Posted on 01/27/2009 1:20:04 AM PST by CutePuppy
Authorities on Monday arrested the chief executive of a private New York financing firm on suspicion of running a purported Ponzi scheme that attracted $400 million in investments, U.S. law enforcement officials said.
Nicholas Cosmo, head of Agape World Inc on New York's Long Island, was said to provide commercial bridge loans, but was instead operating a traditional Ponzi scheme in which early investors are paid with the money of new clients, officials said.
"Nicholas Cosmo took the advice of an attorney and complied with an arrest warrant," said Al Weissmann, spokesman for the U.S. Postal Inspection Service, which is investigating Agape World and Cosmo along with the FBI.
Cosmo's attorney confirmed to CNBC that he voluntarily surrendered to authorities and "intends to work with them to allay investor's concerns."
Another law enforcement official, said agents had visited Cosmo's office on Monday expecting to arrest him, but he was not there.
He complied with the warrant on Monday night and was expected to appear in magistrate's court on Tuesday in Central Islip on Long Island, FBI and USPIS officials said.
The amount of money, while large, pales compared with the purported $50 billion fraud masterminded by investment manager Bernard Madoff. Law enforcement officials said they expect to uncover more Ponzi schemes following the sharp decline of the U.S. financial industry.
Agape World, a private firm with its office in Hauppauge, New York was not registered with the U.S. Securities and Exchange Commission.
"Some of the early investors made money but as this scheme started to crumble, the later investors did not see a penny," a law enforcement official said of the firm.
Cosmo was convicted of a federal charge of felony fraud and swindle in 1999 and sentenced to 21 months in prison. He was released in August 2000, according to the U.S. Bureau of Prisons.
According to the firm's Web site www.agapeworldinc.net/ it has made commercial bridge loans, construction loans, acquisition loans and financing for properties nationwide with capital obtained from private sources since 1999.
Projects in New York, California, Texas and South Carolina are among those listed as recipients of its loans in the past two years.
Investors Raised Concerns
Investors had been raising concerns about Agape long before the financial crisis unearthed the recent rash of Ponzi schemes, seeking advice and intelligence on Internet investment chat boards such as www.scamvictimsunited.com and www.fatwallet.com.
"Has anyone invested with Agape World Inc? They provide bridge loans and offer investors 13-14% returns? When my brother was telling me about it, it sounded kinda fishy and risky," reads a March 2, 2008 website posting.
"The pictures on their website would make you believe that they funded the San Francisco Bay Bridge, the Taipei 101 Tower, and the Tower of Babylon, and the Baghdad Railroad," reads another post.
Others defended Agape. "I have been an investor with Agape World Inc for 2 years. I have always received my interest payments on time," reads an Oct. 14, 2008 comment.
"Only twice in a 9 year history of the company has an interest payment been extended ... Nicholas Cosmo does have a past and he has paid for it," writes another ten days later.
Former Nasdaq stock market chairman Madoff was arrested Dec. 11 and charged with securities fraud after authorities said he confessed to running "a giant Ponzi scheme" over many years.
Since then, authorities have announced charges in investigations of at least three other alleged Ponzi schemes -- in California, Georgia and Florida -- with amounts ranging from $25 million to hundreds of millions of dollars.
Arthur Nadel, head of Florida-based Scoop Management, was reported missing by his family in early January. He left behind a suicide note. It expressed guilt for losing his clients' money and said someone might try to kill him.
The U.S. Securities and Exchange Commission charged the money manager with fraud last Wednesday in a complaint, saying the six hedge funds Nadel oversaw, which he valued at more than $300 million, actually contain less than $1 million. It obtained an emergency court order freezing Nadel's assets and appointed a receiver.
Bridge financing would be an ideal vehicle for Ponzi Schemes. If all goes well there would be plenty of churn, enough to disguise the Ponzi nature of the scheme. And well-run, most of it could even be “legit”.
Exactly.
Norman Hsu had a “legit” one just like that - combined with money laundering to politicos from “sugar daddy” somewhere overseas. If it were not for his past and criminal record compounded by minor mistakes he could have wound down the “pipeline” scheme at any time after it was no longer needed.
That’s why he didn’t have an “exit strategy” - none was necessary, it was not supposed to go on indefinitely, just long enough to transfer enough for favored campaigns.
True, and it did make me feel so small for even contemplating to post this. So, in trying to bulk up the overall amount, I found the article that mentions several recent schemes, in addition to this minor one (by comparison to Madoff).
Madoffs with $50B compounded over several decades don't come up quite that often. Neither were Enron and WorldCom. Wonder if we'll see the Wall Street 2 or Madoff: The Smartest Guys in the Room, with a cast of explicitly greedy and corrupt Democrats... Naah!
You sir, in a nutshell, have described exactly what built the false derivatives economy on a global basis.
Actually more than two orders of magnitude smaller than Madoff. log10(50e9/400e6)~2.1.
It’s interesting because it shows that Madoff was far from the only one. There are lots of these scamsters out there, the public should be made aware of it. Madoff was just their king.
Think of all the implications of the term---this conman must be a student of Alfred North Whitehead.
"Bridge loan"-----that is one heckofa dead metaphor.
He took it several steps farther----pictures on Agape's website would have investors believe that they funded the San Francisco Bay Bridge, the Taipei 101 Tower, and the Tower of Babylon, and the Baghdad Railroad...........
Some people will believe anything.
NADEL'S SECOND STRIKE; FAKE CPA DISCOVERED
By KAJA WHITEHOUSE, NY POST, 1/12/09
The accountant for missing Sarasota, Fla., hedge manager Arthur Nadel was slapped with a cease-and-desist order in 1999 for unlawfully practicing as a certified public accountant...... Michael Zucker, 71, was officially touted as the accountant and CPA of Nadel's hedge-fund firm, Scoop Management, according to documents obtained by The Post.
But Zucker, who's wife Caroline chairs the Sarasota County School Board, hasn't been licensed to work as a Florida CPA since 1989, according to state documents. Ten years after his Florida license expired, Zucker was slapped with a cease-and-desist order for practicing with a null-and-void license, an official with the Florida Board of Accountancy confirmed.
While it's legal to operate as an unlicensed accountant in Florida, promoting oneself as a CPA without an official license is against the law, the official said. Also, Florida requires CPAs to be licensed in the state in order to call themselves CPAs, the official said. Authorities are entering their eighth day in the search for Nadel, who is suspected of swindling Scoop Management investors out of as much as $350 million. Nadel has been on the lam since he left for work early last Wednesday, attracting the attention of the FBI and the SEC.
SNIP---Nadel's partner Neil Moody confirmed that Zucker was the firm's official accountant and CPA. Moody said he thought Zucker was a CPA registered in New York, but public records show Zucker also let his New York CPA license expire, although it's not clear when. Scoop Management fund documents list Zucker's lakeside Sarasota home as his business address, but some neighbors said they had no idea Zucker was running a business out of his home or that he was an accountant. One neighbor said she thought Zucker was retired.
SOURCE http://www.nypost.com/seven/01212009/business/nadels_second_strike_151069.htm
> Some people will believe anything.
And some people are too gullible to be trusted with money. Not even their weekly allowance.
The new spiel is "I have a bridge loan for you... You get the bridge with no money down".
“Bridge Loan” in the popular lexicon also means a short-term loan that a person or company takes out until they can secure permanent financing or can remove an impediment to permanent financing.
I know. In some circles it’s colloquially called loan sharking. Apparently, my feeble attempt of making a pun on the “bridge” word association in this case was less obvious and funny than I thought it might be... Oh well, back to school.
Actually, I thought that the key word for that would be "insurance", of viaticals variety, with the total value of insurance settlements comprising multiples of underlying value (which no sane insurance company would ever underwrite).
Makes me wonder to ever trust anyone in “investment banking”, I mean colluded theft.
Bingo!!! CutePuppy sounds more like a wise old dog.
Sounds like quite a few got ‘O-Zuckerfried’!!
LOL.
For a second there, I thought you were serious.
Thanks for the /s
;-)
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