Woodmere Man Admits to $62M Ponzi Scheme

A Woodmere man who admitted to running a $62-million Ponzi scheme that he used to pay his bills lost some of the money while gambling in Atlantic City and donating to charity.

Gershon Barkany, 29, pleaded guilty Wednesday to wire fraud at Central Islip federal court after prosecutors said he cheated seven investors out of funds they believed would be used to purchase real estate in New York and New Jersey.

“Unbeknownst to his victims, what they were really buying were not brick-and-mortar buildings, but the smoke-and-mirror fantasy of Barkany’s fraudulent sales pitch,” said George Venizelos, assistant director in charge of the FBI’s New York Field Office.

Barkany told investors he would buy the property that he would resell immediately for profit and that if the property did not sell the owner would refund their money, making the investments “risk free.” But, the investments did not exist, Barkany fabricated documents and each investor lost millions of dollars.

One investor gave $46.5 million total over the course of about six months for an office building in Manhattan, a hotel in Atlantic City and other properties in the Bronx and Queens.

Barkany also wired $146,000 to a bank in Israel, which the FBI believes was to be used to purchase property without Barkany’s investors’ knowledge. Barkany has travelled to Israel and Canada in the last three years.

The FBI arrested Barkany in March 28. He agreed to repay the $62 million he took from investors and faces up to 20 years in prison.

Loretta Lynch, U.S. Attorney for the Eastern District of New York, said: “Barkany rolled the dice that his brazen greed and dishonesty would go unnoticed. That gamble did not pay off.”