Jordan D. Maglich Tuesday, June 12, 2012 at 9:03PM
The Securities and Exchange Commission ("SEC") today sued fourteen individuals who misrepresented the safety of investments in the now-defunct Agape World ("Agape") that was later discovered to be a $415 million Ponzi scheme. Those named are Bryan Arias, Hugo A. Arias, Anthony C. Ciccone, Salvatore Ciccone, Diane Kaylor, Jason A. Keryc, Anthony Massaro, Christopher E. Curran, Ryan K. Dunaske, Michael P. Dunne, Martin C. Hartmann III, Michael D. Keryc, Ronald R. Roaldsen, Jr., and Laura Ann Tordy. These defendants were brokers, account representatives, and vice presidents for Agape, and in their capacity as the principal sales agents for the scheme, made misrepresentations to thousands of investors as to the safety of their investment whilst also promising above-average returns in a very short period of time. The SEC is pursuing injunctive relief, disgorgement of all ill-gotten gains, and civil monetary penalties against each of the defendants.
Agape was a nationwide Ponzi scheme orchestrated by Nicholas J. Cosmo, whose exploits earned him the nickname as the "New York Mini-Madoff". After being indicted in April 2009, Cosmo pled guilty to one count of wire fraud and one count of mail fraud, and was sentenced to twenty-five years in federal prison in October 2011. According to prosecutors, Agape solicited over 5,000 investors nationwide, offering exorbitant short-term returns that were the equivalent of eighty percent annually. Cosmo told potential investors that these returns were achieved by making profitable short-term bridge loans. As a result, Cosmo and Agape took in approximately $413 million from thousands of investors nationwide. However, in reality Cosmo used only $30 million to make the bridge loans, and also squandered $80 million by engaging in unauthorized trading in commodities and futures positions. Approximately $232 million was paid to investors in the form of fictitious interest payments.
According to the SEC, over $60 million was paid in commissions to Agape brokers for continuing to bring in new investors. As alleged in the SEC's complaint, Defendants Bryan and Hugo Arias, Anthony and Salvatore Ciccone, Kaylor, Jason Keryc, and Massaro worked as brokers for Agape, with the remainder of the defendants working as so-called "sub-brokers". In their capacities as brokers and sub-brokers, the Defendants made numerous misrepresentations to potential investors, including the use of their funds, and the safety of the underlying investments. Additionally, in light of the short-term nature of the investments, the Defendants urged investors to "roll-over" their principal and accrued interest to continue to perpetuate the scheme and ignored numerous red flags of fraud, including Cosmo's prior criminal convictions for fraud, the promised exorbitant returns, and representation that only 1% of an investor's principal was at risk.
Defendants Jason Keryc, Anthony Massaro, Anthony Ciccone, and Diane Kaylor were also recently criminally charged with one count of conspiracy to commit mail fraud. If convicted, each faces criminal monetary penalties, as well as a maximum of ten years in federal prison.
A copy of the SEC Complaint is here.
A copy of the SEC Litigation release is here.
A copy of the criminal complaint filed against Defendants Keryc, Massaro, Ciccone, and Kaylor is here.