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40M Ponzi scheme scars many, yet some back Bklyn investor

I dont hate him ... but I would like to throw him down the sewer
EXCLUSIVE
BY BEN CHAPMAN, MICHAEL LIPKIN and ELIZABETH HAYS
DAILY NEWS WRITERS

PHILIP BARRY may be the Bernie Madoff of Brooklyn, but unlike the universally reviled felon, many people still swear by him instead of at him.
Barry, an unassuming Bay Ridge storefront investment adviser, has been accused of running a $40 million Ponzi scheme that defrauded hundreds of local investors of their life savings including a political boss. I dont hate him; I wouldnt want to waste my time hating anybody, said Barbara Grebin, who lost her life savings of $120,000 to $150,000 in Barrys scheme. But I would like to throw him down the sewer. Another furious investor, whose family lost millions, said she trusted Barry for 30 years. He is an outright liar, the 52-yearold woman said. Hes put me in such a financial bind. I dont know where to go. Even Michael Long, boss of the state Conservative Party, got snared. He lost $15,000 with Barry, but he bears no hatred. I dont think hes a crook, Long said. I think he really felt that he was investing wisely and making money for people. Brooklyn Federal Court Judge Charles Sifton has agreed with the more than 40 investors who sued Barry for allegedly stealing millions of dollars from them in a classic pyramid scheme he ran for decades out of a shabby 82nd St. office. Sifton ordered Barry to pay hundreds of thousands of dollars in damages. Barry has filed for bankruptcy and the feds have been poring over his records for more than a year, though he has yet to be charged with a crime. Confronted by the Daily News, Barry, 52, denied he stole anyones money and said he just needs more time. Its all in real estate, Barry said.

Barbara Grebin, 68, lost her life savings of $120,000 to $150,000 after investing it with Brooklyn investor Philip Barry and watching it vanish.

Im going to keep on working to make sure everyone gets the profit they are entitled to. Though he is well-known in Bay Ridge, Barry is an elusive character. Interviews and court documents show he launched his scheme 30 years ago and used word of mouth to lure investors with guaranteed rates of return from 12.55% to 36%. Many were retired. Many brought cash. Many trusted his down-to-earth demeanor and local roots. Unlike Madoff, who lived in fancy apartments and mansions and did business in upscale restaurants, Barrys lair is a shabby storefront filled with shag carpeting, tattered metal office furniture and a tiny black-and-white TV.

Living on the cheap

Instead of hitting fancy restaurants, he heated up TV dinners in his office. Investors said he was even too cheap to buy a sandwich for lunch: Instead, he brought in packets of cheese and bread to make his own. He wasnt a flashy dresser. He didnt have an expensive car, said a 73-year-old retired tinsmith from Dyker Heights who lost more than $300,000. He seemed like a pretty steady guy. But like Madoffs $65 billion scam, probers and investors say Barrys scheme began to unravel in 2007 as the economy started to soften and investors began asking for their money.

Philip Barry insists lost money is all in real estate. Photo by Michael Oates

Instead of investing the money, they say, he bought more than 1,000 acres of lakefront property in upstate Lake Joseph under his name. As in any Ponzi scheme, some investors got money back, but most did not. Former Brooklyn high school coach Barney Davis said he got suspicious when his $3,000 quarterly interest checks suddenly started bouncing a few years back. I started thinking Id better gradually start taking it out, said Davis, 63, who has to scrimp to get by. He never paid me again. Grebin, 68, gave Barry $50,000 over 30 years and was happy to get some dividends and assurances that her fund had grown to $430,000. It was too good to be true. I asked him to invest in tax-exempt bonds. Now I dont think he did that at all, said Grebin, a retired VA Medical Center administrator. He yessed me to death. About two years ago, I asked him for money and the check bounced, she said. Thats when I knew we were in deep trouble. Early last year, Barry got hit with his first of many suits, from investor Grace Scodardi, a retiree who began investing in 1993 and lost more than $330,000, court papers say. After Sifton sided with the investors in a series of court orders and summary judgments last fall and winter, Barry declared bankruptcy. A court trustee is liquidating Barrys limited assets to try to pay some of the defrauded investors. True to form, Barry showed up in U.S. Bankruptcy Court last week wearing shoes with holes in them and an old, wornout shirt. He still lives in the $700-a-month walkup apartment on Fourth Ave. where he grew up. The Debtor [Philip Barry] . . . conducted an extensive Ponzi scheme which resulted in catastrophic losses to their investors, Bankruptcy Judge Dennis Milton wrote last week, approving an auction of Barrys lakefront property. Unfortunately for investors, the expected starting bid at the Oct. 20 auction would barely cover the roughly $6.4 million he owes on several mortgages. Amazingly, the burned investors who still stand by Barry see him as their only shot at getting their lost savings back. They hope a backer will come forward to pay off the mortgages so Barry can develop the property. We dont want to see Phil in jail because hes the only one who can save us, said a 79-year-old investor, who lost $10,000. If he goes to jail . . . none of us investors will see a dime. ehays@nydailynews.com

nydailynews.com DAILY NEWS Monday, August 17, 2009