Photo Courtesy of Realtor.com
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 NYC and New Jersey. No such deals existed, and the investors lost their entire investments.
By Forum Staff
A Long Island man was recently sentenced to 56 months in prison for orchestrating a Ponzi scheme over four years that caused investors to lose approximately $62 million, according to federal prosecutors.
Gershon Barkany, 34, pleaded guilty to wire fraud in June 2013. He has also been ordered to pay restitution in an amount to be determined later and forfeiture of $62 million.
According to officials, 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 NYC 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 Queens and the Bronx. In fact, those real estate deals did not exist, and the investments were lost.
Federal authorities noted that shortly after Barkany’s arrest on March 28, 2013, two additional victims contacted the Federal Bureau of Investigation and reported that they had been defrauded by Barkany. He 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 also 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.
