Economy

nitpicker

(7,153 posts) Thu Dec 20, 2018, 05:55 AM Dec 2018

Long Island Man Sentenced to 56 Months' Imprisonment for Defrauding Investors of $62 Million in a Re

https://www.justice.gov/usao-edny/pr/long-island-man-sentenced-56-months-imprisonment-defrauding-investors-62-million-real

Department of Justice
U.S. Attorney’s Office
Eastern District of New York

FOR IMMEDIATE RELEASE
Wednesday, December 19, 2018

Long Island Man Sentenced to 56 Months’ Imprisonment for Defrauding Investors of $62 Million in a Real Estate Ponzi Scheme

Earlier today, at the federal courthouse in Central Islip, Gershon Barkany was sentenced by United States District Judge Joseph F. Bianco to 56 months’ imprisonment to be followed by three years’ supervised release for orchestrating a Ponzi scheme over four years that caused investors to lose approximately $62 million. Barkany was also ordered to pay restitution in an amount to be determined later and forfeiture of $62 million. Barkany pled guilty to wire fraud on June 26, 2013.
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Between December 2009 and March 2013, Barkany induced more than 10 victims to invest approximately $62 million by promising to use their money in “risk-free” deals to purchase, and then immediately re-sell at a profit, commercial real estate properties located in New York City and New Jersey. No such deals existed, and the investors lost their entire investments. Relying on Barkany’s representations, one victim invested $46.5 million as a down payment on an office building in Manhattan, a hotel in Atlantic City and properties in the Bronx and Queens. In fact, those real estate deals did not exist, and the investments were lost.

Shortly after Barkany’s arrest on March 28, 2013, two additional victims contacted the FBI and reported that they had been defrauded by Barkany. Barkany induced those investors to give him approximately $7.5 million by promising to use their money in a “risk-free” deal to purchase, and then immediately re-sell at a profit, an office building in Manhattan. In furtherance of the scheme, Barkany created fraudulent documents, including a purchase agreement purportedly signed by the seller of the office building and an escrow agreement allegedly signed by a third-party escrow agent. Once again, the promised deal did not exist, and the investment was lost.

Barkany diverted some of the funds he received to pay victims whom he had earlier defrauded, and used approximately $7.8 million of investors’ monies for personal expenses and gambling.
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