New York Ponzi scheme operator Cosmo had mob ties


Nicholas Cosmo, a convicted felon who somehow turned himself into an investment adviser who bilked people out of $370 million, allegedly has ties to organized crime, according to CNBC's Charlie Gasparino.

Former Genovese family associate Michael Durso and another unidentified man met Cosmo during the 1990s and "put pressure on Cosmo to pay around $139,000 owed to loan sharks connected with the Genovese family," Gasparino reported.

Like the victims of the Madoff swindle, investors who had money with Cosmo's Agape World in Long Island are probably out of luck. Agape is in Hicksville, NY, far from the tony world of Manhattan and Palm Beach that Madoff called home for decades. He nonetheless was a bold liar.


"Cosmo handed a Bloomberg reporter a reprint of a page from Entrepreneur Magazine's May 2008 issue, which listed Agape World as number 73 in its HOT 100 fastest-growing businesses," Bloomberg News said. "Cosmo told the magazine he began the business with one employee in August 1999. Actually, he was imprisoned at Allenwood that summer."

I have said it before and I will say it again: Ponzi scheme reports are going to become increasingly common. Many people are in desperate financial straights. They are behind in their mortgages, credit card bills and car payments. Others break out in a cold sweat whenever they see their 401(k) statement.

This is an ideal climate for people to prey on the less fortunate or the financially illiterate. People are so stressed that they will believe that stock markets never decline or that one call to a debt counseling company can make all of their troubles go away. I wish life were that simple.

The sad fact is that times are tough and they are going to stay tough. That means it's vital for people to use their financial common sense and not to buy things they cannot afford. Of course, the alternative of magical thinking continues to appeal to people, which is too bad.

As my fellow blogger and corporate fraud expert Tracy L. Coenen noted: "It's probably easier to swindle people now."

More Ponzi schemes may be uncovered on a smaller scale because "it's a lot easier to get someone to part with $500 or $1,000 dollars," she said.

Indeed, fugitive money manager Arthur Nadel, whose $350 million fund is supposedly wiped out, was found today in Florida after fleeing authorities.

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