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New York (HedgeCo.Net) – Nicholas Cosmo, head of New York-based Agape World Inc., has been arrested for allegedly running a $400 million Ponzi scheme.  His company, which marketed commercial bridge loans, 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,” said one law enforcement official, referring to the classic Ponzi scheme, where new money coming in is used to pay off earlier investors. 

Agape World Inc. had bragged to clients that they posted consistent returns of around 14 percent.  Had investors performed a due diligence on Cosmo, they would’ve found that he was convicted in 1999 of fraud and sentenced to 21 months in prison. 

Agape World Inc. was essentially aiming to be an asset based lender.  They supposedly provided project loans on construction, acquisition loans and provided financing for unfinished properties. 

The trouble in the markets lately has highlighted the immense presence of Ponzi schemes all around the country.  Even after the $50 billion Madoff debacle, a handful of Ponzi schemes and fraudsters have floated to the surface.  Arthur Nadel of Sarasota, Florida, disappeared along with his client’s $350 million in cash.  Shortly after, Michael Riolo of Boca Raton was targeted, accused of bilking $50 billion out of investors.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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Globe and Mail – GMP Securities enjoyed a solid debut with its new and much-scrutinized hedge fund.

GMP Diversified Alpha Fund, a multi-strategy fund launched last year by the investment dealer, published its first set of performance numbers Thursday as part of the parent income trust’s financial results.

The fund, which is run in part by GMP’s star stock trader and vice chairman Michael Wekerle, posted a 6.2 per cent return over its first three months of operation, a quarterthat ended June 30. The fund has $196-million of assets.

Over the same period, the benchmark Scotia Capital Canadian hedge fund index returned 5.93 per cent over the same period on an equal weighted basis, and 9.93 per cent on an asset weighted basis that puts more emphasis on performance at the larger domestic hedge funds.

GMP’s venture into the hedge fund world has drawn attention on the Street because of Mr. Wekerle’s dual role as both a part of the hedge fund team and head of the dealer’s equity desk.

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