FindLaw: Nicholas Cosmo's Charges of Engaging in $370 Million Ponzi Scheme

 


U.S. v. Nicholas Cosmo

Former Convict Charged With Engaging In
$370 Million Ponzi Scheme Involving Mail Fraud

January 26, 2009

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  • An ex-convict and former stock broker was charged by the U.S. Attorney in Brooklyn with engaging in a $370 million Ponzi scheme.

    According to the criminal complaint, Nicholas Cosmo planned and carried out a fraudulent scheme in which he, and others acting at his direction, promised investors that money they invested in his Agape World, Inc. and Agape Merchant Advance, LLC companies would be used to provide businesses with short-term 'bridge' loans.

    Investors were allegedly told that their money would return interest of 48% to 80% per year. The charges contend that only $10 million of the $370 million obtained from investors was actually lent to commercial borrowers, and that only $746,000 remained in the defendant's companies' bank accounts.

    Cosmo was convicted in 1999 of one (1) count of engaging in frauds and swindles. Prior to his arrest in that case, Cosmo reportedly admitted to commingling funds while working as a licensed stock broker, misleading investors, and forging documents. U.S. District Judge Arthur Spatt sentenced Cosmo to a 21-month prison sentence, 3-years of supervised release, ordered him to pay $177,000 restitution, and “receive extensive gambling therapy.”

    As a result of that earlier conviction, the National Association of Securities Dealers revoked Cosmo's broker's license, fined him $68,209, censured him, and barred him from association with any NASD members. According to the current charges, NASD records show that in the earlier case, Cosmo “falsified account transfer records to gain control of a a customers' account.”


     

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