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Last week, Gambling911.com was alerted that someone we knew had been burnt for close to $40,000 in an apparent ponzi scheme originating from Long Island, New York. We learned the individual's name was one Nicholas "Nick" Cosmo. Before we could even start to research the tangled web involving Cosmo and his Agape World Investment firm, news began breaking of the wide ranging impact the alleged ponzi scheme had to the tune of $370 million.
Prosecutors charged Nicholas Cosmo, 37, on Tuesday with mail fraud in U.S. District Court in Central Islip on New York's Long Island. If convicted, Cosmo, 37, faces up to 20 years in prison.
"This defendant, who operated a classic Ponzi scheme to enrich himself and his colleagues at the expense of investors, is now in custody and the government's investigation is continuing," U.S. Attorney Benton Campbell in the Eastern District of New York said.
A ponzi scheme is one in which early investors are paid with the money of new clients.
By Tuesday afternoon, CNBC had broken the story that Cosmo owed money to the Mob.
From CNBC.com:
A former Genovese family associate, Michael Durso, who is now in the federal witness protection program, and another associate met Cosmo in in the late 1990s, sometime around 1997, according to these people. It was at that time that they put pressure on Cosmo to pay around $139,000 owed to loan sharks connected with the Genovese family, they said.
At one point, members of the Gambino family intervened on Cosmo's behalf and paid some of the debt, these people said. Durso, these people say, has been in contact with the FBI about his alleged involvement with Cosmos.
An attorney for Cosmo when informed about the alleged connections with New York crime families had no comment.
Agape World CEO Nicholas Cosmo told some investors on Friday that all payouts are suspended because real-estate deals the firm backed are facing foreclosure.
The news comes just weeks after the largest ponzi scheme in history came to light involving former chairman of the NASDAQ stock exchange, Bernard Madoff. Madoff is accused of bilking investors out of over $50 billion. Unlike Madoff's mostly high end clients, Cosmo appears to have preyed on working class people. The folks we know worked in a restaurant and invested their life savings with Cosmo.
Just this year Entrepreneur Magazine ranked Agape World Inc. as the #73 fastest growing company in the U.S..
If convicted, Cosmo could face up to 20 years in prison.
Christopher Costigan, Gambling911.com Publisher
