U.S. Department of Justice

United States Attorney
Eastern District of New York

Friday, October 14, 2011

Former New York Investment Company Owner and President Sentenced to 25 Years in Prison for Multi-Million Dollar Ponzi Scheme

Long Island-Based Defendant Caused Thousands of Investors to Lose $195 Million

BROOKLYN, N.Y. – Nicholas Cosmo, the former owner and president of Hauppauge, N.Y.,-based companies, Agape World Inc. and Agape Merchant Advance (AMA), was sentenced today to 25 years in prison by U.S. District Court Judge Denis R. Hurley in federal court in Central Islip, N.Y., announced U.S. Attorney for the Eastern District of New York Loretta E. Lynch.  On Oct. 29, 2010, Cosmo pleaded guilty to committing mail and wire fraud in connection with his operation of a massive Ponzi scheme involving the theft of more than $195 million of investor money that was supposed to be used to fund short-term commercial loans.  Cosmo was ordered to pay $179 million in restitution to more than 4,000 victims and agreed to an asset forfeiture judgment in the amount of $409,305,000 as part of his sentence.

Cosmo, and others working at his direction, fraudulently obtained in excess of $400 million from investors over a five-year period by representing that the funds would be used by Agape either to fund short-term secured bridge loans to commercial borrowers, or used by AMA to make short-term loans to small businesses.  Investors were told that the loans generated high interest rates which would result in payment of high rates of return on their investments.  Cosmo often failed to make the short-term loans, admittedly using approximately $80 million of investor money to trade futures and commodities unbeknownst to investors, and paid false profits to early investors in the scheme using new investors’ money.

At the sentencing proceeding, several victims, many of whom stated that they lost their family’s life savings, described the devastating effect of their losses as a result of Cosmo’s criminal actions.

“As recounted today in court by several of his victims, the defendant’s actions crushed the hopes and dreams of everyday citizens.  We stand committed to ensuring that our markets operate fairly and honestly, and we will aggressively investigate and prosecute those who fraudulently enrich themselves at the expense of investors,” stated U.S. Attorney Lynch.  “Those who lie and steal from the investing public are on notice that they face severe penalties.”

U.S. Attorney Lynch expressed her grateful appreciation to the U.S. Postal Inspection Service and FBI, the agencies responsible for leading the government’s investigation.

The government’s case was prosecuted by Assistant U.S. Attorneys Demetri M. Jones, Grace M. Cucchissi and Vincent Lipari.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.  For more information on the task force, visit www.stopfraud.gov.

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GENERAL INFORMATION
Financial Fraud Enforcement Task Force

 Leadership
Eric Holder, Attorney General, Chair
 
 Contact
(202) 514-2000
Recursos Para Víctimas de Fraude
What is Financial Fraud?
What is Financial Fraud?

Financial Fraud encompasses a wide range of illegal behavior - from mortgage scams to Ponzi schemes, credit card theft to tax fraud. Everyone is affected by financial fraud.