FBI Arrests Man for Real Estate Ponzi Scheme

Allison Tussey —  March 29, 2013 — Leave a comment

Gershon Barkany, 29, Far Rockaway, New York, was arrested by the FBI based on a criminal complaint alleging that the he defrauded investors by promising to use their money in risk-free deals to purchase and then immediately re-sell at a profit large real estate properties located in New York City and New Jersey. In fact, the complaint alleges that no such deals existed and the defendant defrauded victims of more than $50 million.

According to the criminal complaint, Barkany induced at least five investors to wire transfer large sums of money supposedly to purchase real estate in Manhattan, Queens, the Bronx, and Atlantic City, New Jersey. According to one of the investor victims, Barkany claimed that the sellers of these properties would only close on the real estate sales contracts after Barkany had located a purchaser who would be willing to buy the property from Barkany at a higher price. In that way, Barkany assured the victim that the real estate deals would be risk free.

In fact, the real estate deals did not exist. As part of Barkany‘s Ponzi scheme, he diverted some of the funds he received to pay investors whom he had earlier defrauded. The defendant also lost some of the funds in gambling and otherwise used the money for his own benefit.

If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation (FBI), New York Field Office. The defendant’s initial appearance is scheduled for this afternoon before United States Magistrate Judge A. Kathleen Tomlinson at the United States Courthouse in Central Islip, New York.

The government’s case is being prosecuted by Assistant United States Attorney Christopher C. Caffarone.

“Barkany’s victims sought the security of investing in real estate. Instead, they were taken for millions by the defendant’s lies and deception,” stated United States Attorney Lynch. “As alleged, the promised high returns were only for him, as he used his victims’ money to gamble and keep his scheme afloat. Today’s arrest demonstrates the Department of Justice’s commitment to investigate and prosecute financial crimes.” Ms. Lynch added that the government’s investigation is continuing.

FBI Assistant Director in Charge Venizelos stated, “As alleged, Barkany promised a get-rich-quick investment scheme that really had potential to enrich only him. There were no investment properties, just a house of cards built on a foundation of lies. There may be no truly risk-free investments, but investors are entitled to honesty.”

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Allison Tussey

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