A Brooklyn man scammed hundreds of investors out of their life savings in a classic Ponzi scheme that guaranteed high returns and little risk, a prosecutor said Tuesday.
"The profit numbers were phony - Philip Barry just made them up," Assistant U.S. Attorney Jeffrey Goldberg told jurors in Brooklyn Federal Court.
Barry, 53, is charged with securities and mail fraud in a scam that began more than three decades ago in a Bay Ridge storefront and was kept afloat by the infusion of cash from new investors promised double-digit profits.
Many of Barry's clients were blue-collar workers from the neighborhood and their children even invested with him when they became adults.
"Philip Barry's investment business was a fake, but his victims were very real," Goldberg said.
For years, Barry allegedly lied to investors claiming he was investing their money in stock options, even producing sham account statements showing 12% interest earnings.
It was all an illusion.
Barry was simply taking the money out of one investor's pocket to give to another, until the scheme came crashing down in 2008.
The first witness, bond trader Frank Monteleone, testified that he invested and lost $100,000. "He seemed like he knew what he was doing," Monteleone, 47, said. "And my dad thought highly of him."
Barry did not live the high life like Ponzi kingpin Bernard Madoff and will argue that he was done in by the real-estate bubble.
"You have to ask yourself, what was the point of doing this if you don't get nothing out of it," defense lawyer Michael Weil said.
"Every time someone loses money doesn't mean a crime was committed," Weil said.
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