Four Charged in Alleged $400 Million Long Island Ponzi Scheme

The Wall Street Journal on April 25, 2012 released the following:

“By Chad Bray

Four account representatives for a defunct Long Island investment firm have been charged with helping carry out a $400 million Ponzi scheme, federal prosecutors in Brooklyn said Wednesday.

The account representatives — Jason Keryc, Anthony Massaro, Anthony Ciccone and Diane Kaylor — worked for Hauppauge, N.Y.-based Agape World Inc. and Agape Merchant Advance LLC.

Nicholas Cosmo, Agape’s former owner and president, was sentenced to 25 years in prison in October after pleading guilty to mail fraud and wire fraud in 2010.

Prosecutors alleged the account representatives played a key role in the scheme by soliciting and obtaining hundreds of millions of dollars from investors.

“These defendants allegedly convinced thousands of men and women to part with their hard-earned money for what was supposed to be a safe investment,” said Loretta Lynch, the U.S. Attorney in Brooklyn. “In reality, the investors were duped into investing in a classic Ponzi scheme.”

They falsely represented to investors that the investments would only be used to make short-term, secured bridge loans to commercial borrowers or short-term loans to small businesses, and that investing in Agape or its sister company, AMA, carried little or no risk, prosecutors said.

Agape and AMA actually was a Ponzi scheme where new investor money was used to pay returns to existing investors, prosecutors said. Also, about $100 million of investor money was used without their knowledge to trade in high-risk futures and securities, prosecutors said. Investors lost about $179 million in the scheme, prosecutors said.

When some investors became concerned about their investments, the account representatives allegedly offered them a fictitious insurance policy, promising the insurance plan would own a portion of liens that purportedly secured repayment of the bridge loans, prosecutors said. The scheme allegedly raised about $865,000 in additional funds from the bogus insurance pitch, prosecutors said.

The four account representatives allegedly received about $38 million combined in commissions, prosecutors said. They have been charged with conspiracy to commit mail fraud and face up to 20 years in prison.

“[Massaro] will plead not guilty because he is not guilty,” said Joseph Tacopina, a lawyer for Massaro. “He was fully cooperative with the government in its case against Nicholas Cosmo years ago, so suffice it to say that these charges come as quite a shock.”

Lawyers for Ciccone, Keryc and Kaylor didn’t immediately return phone calls seeking comment Wednesday.”

US v Keryc, et al- Federal Criminal Complaint and Supporting Affidavit

18 U.S.C. § 1349

Federal Mail Fraud

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