Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Tuesday, September 8, 2009

Brooklyn Money Manager Settles SEC Charges of Running a Ponzi Scheme

Yet another Ponzi scheme!  The SEC charged a Brooklyn money manager with running a $40 million Ponzi scheme in which he promised approximately 800 investors guaranteed high returns from safe, liquid investments, but instead spent their money on real estate, his pornography mail order business, and other interests.

The SEC alleges that Philip G. Barry and his firms Leverage Group, Leverage Option Management Co., Inc, and North American Financial Services defrauded investors, including senior citizens and retirees, by selling securities in Leverage investment funds. According to the Commission's complaint, Barry provided fake account statements to investors that recorded growing account balances and concealed that Barry had not been trading securities at all for several years. Neither Barry nor any of his related firms is registered with the SEC in any capacity.

The SEC's complaint charges Barry, Leverage Group, Leverage Option Management Co., Inc, and North American Financial Services with numerous securities violations.  Barry, Leverage Group, Leverage Option Management Co., Inc, and North American Financial Services, without admitting or denying the allegations, consented to the entry of a judgment that will grant the SEC the full relief that it seeks, but will defer the determination of the financial amounts of the settlement until a later date. The agreement to resolve the SEC's action is subject to approval by the court. Barry also has consented to the issuance of a Commission order barring him from association with an investment adviser.

http://lawprofessors.typepad.com/securities/2009/09/brooklyn-money-manager-settles-sec-charges-of-running-a-ponzi-scheme.html

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