Go directly to jail, judge tells $413M Ponzi schemer who violated bail terms

Oct 12, 2009 @ 9:23 am

By Associated Press

A federal judge revoked a $1.25 million bail package Friday for a New York businessman accused of orchestrating a $413 million Ponzi scheme, saying in a blistering rebuke from the bench that Nicholas Cosmo "will bend the rules if he feels it will serve his interests."

U.S. District Judge Denis Hurley ordered Cosmo jailed immediately. Hurley ruled after a two-day hearing that ended Thursday that Cosmo had violated strict bail conditions barring him from access to any computer or the Internet. The Friday proceeding was to determine whether additional bail conditions could be imposed on Cosmo before trial. The judge said he found no circumstances that would allow that.

"He is unlikely to abide by any condition or conditions of his release," Hurley said

Testimony during the hearing revealed that Cosmo, 37, violated terms of his release by using a computer at his parents' Wantagh home, where he had been staying under house arrest. He had claimed he used the computer merely to play chess games.

Witnesses also testified that Cosmo gave his girlfriend his password to company accounts and she downloaded and printed out business e-mails on his behalf.

Hurley also said he was troubled by testimony that, though it was not a technical violation of his bail, Cosmo had made more than a dozen phone calls to his girlfriend and his sister, exhorting them to sell an expensive watch in violation of court orders not to transfer any of his assets.

The watch, which Cosmo believed was valued at $12,500, was sold last spring for less than $3,000 to help pay lawyers' fees, according to testimony from the hearing.

Cosmo, the former head of the Long Island-based Agape (uh-GAH'-pay) World and Agape Merchant Advance in New York City, was arrested in January on charges he fleeced some 6,000 people out of more than $400 million.

Investors believed they would make returns as high as 80 percent a year from interest collected on short-term loans to businesses. But an investigation revealed that "much of the money paid back to investors ... was actually money provided by subsequent investors" — a Ponzi scheme.

Cosmo also spent 21 months in federal prison for a 1999 mail fraud conviction.

His attorney, Stacey Richman, said his client was disappointed by the judge's decision, but they would concentrate on preparing his defense for trial. "I am going to have to educate the court that this is actually a good man. There was no malicious intent," she said.

She had sought to allow her client to remain free until Monday, but Hurley ordered him sent immediately to jail.

Mike Casey, a New York City firefighter from Long Beach who said he lost nearly $50,000 investing with Cosmo, said he was pleased by the judge's decision to revoke bail. "Thank God," Casey said outside the courtroom. "It's annoying that he wanted the weekend off, though."


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