Thursday, June 27, 2013

Gershon Barkany pleads guilty to $62 million fraud

F.B.I.   Earlier today, Gershon Barkany pleaded guilty at the federal courthouse in Central Islip, New York, to wire fraud. The proceeding took place before United States Magistrate Judge Arlene R. Lindsay. When sentenced, Barkany faces up to 20 years in prison. As part of his plea agreement with the government, Barkany agreed to a $62 million money judgment payable to the United States.

The guilty plea was 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, New York Field Office.

According to court filings and facts presented during the plea proceeding, between December 2009 and March 2013, Barkany induced seven investors to give him 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 New York City and New Jersey. However, no such deals existed and the investors lost their entire investments.

In one instance, Barkany approached an investor he knew from the community and who placed his trust in the defendant. Barkany preyed on that trust to convince the investor to invest $46.5 million that was supposed to be used as a down payment to purchase an office building in Manhattan, a hotel in Atlantic City, and properties in the Bronx and Queens. Barkany explained that he would find a buyer for those properties who would pay a higher price before the actual closing, resulting in a profit for Barkany and the investor. Barkany assured the investor that the real estate deals were risk free because if Barkany was unable to find a buyer before the closing, the owner of the properties would refund their money. In fact, those real estate deals did not exist and the investment was not refunded. [...]

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