Another mini-ponzi scheme in the US

28 January 2009

New York's Nicolas Cosmo, president of loan business company, Agape World Inc. in Hauppauge, Long Island, has surrendered to the police after being accused of running a $380-million mini-Madoff ponzi scheme

The FBI said Nicholas Cosmo surrendered on Monday night and has been charged with one count of mail fraud in connection with running a ponzi scheme in the US District Court in New York's Long Island.

Nearly 1,500 investors had put their money with his company on the assurance that the money would be lent to commercial borrowers on short-term at high interest bridge loans and the investors would get their investment back with returns as high as 80 per cent a year.

Suddenly when the payouts from their investments stopped, angry investors stormed the office last Friday refusing to leave. Police had to be called in and an investigation to the fraud started.

Cosmo said that three borrowers had defaulted on loans, forcing his company to halt payments and he has hired a law firm to foreclose the projects and recover the investments, but the whole process would stretch for a year and until that time the company could not make any payments.

A letter written by Nicholas Cosmo said that "Due to the financial banking crisis we have been hit with numerous defaults and extensions, which have led to decreased liquidity of our loans."