Philip Barry, accused of running a $40 million Ponzi scheme out of a Bay Ridge storefront, was charged with securities fraud by the feds yesterday. Barry allegedly promised his investors—many from his neighborhood—12-21% returns based on investments with stock options but he actually used the money to pay his own bills, speculate on real estate in Sullivan County... and start a mail-order porn business. The Daily News reports, "Duped investors [said] they knew he had a side business selling DVDs and CDs on eBay - and some said they always suspected something fishy. 'He said that prisons were his best customers,' said a shopkeeper near Barry's office who lost about $30,000 in the scheme and saw Barry walk by daily with a hand truck loaded with boxes on his way to the post office. 'He said they were videos, but he never said what kind.'" Barry's scheme fell apart in 2007 when clients wanted to cash out and the investigation began last year, when Barry himself told the feds he was running a Ponzi scheme.