Jesus, Not Another One: Nicholas Cosmo Is The Newest Ponzi In Town

The financial crisis has exposed yet more Ponzi-style wonkiness in the form of Nicholas Cosmo, who was arrested yesterday after an alleged $380m mail fraud scheme. Just last week I was noting how every few days brings another worm out of the woodwork, and now Cosmo is making me think I should just change the whole blog to charting fraudsters.

Cosmo was head of Agape World Inc, a bridge-loan company that “works with you and your potential project to help raise assets to meet approval for traditional lending at a later date”. Anything with “later date” in it, especially coming from someone who did jail time for misappropriating funds as a stockbroker, and who has had “extensive gambling therapy”, should start the alarm bells ringing. And bells did ring on this messageboard, where people discuss the flimsiness of Agape, played out over the last few months of delayed loan payments and wheels falling off. After thousands of investors pulled their money out post-crisis, there presumably wasn’t enough to keep the scheme inflated, and so it collapsed.

Cosmo “voluntarily surrendered” to the authorities at the train station, which proves that the train, North By Northwest not withstanding, is not a good getaway method thanks to the waiting around involved. Better yet, the arrest was in Hicksville, NY, which I thought was just shorthand for a town full of tumbleweeds and people with webbed feet, but it turns out it’s an actual place.

Before his arrest, Cosmo told this site that everyone would get their money back, and that he wasn’t running a Ponzi scheme as he’d stopped taking on new investors, which a Ponzi would never do (I’m not really convinced by this logic). He’d already faced the wrath of investor Will Fray, who punched Cosmo at his office last week after it looked like $285,000 of his money was lost with Agape, assured investors all was well, but then quietly locked up the offices.

Meanwhile in the Madoff case, a Spanish law firm representing clients who have lost cash in the scandal is proposing a multi-national network of lawyers to deal with the case and get everyone some compensation. It comes as Spanish bank Santander, who have been doing alright during the crisis through hoovering up smaller beleagured rivals, have revealed their exposure to Madoff comes to €2.33bn. In one of those “oops, the microphone is still on” gaffes, one Santander chief referred to the shareholders gathered beneath him at an emergency meeting about the scam as “bastards”, after they applauded a fellow shareholder who challenged the bank’s dealings with Madoff.

Also, Madoff cheated at golf. That’s all the evidence I need!

Posted by Ben Beaumont-Thomas in Hot Money | January 27, 2009 1:09PM |