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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Tags: 21 months, accredited-investors, boca raton, bridge loans, commercial bridge, consistent returns, cosmo, due diligence, fraudsters, hedgeco, immense presence, new-money, ponzi scheme, ponzi schemes, project loans, riolo, sarasota florida, securities-and-exchange-commission

Bloomberg – Elliott Management Corp., the $12.8 billion hedge-fund firm founded by Paul Singer 32 years ago, told clients that it bought securities from Marc Dreier, the New York lawyer jailed for alleged fraud.

Elliott lost money on promissory notes purchased in October from Dreier, who had previously done work for the company, it said in an undated quarterly letter to clients. The firm’s Elliott Associates LP fund declined 9.2 percent in the fourth quarter, its worst quarterly loss.

“There are many reasons why funds lose money, but being defrauded is among the most embarrassing and annoying,” New York-based Elliott said in the letter, a copy of which was obtained by Bloomberg News. “We continue to adapt our processes to keep several steps ahead of fraudsters, and we maintain an attitude of probing skepticism. But sometimes we get hooked, as in the Dreier case.”

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Tags: attitude, bloomberg, dreier, elliott associates, fourth-quarter, fraud, fraudsters, management corp, money, new york lawyer, paul singer, promissory notes, quarterly letter, quarterly loss, several steps, skepticism