Thursday, February 19, 2009

Local Victims Left in Wake of Ponzi Scam

Agape World, Inc. Had Office on Grand Avenue

By Conor Greene

Almost one month after the arrest of alleged Long Island con artist Nicholas Cosmo on federal mail fraud charges, local residents who invested in Agape World, Inc. are left wondering where their money went and if they will ever recover any of it.

While Cosmo’s business – which federal authorities say was nothing more than a Ponzi scheme that cheated 1,500 people out of about $370 million – was based on Long Island, it also had an office on Grand Avenue in Maspeth. That’s where many Queens residents went to invest their money in hopes of cashing on large returns.

Cosmo was arrested on January 26 following a FBI investigation, which culminated in raids of Agape’s Hauppauge, Jackson Heights and Maspeth offices. The company had promised investors the chance to cash in returns from bridge loans Agape provided to other individuals and companies. Instead, authorities say that just $10 million of $370 million provided by investors was ever loaned out. The rest is believed to have been squandered by Cosmo, who is being held in federal custody.

As the case slowly moves forward, hundreds of local investors have begun banding together in an effort to recover any of the lost money. “We have two objectives – to get information so that we feel connected to the process, and secondly to give each other hope,” said Dom DiColandrea of West Babylon, who has helped mobilize a group of victims and posts updates on a victim’s blog,

“We’re hoping that while Agape may have nothing left, we’re hoping that some of the other parties responsible are going to be held accountable by the law,” continued DiColandrea. “If not under yesterday’s law, we’re hoping that today, lawmakers will look at this as a chance to set precedent for future victims.”

One victim, Ana Nunes, said she lost about $1 million total that she invested with her boyfriend and a friend. Like other victims who spoke with The Forum, she initially was introduced to Agape by somebody she trusted, in this case a colleague. “He said everything was working fine, there was a contract, his broker was a family member, so he was sure it was something good,” said Nunes.

She began by investing a small amount in May 2007 to test the waters before providing additional money several months later. Her confidence in the investment was bolstered in May 2008, when Entrepreneur Magazine ranked Agape World as one of its top 100 fastest-growing businesses. “I was very careful, and then I saw [the article]. Then I started investing a lot of money, and brought on my boyfriend and friend,” she said.

Like many investors, Nunes, 32, became concerned when news broke in September of the $50 billion Ponzi scheme allegedly carried out by Bernard Madoff. “I said I better take some money out and called, but there was never an answer. I called the FBI and said there is something wrong, and one week later he was arrested,” she said. “I thought I was going to have a heart attack. We couldn’t sleep and I never felt so much anger in my life.”

According to Nunes, who works in finance, the totalinvestment had grown to about $1 million by the time the scheme came crashing down. We lost everything… I don’t think he cared.”

Paul McGirr of Flushing said he invested more than $70,000 through Agape’s Maspeth office, starting in March 2007. “I had guys at work that said they were getting 14 percent returns on their money,” he recalled. “I said nobody pays that.”

A week later, a broker discussed the plan with him and said the only risk was losing one percent on the principal investment. After researching the company and calling a few of its investors, McGirr invested $70,000. Soon, his account was up to $79,835, and like most, McGirr listened to his broker’s advice to roll the money over.

In December, when he began noticing that some of the company’s loans were defaulting, he visited the Maspeth office and asked for some of his money. He was told that a check would be issued later that month. When that date came and went, he was told the check would be issued on January 20. “I waited until the 21st and started calling, but I couldn’t get through,” said McGirr. “That night one the news I heard, Long Island businessman arrested…”

Like many victims, McGirr had a “gut feeling that it was going south” over the past couple of months. “I wasn’t sure to what degree and still had some glimmer of hope the check would come on January 20. When January 21 came and the check wasn’t in the mail and I couldn’t get through on the phone, I knew we got scammed.”

A third victim, who lives in Laurelton and asked that her name not be used, invested $10,000 – the minimum amount – with her husband. She was referred to one of Agape’s brokers through her accountant, which led her to believe it was legit. “He showed us checks with these returns, and it looked good, a check for seven thousand, five thousand. Who wouldn’t want that if your account was showing you it?” she recalled.

Starting in July 2007, the couple watched as their investment grew to nearly $20,000as they kept rolling the dividends over. The return fell from 12% to 10% in August 2008, as people began trying to get their money back.

“We did get concerned and went out and talked to [broker] Anthony Massaro, but he assured us everything was okay,” she said. “When the Madoff thing hit the fan, my husband thought we might be in a Ponzi scheme.”

About three weeks after their final office visit, she heard on the radio that Cosmo had been arrested. “I could kill him,” the victim said. “I’m sorry about the people who invested so much more. I was trying to get my husband to pull out money elsewhere to put in there. We would have been wiped out clean, our daughter’s college fund, everything.”

In the same way each victim was brought into the scam in a similar manner, many have similar advice for others. “If it looks too good to be true, it’s rotten,” said the Laurelton victim. “Because it was my accountant who told me, I figured it had to be good. Whether it’s the accountant of the Pope, run away – don’t walk.”

Said McGirr: “If you’re making more than eight or nine percent, there is no such thing. Thoroughly check it out, and only go with a big house broker. This individual crap, forget about it, you got no backing, no leg to stand on when it goes south.”

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