Brokers who worked with Nicholas Cosmo on a $415 million Ponzi scheme misrepresented the safety of investments to thousands of investors, the Securities and Exchange Commission said in a lawsuit.
The SEC sued 14 brokers, account representatives and vice presidents for Cosmo’s Agape World Inc. today in federal court in Brooklyn, New York. Cosmo, who was arrested in January 2009, pleaded guilty to running a Ponzi scheme and was sentenced to 25 years in prison last October.
According to the SEC, Agape solicited investor funds to make short-term bridge loans, taking in about $415 million while only actually lending about $30 million. Actual losses to victims totaled about $195 million, the U.S. said.
Brokers “knowingly or recklessly, and repeatedly, made misrepresentations to investors concerning the Agape securities,” according to the SEC complaint. They also urged investors to roll over their principal and interest from one security to the next to perpetuate the scheme, the SEC said.
The SEC is seeking civil penalties plus disgorgement of ill-gotten gains received as a result of the alleged violations of federal securities laws.
Four of the defendants were arrested April 25 on a criminal complaint, according to the complaint. Cosmo, who was sentenced by U.S. District Judge Denis Hurley in Central Islip, New York, ran the scheme from October 2003 to January 2009.
Agape had offices in Hauppauge, New York, on Long Island, and in the borough of Queens in New York City.
The case is SEC v. Arias, 12-2937, U.S. District Court, Eastern District of New York (Brooklyn).
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