Woodmere man charged in $50M Ponzi scheme
A Woodmere man was arrested Thursday by FBI agents on charges of concocting real estate deals as part of a more than $50 million Ponzi scheme, according to officials.
Gershon Barkany, 29, ended up spending investors' funds for "his personal benefit," officials said.
He lost it gambling in Atlantic City, donated it to an unspecified charity and used it pay off early investors, as is typical in a Ponzi scheme, according to a complaint and arrest warrant filed in federal court in Central Islip by Assistant U.S. Attorney Christopher Caffarone.
Reading from an interview Barkany gave to officials before he was brought into her courtroom, U.S. Magistrate Kathleen Tomlinson said, "This man has an obvious gambling problem." She did not elaborate.
Barkany is accused of duping five investors out of the millions by claiming he would invest the money "risk-free" in properties in New York City and Atlantic City, and then sell them at a profit, according to the U.S. Attorney for the Eastern District Loretta Lynch.
Barkany was not required to plead to the charge before Tomlinson, who ordered him held pending a future bail hearing.
Barkany was the principal executive at more than 20 businesses based at an office at 77 Spruce St. in Cedarhurst since 2009, including The Pratt Park Group and Pratt Lenders Inc., state incorporation and Nassau County tax lien records show.
In the court papers, prosecutor Caffarone said that Barkany's scheme ran from January 2009 to December 2010 and that the FBI investigation showed that the supposed real estate deals "did not exist."
The investors had filed a civil suit in State Supreme Court in Nassau County against Barkany's lawyers in 2011. In that pending suit, Caffarone said that Barkany admitted in an affidavit to defrauding the five investors.
In that affidavit, Barkany was quoted as saying, "The loans and real estate transactions were generally shams fabricated by [me, Gershon Barkany,] to serve as a vehicle to separate [investors] from their money."
The five investors were not identified in the federal criminal complaint, including one who was said to have lost $46.5 million in the scheme.
Neither the investors named in the civil suit filed in Nassau County nor their attorney could be reached for comment.
Caffarone opposed releasing Barkany on bail, saying that he was a flight risk, with parents living in Canada and two siblings living in Israel.
But Tomlinson said she would consider releasing Barkany if he posted a substantial bail package.
Barkany's attorney, Bruce Barkett, said he would attempt to raise a package that would satisfy Tomlinson. If convicted, Barkany faces up to 20 years in prison.
U.S. history is riddled with Ponzi con men: Among the more noted: Bernard Madoff, who scammed $20 billion; Texas financier R. Allen Stanford, $7 billion; Minnesota businessman Tom Petters, $3.7 billion; Florida attorney Scott Rothstein, $1.2 billion; Long Island's Nicholas Cosmo, $405 million; and Charles Ponzi, himself, who took in $8 million to $10 million between 1919 and 1920.
With Joseph Mallia