NEW YORK – What do you do when you can’t find the funds you need to finance your adult mail order business and real estate ventures? How about take money from elderly retirees, tell them it will be invested in safe options and securities earning as much as 21 percent each year, but then use the money to finance your own personal and business expenses instead of investing it as promised.Those are the charges facing 52 year-old money manager Philip G. Barry, who also owns the adult mail order business Barry Publications.
The Securities and Exchange Commission (SEC) filed a civil suit against Barry and his various firms, including The Leverage Group, Leverage Option Management Co. Inc. and North American Financial Services. That suit was settled, with Barry neither confirming nor denying guilt. But now the New York Attorney General’s Office has joined in, filing criminal charges against Barry in what the London Times is calling a “mini Madoff-style” investment scheme.
“This defendant allegedly convinced hundreds of individuals to hand over their savings for what was supposed to be a safe investment that could be easily liquidated,” U.S. Attorney Benton J. Campbell said in a statement. “In reality, as charged in the complaint, the defendant’s investment fund was nothing more than a classic Ponzi scheme. We will aggressively prosecute those who perpetrate such crimes.”
According to the SEC and NY Attorney’s Office, Barry ran a $40 million Ponzi scheme that defrauded some 800 investors. Investors were allegedly shown fake balance sheets that placated them with fictional profits.
Rather than invest the money as promised, Barry allegedly used the funds in at least 60 personal real estate deals. Charges against him also claim he used investors’ money to finance his adult mail order business, Barry Publications, as well as paying for personal restaurant expenses. Near the end of the alleged scheme, Barry used funds from new investors to pay off old investors.
Barry and his firms were not registered with the SEC.
