Gershon Barkany, Wire Fraud, New York 2021

Gershon Barkany, a Woodmere man, pleaded guilty to defrauding investors of $62 million in a real estate Ponzi scheme earlier today at the federal courthouse in Central Islip, New York.

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.

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 monies.

On March 28, 2013, FBI special agents arrested Barkany. Shortly thereafter, two additional victims contacted the FBI and advised that they too had been defrauded by Barkany. As he had done with the other victims, Barkany induced those investors to give him approximately $7.5 million by promising to use their money in a “risk-free” deal to purchase, and then immediately re-sell at a profit, an office building located on 53rd Street in Manhattan.

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.

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