A Woodmere man pleaded guilty Wednesday to defrauding real estate investors of $62 million and agreed to repay them, federal prosecutors said.
Gershon Barkany, 29, faces up to 20 years in prison for wire fraud involving a three-year Ponzi scheme in which seven investors gave him money to buy and immediately resell commercial properties in New York and New Jersey at a profit, U.S. Attorney Loretta E. Lynch said in announcing the plea deal.
Between late 2009 and March 2013, Barkany got the money by promising to make "risk free" purchases, prosecutors said. Those deals never existed, and he created "fictitious documents," including sales and escrow agreements, they said.
He used some of the money to repay investors he had defrauded earlier, lost some gambling in Atlantic City, and used some for his own benefit, authorities said.
Barkany's attorney, Bruce Barket of Garden City, said his client has repaid more than $25 million since 2010, when he met with investors to confess he had "misappropriated" funds.
Not all of Barkany's deals were fake, Barket said: "Some investments panned out, some didn't. There was a mixture of legal and illegal activities."
The attorney described Barkany, a father of two, as a decent man who will raise and earn money to repay investors.
"He gave much of the money to charity and lived a fairly simple life," he said. "This is not somebody who was buying jets and homes in the Hamptons."
But prosecutors said in one case Barkany "preyed" on one investor he knew, bilking the victim out of $46.5 million that was supposed to be the down payment for a Manhattan office building, an Atlantic City hotel and Bronx and Queens properties, Lynch's news release said.
Before closing on those deals, Barkany told investors, he would have a buyer in the wings, one who would pay a higher price for the properties, prosecutors said. Barkany said if he could not find a buyer, the money would be refunded to the investor but that never happened, authorities said.