White collar crimes are not victim-less.
Nor are they painless.
When it comes to white-collar-crime, there’s bad, there’s worse, and then there’s being compared to Bernie Madoff.
In 2015, 30 devastated victims of corrupt financial manager Philip Barry brought a $36.1 suit in Brooklyn Supreme Court against JPMorgan Chase, M&T Bank, HSBC and TD Bank. The suit accused those institutions of facilitating Barry’s Ponzi scheme.
Newspapers dubbed Barry the “Bernie Madoff of Bay Ridge,” after the now infamous Wall Street villain who bilked thousands of investors out of $50 billion in what is likely the largest financial fraud in history.
Though Barry’s scam is nowhere near as large in scope as Madoff, it was cited as the longest-running Ponzi scheme of all time, by Loretta Lynch, US Attorney for the Eastern District of New York.
Basically, a Ponzi scheme is a fraud where an individual or organization invests funds, usually on the promise of a lucrative return. Instead of investing responsibly and managing that money to generate profits, the crook simply redistributes the new money raised from additional investors, while pocketing as much as he can.
Of course, eventually the scheme collapses. Barry’s victims blamed not only him, but also the financial institutions with which he was associated. They maintained that these banks were sophisticated and must have known Barry was running the $40 million scheme over the course of 30 years, yet turned a blind eye as they raked in thousands in bank fees, according to the suit filed in Brooklyn Supreme Court.
Barry was no modern day Robin Hood. Quite the opposite, he stole from more than 800 people, mostly Brooklyn blue-collar workers and elderly retirees, for more than 30 years. Once victim invested $2.3 million, as he was so convinced in Barry’s ability to outperform the market.
Barry tried to turn a profit, so he says, though turned out to be a terrible investor. He elicited such trust and his fraud running for so long because he was one of Bay Ridge’s own. A regular fixture in the neighborhood, Barry lived in Bay Ridge since high school, and later opened his financial advisory firm from an office on 82nd Street. He didn’t even have to advertise to attract clients.
Hundreds of Brooklynites lost homes, retirement funds, college tuitions, nest eggs. They were ruined financially, emotionally, even physically. For many of his elderly victims, the loss of their life savings is a life sentence.
For Barry’s victims, there was no meaningful recourse for recovery. The money was squandered, so any return will be pennies on the dollar, regardless the empty remorse he now professes. When he was arrested, Barry had $550,000 left of the estimated $40 million.
As for Barry’s victims suing the banks, insisting that they should have seen the signs of financial fraud and made efforts to protect them. That’s pretty hard to prove in a court of law, especially to the tune of $60 million ($11.1 million for damages, $25 million for pain and suffering). An initial suit, brought in 2011, was denied in federal court. The judge punted, ruling there were no grounds for it in the federal Securities Litigation Uniform Standards Act law.
The current suit, brought in 2015, is now winding its way through the courts.
Barry was sentenced in 2011 to 20 years in prison, a fraction of the 150 years Bernie Madoff received. Addressing the victims at sentencing, Barry apologized.
And he promised to pay them back.