The federal court in Brooklyn charged the 'Leverage Group' proprietor, Philip Barry, on Tuesday with a single criminal count of securities fraud - the New York money manager had been operating a supposed $40 million 'Ponzi' investment scheme since 1978!

The 52-year-old Barry, of the New York borough of Brooklyn, has defrauded over 800 investors, who believed that he was investing the cash in stock options though the Leverage Group; and had apparently used the swindled $40 million to finance a pornography material-based mail-order business, Barry Publications!

Going by the criminal complaint, Barry had promised the investors 'made-up' returns ranging from 12.5 percent to 21 percent. Initially, he invested the money of the customers in property, and gradually stopped investing it at.

The US Attorney's office in Brooklyn elaborated that, similar to the way a traditional 'Ponzi' scheme functions, the 'Mini-Madoff' Barry used new customers' funds to pay returns to existing clients. Prosecutors said that part of the new cash went towards the payment of Barry's own expenses at restaurants and petrol stations, and the maintenance of the nearly 60 properties he had purchased.

The investigation against Barry was initiated in August 2008, when he approached prosecutors from the US Attorney's Office in Brooklyn, and supposedly admitted to his 'Ponzi' scam - which remained in operation for over three decades, till February this year!