Long Island bad boy Nicholas Cosmo isn’t just out of a job. After ripping off investors for tens of millions of dollars, he is also out of luck.
Cosmo, who is infamous for bringing white-collar crime to blue-collar investors, has now been permanently barred from the commodities business and fined $240 million by the Commodity Futures Trading Commission.
The Oct. 25 action came two weeks after a federal judge sentenced him to 300 months in prison and ordered payment of $179 million in restitution.
Regulators said the 40-year-old Cosmo had the Midas touch with working-class people in the New York City region. Promising returns as high as 80 percent, he solicited small investors who believed their money was going into secured, profitable bridge loans to small businesses.
Many investors lost their life savings, with Cosmo using the money for unauthorized commodities trades, Ponzi payments to early investors, commissions, and brokerages fees worth millions. Along the way, federal prosecutors said, he also blew hundreds of thousands of dollars on limousines, jewelry, and lavish hotel stays.
According to Reuters, Cosmo got his start as a legitimate stock broker. But that ended in the late 1990s when he was charged with misleading investors, commingling their money, and forging documents. He then lost his license and served 21 months in prison.
Upon release, the lack of broker’s credentials did little to slow him down. Cosmo got back on his feet, set up headquarters on Long Island, and opened Agape World Inc. and Agape Merchant Advance, the vehicles for the bridge loan scam.
By using teams of commissioned sales people, Cosmo lured investors who poured an estimated $400 million or more into his companies. Eventually, he would become known as the “mini-Madoff.” But unlike Ponzi master Bernard Madoff, who stole from wealthy people, corporations, and charities, Cosmo took advantage of plumbers, carpenters, waiters, military members, and other working people.
Things began crumbling when investor complaints mounted and federal agents raided the Agape offices. In January 2009, Cosmo was arrested in Hicksville, N.Y. He pleaded guilty to mail and wire fraud in October 2010, and faced a possible 40 years in prison. Some think he got off light with a 25-year sentence.
Said Loretta Lynch, U.S. Attorney for the Eastern District of New York: “The defendant’s actions crushed the hopes and dreams of everyday citizens.”
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James Welsh is a veteran newspaperman and financial writer covering compliance and securities fraud issues. He also writes the daily “Streetsweeper/Top 10” column at www.thestreetsweeper.com.