Last week, Agape World Inc and Agape Merchant Advance LLP owner and founder Nicholas Cosmo was arrested and charged with running a $370 million mail fraud scheme. According to US authorities, Cosmo ran his alleged Ponzi scam from October 2003 to December 2008, taking money from over 1,500 individual investors.
Cosmo reportedly told investors that he would place their funds into bridge loans for businesses at interests as high as 16%. Investors were reportedly promised returns of up to 80%.
While a few commercial loans were made, the interest rates were significantly lower than what was promised. Also, less than $10 million was actually loaned out. Over $100 million was placed in commodity futures trading accounts that incurred about $80 million in losses. According to US Postal Inspector Richard Cinnamo, Cosmo paid recruiters some $55 million find investors. Many of the recruiters have criminal records.
Cosmo also reportedly used over $212,000 in investor funds to pay a court-ordered restitution from an earlier conviction. He also spent over $100,000 in investor funds for personal expenses and invested $300,000 in the National Tournament Baseball. Cosmo is president of that league.
In September, investors began complaining that their payouts had been postponed. Private investigator Mike Kessler notified the FBI, the New York Attorney general, and the Suffolk County district attorney that there were problems brewing, but no action was taken until investors were no longer getting paid.
In 1997, Cosmo was accused of misappropriating funds while working as a stockbroker. He pleaded guilty to one federal charge, was ordered to pay restitution, and was sentenced to 21 months in prison.
Related Web Resources:
Agape Founder Nicholas Cosmo Arrested and Charged with $370 Million Ponzi Scam, Time, January 27, 2009
In Echoes Of Madoff, Ponzi Cases Proliferate, Wall Street Journal, January 28, 2009
Agape World Inc
If you are an investor who has lost money in a Ponzi scam, contact our stockbroker fraud lawyers at Shepherd Smith Edwards & Kantas LTD LLP to explore your legal options.