With dozens of his victims watching, an investment manager once dubbed by the media as Brooklyn's Bernie Madoff, was sentenced on Friday to 20 years in prison for operating a decades-long Ponzi scheme that bilked hundreds of investors out of more than $24 million.
Philip Barry, 53, was convicted last November by a federal jury in Brooklyn on one count of securities fraud and 33 counts of mail fraud for the three-decade crime, which prosecutors described as a classic Ponzi scheme.
Barry, a resident of Brooklyn's Bay Ridge neighborhood, has also been ordered to repay $24 million to his victims, although prosecutors cast doubt on whether the restitution will ever happen. Barry declared bankruptcy in 2008.
In a hearing before U.S. District Judge Raymond Dearie, seven of Barry's 800 victims came forward to share tales of how Barry pledged to invest their hard-earned savings in safe options. Instead, he began ducking calls and promising a check was in the mail when, in fact, there was no check, they testified.
Phil Barry is a thief, said Frances Monteleone, who lost the $215,000 she invested with Barry. He stole my money, and he stole my future.
Barry's attorney, Lisa Hoyes, compared Barry with Bernie Madoff, the Manhattan Ponzi schemer who received a 150-year sentence in 2009 for operating a $65 billion Ponzi scheme. Unlike Madoff, who inhabited a swanky Manhattan apartment and lived a lavish lifestyle, she argued, Barry lived modestly and declined to use investors' money to pay for fancy cars or trips.
Does that make any difference to his victims? Dearie asked in response.
Prosecutors had pushed for a prison sentence of 27 to 34 years, the maximum term allowed under federal guidelines. U.S. attorneys cited the 30-year duration of the scheme, the 800 estimated victims, and the $24 million in actual losses as proof that Barry ranked toward the top of the list of Ponzi schemers convicted at trial.
In addition, Assistant U.S. Attorney Jeffrey Goldberg argued, Barry's victims, unlike Madoff's victims, were primarily working-class individuals without the means to absorb the losses they suffered.
Dearie did not give a reason for the lower-than-maximum sentence, other than to say that he had to consider a sufficient punishment.
Barry read a short statement in which he said he was profoundly sorry. If granted leniency, he said, he would work to repay the money, possibly as a radio host, since he is barred from working again in the financial sector.
I never intended or expected this to happen, he said. No one plans to get lost in the woods. It just happens, one step at a time.
Barry voluntarily told prosecutors at the Brooklyn U.S. Attorney's office in August 2008 that he owed investors more than $50 million. In October 2008, he declared bankruptcy, and testified in bankruptcy court that he owed investors in his operating company, Leverage Group, an estimated $60 million. In late 2009, he was arrested and indicted following a year-long investigation.
Also in 2009, Barry and Leverage Group settled a civil lawsuit brought by the U.S. Securities and Exchange Commission, agreeing to pay an as-yet-undetermined amount in disgorgement and civil penalties.
The case is U.S. v. Barry, in the U.S. District Court for the Eastern District of New York, no. 09-833.
(Reporting by Steve Orlofsky)