The tri-state area seems to have more than their share of financial investor frauds.
Long Island, New York. Nicholas Cosmo, convicted in 1999 and served 21 months in federal prison for mail fraud, is accused of stealing $370 million in a Ponzi scheme.
Who did their due diligence in deciding to invest their funds with Cosmo, a convicted criminal with a past involving financial crimes?
Yet he is not in prison because he was deemed not to be a danger to the community or a flight risk.
Obviously the judicial system is not working to prevent financial crimes, as their frequency and size continue to grow at alarming rates. Until the system treats these crimes serious enough to create a real consequence, individuals will continue to commit financial crimes.
Unfortunately most of the perpetrators will never see the inside of a jail cell.
We don’t have to look far – we simply look over to New York City, where Bernie Madoff, who arguably should be behind bars, is free spending his time in his lavish New York residence.
Here’s the latest article:
Businessman implicated in $370 million scam to remain behind bars
By Frank Eltman
Published: Friday, January 30, 2009 7:09 PM EST
CENTRAL ISLIP, N.Y. – A Long Island businessman accused of running a $370 million Ponzi scheme – and blowing tens of millions of dollars on bad trades and conspicuous spending – must stay behind bars unless his defense team can dramatically increase its offer of $750,000 bond, a judge ruled Thursday.
Investors, including two Iraq veterans who lost big chunks of their military pay, were among those who packed the Long Island courtroom for Nicholas Cosmo’s bail hearing.
Although Cosmo spent 21 months in federal prison for a 1999 mail-fraud conviction, he is neither a flight risk nor a danger to the community, U.S. Magistrate Judge E. Thomas Boyle said.
However, the judge said ǃ?bail must be substantial,ǃ? directing Cosmo’s lawyer to come up with a revised offer. Another hearing on the matter will then be scheduled.
Defense lawyer Steven Feldman said in a statement that the defense “will work with the government, as the court ordered, in an attempt to identify and agree on those terms and conditions.”
Cosmo surrendered to the FBI and U.S. Postal Inspection Service agents on Monday. He did not enter a plea at an initial court appearance on Tuesday, nor did the judge require him to speak at Thursday’s hearing.
Federal prosecutors say Cosmo, who runs Agape World Inc. and Agape Merchant Advance out of offices in Hauppauge and Queens, has taken in more than $370 million from at least 1,500 investors since 2006.
Some investors made up to 80 percent a year in profits by providing the money for short-term loans to businesses paying premium interest rates. Many others are now left wondering where their money went.
ǃ?I was planning on buying a house this year,ǃ? said Frank Ingrao of Williston Park, currently a sergeant in the Marine Corps Reserves. ǃ?Now, no more. I just want to see his face.ǃ?
Ingrao said he invested $63,000 about two years ago after returning from duty in Iraq.
At the time, said Ingrao, it seemed that Cosmo “did everything right. At times I had my doubts, but he was pretty smart.”
Devon Thomas, a fellow reservist who served with Ingrao in Iraq and also did a stint in Afghanistan, said he invested $10,000.
“I think he should do 25 to life,” Thomas said. “I just want my money back.”
As of late last week, the firms had only $746,000 in the bank, prosecutors said.
Investigators say less than $10 million in actual “bridge loans” were made to businesses. Another $55 million went to brokers who recruited new investors, and prosecutors say Cosmo lost $80 million in commodities futures trading.
He also spent investor money on jewelry, hotel rooms, limousines, payments to his wife, and a private baseball league, prosecutors said.
Perhaps the most egregious spending, prosecutors said, was the $212,000 in Agape funds Cosmo used to pay restitution from the 1999 federal mail-fraud conviction.
Nevertheless, the judge said the Commodities Futures Trading Commission has frozen Cosmo’s assets and said Cosmo had no record of missing court dates in his prior prosecution, nor was there any indication he failed to abide by conditions of his parole. Boyle added that prosecutors have no evidence that any money was transferred out of the country.
“The government has failed to show that this defendant is a danger to the community,” Boyle said.