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Nicholas Cosmo charged in New York Ponzi scheme
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by Rachel Nixon | January 27, 2009 at 11:27 am
585 views | 3 Recommendations | 2 comments
A new alleged investor fraud case has emerged in the US with the arrest of Nicholas Cosmo, the owner of a New York investment firm.
Cosmo, founder of Agape World Inc, has been charged with defrauding 1,500 investors of more than $370 million, telling them it would be used to make loans.
The case is the latest to allegedly involve a Ponzi scheme like that made famous by investor Bernie Madoff. A Ponzi scheme promises very high returns and pays early investors with funds from later ones.
Cosmo operated a Ponzi scheme at least between October 2003 and December 2008 that raised more than $370 million from more than 1,500 individual investors and deposited that money into Agape World bank accounts, according to a 51-page affidavit by U.S. Postal Inspector Richard Cinnamo detailing the allegations against Cosmo.
Cosmo, arrested after he surrendered yesterday in Hicksville, New York, claimed he was putting investors’ money into bridge loans to businesses, according to the Cinnamo affidavit, which was unsealed today. Just $746,000 of the money was found in the bank accounts last week, Cinnamo said. Less than $10 million was loaned out, the alleged business of Agape World.
Instead, more than $100 million was invested in commodity futures trading accounts, with losses of about $80 million, according to Cinnamo.
In a separate case, a Sarasota hedge fund manager named Arthur Nadel has surrendered to the authorities in Florida. He had been on the run since January 16th when he threatened to kill himself and vanished.
Nadel, head of Scoop Management, was overseeing six hedge funds valued at more than $300 million.
FBI Tampa spokesman, David Couvertier tells CNN: "He has been processed and taken to the u.s. marshal's service facility in Tampa, and is awaiting his first appearance before a u.s. federal magistrate. There is a criminal complaint against Mr. Nadel which has not yet been unsealed", said Couvertier.
Nadel disappeared earlier this month just as he was allegedly due to pay investors in his funds $50 million, and wrote his wife a suicide note in which he said he felt guilty for losing other people's money.
He is being held awaiting first appearance.
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at 23:44 on January 27th, 2009
nice work,
- more info on Nadel, Missing Hedge Fund Adviser, Arrested by FBI
at 19:19 on April 14th, 2009
It's easy to play armchair quarterback today after so many people were dumped for so long. The Ponzi scheme that involved Madoff has victimized many charitable foundations. In conjuction with the Madoff scandal, another name was involved. Ezra Merkin is a name you probably never heard before. He is accused of having run the feeder funds that gave cash advances to Madoff. Madoff himself is awaiting sentences, while his lawyers try to appeal his bail revocation. Merkin hasn't been charged with a crime yet, only sued. But there may be a need for some big cash advance so Ezra Merkin can pay his fines.