Topper: WS Cosmo ran $370M Ponzi scheme

[sfpcjock]

Surprise! More cool ghosts of recession coming out of the Bushit woodwork. :scared: At least there was woodwork. :wtf:

Feds: Money manager ran $370M Ponzi scheme

AP by FRANK ELTMAN , 01.27.09, 01:37 PM EST

The owner of a New York investment firm ran a $370 million Ponzi scheme, luring in clients with promises of astronomical returns while secretly blowing tens of millions of dollars on bad trades and conspicuous spending, federal authorities said Tuesday.

Nicholas Cosmo, who was arrested Monday by FBI and U.S. Postal Inspection agents, was awaiting arraignment Tuesday on mail fraud charges.

In cheating investors, Cosmo, 37, "not only understated the risk, he completely misrepresented the underlying investments," said Joseph Demarest, head of the FBI's New York office. "When you lie about what you're selling people, that's fraud."

A criminal complaint says Cosmo, who runs Agape World Inc. and Agape Merchant Advance in Hauppauge and Queens, took in more than $370 million from about 1,500 investors since 2006.

The investors believed they would make returns as high as 80 percent a year from interest collected on short-term loans to businesses. But the complaint said an investigation revealed that "much of the money paid back to investors ... was actually money provided by subsequent investors" - a Ponzi scheme similar to the one alleged in the Bernard Madoff case.

Investigators say less than $10 million in loans were made. Aside from compensating prior investors, the remainder was used to pay $55 million to brokers who recruited new investors.

Since 2003, the firm also had transferred $100 million into commodities futures trading accounts controlled by Cosmo. About $80 million of that was lost on trades, the complaint said.

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Cosmo also spent investor money on jewelry, hotel rooms, limousines, payments to his wife and a private baseball league. About $212,000 was used to pay restitution from a previous mail fraud conviction.

As of last Thursday, Cosmo's firm had only $746,000 in the bank, prosecutors said.

Cosmo's attorneys did not immediately return calls seeking comment. A letter hanging in one of his office windows denied there was any Ponzi scheme.

If convicted, Cosmo faces up to 20 years in prison.

[BR_Parkway]

1. Well, if you're going to promise 80% returns, better to use fundie code

words like Agape - that'll be the biggest concentration of gullible.

And using $212,000 to pay off previous convictions - almost priceless.

Always heard that the victim's greed is a necessary step in the con

[sarcasmo]

2. I would think that the victims Greed is the only step you would need in that type of Ponzi Con.

Makes you wonder how many more of these we will hear about in the future.