Man charged in $50 million Ponzi scheme freed on $1M bond
A Woodmere man arrested late last month, accused of operating a $50 million Ponzi scheme, was released on $1 million bond Tuesday by a federal magistrate, despite an FBI agent's report that the bureau had just uncovered a newer, unrelated fraud in which investors were allegedly duped out of another $7.5 million.
Magistrate Kathleen Tomlinson, in federal court in Central Islip, found that the newly alleged scam by Gershon Barkany, 29, amounted to "provocative recklessness" because it supposedly occurred in January, at a time Barkany claimed he was aware he was already under investigation by the FBI in the alleged $50 million Ponzi scheme. Officials say that fraud ran from January 2009 to December 2010.
But Tomlinson said the purpose of bail was to prevent the risk of flight or a danger to the community or both, and Barkany did not appear to fit into either category.
Nevertheless, Tomlinson imposed stringent release conditions in addition to the bond, including home detention, electronic monitoring, a psychiatric examination, and a ban on working in the real-estate industry -- the fictitious buying and selling of real estate at a profit were the transactions behind the frauds of which Barkany is accused.
One of Barkany's attorneys, Bruce Barket, in arguing for his client's release, said that because his relatives were supporting the bond, if he fled, it would "leave his family devastated" financially.
Barket said his client's past shows he has a history of not fleeing authorities, but "dealing with the problems he frankly has created."
Assistant U.S. Attorney Christopher Caffarone had argued against Barkany's release, citing an investigation by the FBI's lead agent on the case, Gregory Hagarty.
Caffarone said in court papers that since Barkany's arrest on March 28, Hagarty had found "the defendant was engaged in a more recent fraud in which he created fictitious documents, forged people's signatures and succeeded in defrauding two additional investors of approximately $7.5 million."
Hagarty found the latest alleged scheme began in January and was similar to the alleged $50 million fraud, in which investors were promised "risk-free" investments in the buying and flipping of real estate, according to Caffarone.