Wed, Jan 28, 2009 - Page 5 News List

New York CEO arrested over pyramid scheme: reports

AFP , NEW YORK

Agape World CEO Nicholas Cosmo is escorted into the US Postal Inspectors office by a US Postal police officer, right, and an FBI agent, left, in New York, on Monday.

PHOTO: BLOOMBERG

Authorities have arrested the head of a New York investment firm in connection with a pyramid scheme that may have cost investors some US$380 million, US media said yesterday.

Nicholas Cosmo, chief executive officer of Agape World Inc, turned himself in late on Monday after FBI and US Postal Inspection Service officials raided the financing firm’s Long Island, New York headquarters, a newspaper said.

Sources close to the case told the Long Island Business News that Cosmo would be charged with defrauding investors out of US$380 million.

On its Web site Agape World says it makes private high interest commercial bridge loans to businesses.

FRAUD

The scheme, which allegedly defrauded up to 1,500 investors, was being investigated after officials took away file cabinets and boxes from two Agape World offices in New York, Newsday newspaper reported.

Cosmo was to be arraigned yesterday and authorities were expected to hold a press conference to discuss the case, the paper said.

Cosmo deflected accusations he was running a Ponzi scheme when he spoke to Long Island Business News hours before his arrest.

Investors previously told the newspaper they suspected Cosmo “wasn’t actually investing their money,” but had instead “either spent their money or gambled it away.”

The firm had offered returns for investor of up to 14 percent in as little as 72 days, the Long Island paper said.

Cosmo, 37, founded Agape World after being released from a federal prison in 2000, after he was caught defrauding investors of a Long Island securities dealer. He was subsequently ordered to undertake gambling therapy, the newspaper said.

MADOFF

The alleged scam comes with New York investors still reeling from revelations surrounding the massive purported Ponzi scam by Wall Street giant Bernard Madoff.

The former chairman of the NASDAQ stock market, was arrested on Dec. 11 after allegedly confessing to running a US$50 billion pyramid fraud, possibly the biggest in Wall Street history.

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