Former Agape Employees Charged in Massive Ponzi Scheme in Superseding Indictment
Superseding Indictment Adds Securities Fraud Charge and Two New Defendants
|U.S. Attorney’s Office December 17, 2013|
Earlier today, a 21-count superseding indictment was unsealed charging Bryan Arias, Anthony Ciccone, Diane Kaylor, Jason Keryc, and Shamika Luciano, former employees of Hauppauge-based Agape World Inc. (Agape) and Agape Merchant Advance (AMA), for their participation in a large-scale Ponzi scheme. The superseding indictment adds two new defendants, Arias and Luciano; a securities fraud charge; a mail fraud count; and two additional wire fraud counts. The defendants are scheduled to be arraigned on the superseding indictment this afternoon before United States Magistrate Judge A. Kathleen Tomlinson at the United States Courthouse in Central Islip, New York.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Philip R. Bartlett, Inspector in Charge, United States Postal Inspection Service, New York (USPIS).
“Today’s superseding indictment is but the latest step in this office’s dismantling of the fraudulent business empire of Nicholas Cosmo,” stated United States Attorney Lynch. “The defendants charged were an integral part of Cosmo’s Ponzi scheme that defrauded thousands of people of hundreds of millions of dollars. The defendants actively promoted the Ponzi scheme, promising safe investments in low risk business ventures. Even when the business ventures began to fail, the defendants continued to peddle lies and deceit to the investors in order to keep money flowing into the scheme.” Ms. Lynch added that the government’s investigation is continuing.
“As alleged in the indictment, the defendants’ foundation for success was built on deception and sham investments using the victims’ money. Over time, as with all Ponzi schemes, the defendants’ lies began to unravel, leaving the collective investors millions of dollars out of pocket. Unfortunately, the public should be reminded that sometimes investment opportunities that are too good to be true are merely schemes designed to steal your money. The FBI, along with our law enforcement partners, will continue to aggressively investigate those who prey upon the public with illegal get-rich-quick plans,” stated FBI Assistant Director in Charge Venizelos.
“Today’s arrests should serve notice to criminals that postal inspectors will leave no stone unturned to bring to justice all parties involved in any crime that utilizes the U.S. mail to steal the hard earned money of consumers,” said Inspector in Charge Bartlett.
Nicholas Cosmo founded Agape and AMA in August 2000. According to the superseding indictment and court filings, between October 2003 and January 2009, Arias, Ciccone, Kaylor, Keryc, and Luciano, who worked as account representatives or brokers for Cosmo, played critical roles in the operation of a Ponzi scheme by soliciting and obtaining hundreds of millions of dollars from investors. To induce investments and discourage withdrawals, the defendants misled the investors by, among other things, (1) assuring investors that their investments would only be used to fund specific, short-term secured bridge loans to commercial borrowers or to make short-term loans to small businesses, (2) promising to pay investors unusually high rates of returns, and (3) representing that investing in Agape and AMA carried little or no risk of loss. The defendants allegedly raised significantly more money than was needed for the loans and lied to the investors when they assured them that their money would specifically be used to fund only a particular loan. For their efforts, Arias, Ciccone, Kaylor, Keryc, and Luciano received approximately $1.7 million, $10.7 million, $4.75 million, $16 million, and $275,000, respectively.
As alleged in the superseding indictment, Cosmo and the defendants actually ran a Ponzi scheme, paying returns to Agape and AMA investors not from any profits earned on investments but rather from existing investors’ deposits or money paid by new investors. In addition, unbeknownst to the investors, approximately $100 million of their money was used to trade high risk futures and commodities. Despite the fact that the defendants knew that Agape and AMA did not produce or earn rates of return that could support the exorbitant returns promised to investors, they allegedly continued to solicit money from investors.
As the fraudulent scheme began to unravel, the defendants allegedly lied to investors about the status of various Agape bridge loans. For example, on November 3, 2008, the defendants learned that all Agape’s 2007 bridge loans were in default or on extension but allegedly failed to disclose that information to existing or new investors. Instead, the defendants actively continued to solicit money from investors, obtaining an additional $25.6 million.
During the course of the Ponzi scheme, approximately 5,000 individuals invested a total of more than $400 million in Agape and AMA. Although some investors succeeded over the years in making full or partial withdrawals, particularly before the Ponzi scheme began to unravel, approximately 4,100 investors sustained actual losses totaling approximately $179 million.
On October 14, 2011, Cosmo was sentenced to a term of imprisonment of 25 years in United States v. Nicholas Cosmo, 09 CR 255 (DRH), for his role in the scheme.
If convicted, the defendants face a maximum sentence of 20 years’ imprisonment on each count.
The government’s case is being prosecuted by Assistant United States Attorneys Christopher C. Caffarone, Grace M. Cucchissi, and Vincent Lipari.
The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Maspeth, New York
Locust Valley, New York
Bethpage, New York
Wantagh, New York
Coram, New York
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