By Stefanie Baum
When Nicholas Cosmo, CEO of Agape World, was arrested on charges of mail fraud brought forth by federal prosecutors on Monday, Jan. 26, his alleged $370 million pyramid scheme became just another case in a long line of corporate crime committed on Long Island.
Cosmo, a convicted felon, and several unnamed convicted-felon brokers working for him, fraudulently told investors that the money they were entrusting to Agape was a secure investment that would be loaned to small businesses, according to the U.S. Assistant Attorney General for the Eastern District of New York. The investors were promised interest returns at rates as high as 80 percent. But a joint investigation between the Federal Bureau of Investigation and U.S. Postal inspectors revealed that most of the new money invested was used to repay past investors—fraudulent activity known as a Ponzi scheme.
According to reports, between October 2003 and October 2008, Cosmo and company lost approximately $80 million of investors’ money. But in the wake of Bernard Madoff (who has a summer home in Montauk) admitting ripping off $50 billion invested with his firm, Cosmo isn’t the most shocking white-collar criminal to devastate so many local investors in one fell swoop. And they’re both in good company.
In April of 2006, Sanjay Kumar, former CEO of Islandia-based Computer Associates pleaded guilty to orchestrating illegal corporate maneuvers in order to artificially inflate stock prices. Kumar allocated in federal court: “I stand before Your Honor today to take full responsibility for my actions, I know that I was wrong and there’s no excuse for my conduct.” Kumar was sentenced to 12 years in prison and was ordered to pay an $8 million fine. That was a big year for multi-million dollar scams. Also in 2006, former Roslyn School District Superintendent Frank A. Tassone, was sentenced to 4 to 12 years in prison for his involvement in the embezzling of $11 million from the district during his tenure from 1992 through 2002. He was one of a half-dozen thieves disguised as public servants and educators who blew taxpayer money on personal purchases. The ensuing school district audits and new accountability standards put in place since the case was uncovered have changed the public education landscape forever.
Then there were the corrupt brokers who were so brazen that Hollywood had to get in on the action. The Lake Success-based brokerage firm, Stratton Oakmont, participated in a seven-year “pump-and-dump” scheme that exploited the stocks of at least 34 companies that cost investors hundreds of millions of dollars in the late 1990s. Boiler Room, a movie released in 2000, was based on this case. Two ringleaders pleaded guilty to charges of money laundering and numerous counts of securities fraud.
Before these cases, there was John Spano, who faked his way into becoming the New York Islander’s owner until he was revealed to be far less rich than he claimed and landed himself in prison for four years. And then there’s the $90-million Newsday circulation scandal that defrauded LI advertisers for at least a decade in an elaborate scheme, landing several corporate lackeys a trip up the river.
Cosmo faces up to 20 years in prison and $250,000 in fines.