Sep 8, 2009 11:58 pm US/Eastern
$40 Million Ponzi Porn Scheme Hits Brooklyn
Philip Barry, 52, Arrested After Allegedly Duping His Investors Out Of Their Money For More Than 3 Decades
Reporting
Lou Young
NEW YORK (CBS) ―
Federal prosecutors said they've busted another big investment Ponzi scheme -- this time in Brooklyn.
Investigators said the decades-long scam ended with a click of handcuffs in Bay Ridge.
More than $40 million may be missing.
The arrest went down at a Brooklyn apartment house while many of us were getting ready for work Tuesday morning. A quiet 52-year-old investment specialist is now charged with running a Ponzi scheme like the one that brought down Bernie Madoff.
It was a very un-Madoff-like building. There was no elevator. But feds made the three-story walk upstairs Tuesday to take Phillip Barry into custody. He apparently didn't want to open up.
When asked how long the authorities were in the building, a neighbor named "Dolly" said, "Like since about 5 o'clock in the morning and at 6 he let them in and then they arrested him and he went out."
The accused worked out of a modest Bay Ridge storefront and when things started unraveling opened a video business that allegedly specialized in mail order porn.
For decades he'd serviced a loyal clientele of investors like Barbara Gerbin, who said she isn't sure what she lost with Barry. Years of statements said she was making a handsome profit and she said she even remembers him talking about how upstate land investments would make him rich. She didn't realize, though, he'd used investors' money to buy the property.
"I couldn't understand why every time the market crashed we didn't. I mean why not everybody else is? He said don't worry about it," said Gerbin, adding when asked if the whole thing was just one big illusion, "I think so. And it worked for a long time."
The feds believe almost all the money Barry collected over 31 years is mostly gone, blown on personal expenses, bad upstate real estate deals and a large cache of pornographic DVDs. Just to be certain, though, the judge ordered him held without bail to make sure he shows up for his next court appearance.
Barry's companies offered fixed interest rates between 6 and 21 percent.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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