Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Tuesday, June 12, 2012

SEC Charges Fourteen in Long Island-Based Ponzi Scheme

Long Island has long had the unfortunate reputation as a center for boiler rooms and other fraudulent scheme.  Today the SEC reinforced that image when it charged 14 sales agents  with misleading investors and illegally selling securities for a Long Island-based investment firm at the center of a $415 million Ponzi scheme.

According to the SEC: the sales agents falsely promised investor returns as high as 12 to 14 percent in several weeks when they sold investments offered by Agape World Inc and that only 1 percent of their principal was at risk. In fact, the Agape securities were actually non-existent; it was a classic Ponzi scheme. The sales agents received more than $52 million in commissions and payments out of investor funds. None of these sales agents were registered with the SEC to sell securities, nor were they associated with a registered broker or dealer. Agape also was not registered with the SEC.

According to the SEC’s complaint filed in the U.S. District Court for the Eastern District of New York, more than 5,000 investors nationwide were impacted by the scheme that lasted from 2005 to January 2009, when Agape’s president and organizer of the scheme Nicholas J. Cosmo was arrested. He was later sentenced to 300 months in prison and ordered to pay more than $179 million in restitution.

http://lawprofessors.typepad.com/securities/2012/06/sec-charges-fourteen-in-long-island-based-ponzi-scheme.html

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