Federal authorities unveiled criminal charges against additional former sales agents of convicted Ponzi schemer Nicholas Cosmo, accusing the ex-employees of soliciting investors whilst ignoring numerous tell-tale signs of fraud. Brian Arias, 40, and Shamika Luciano, 31, were charged with several fraud counts, while additional charges were levied against existing defendants Anthony Ciccone, Diane Kaylor, and Jason Keryc. Each of the fraud counts carries a maximum term of twenty years in prison.
Authorities arrested Cosmo in January 2009, charging him with operating a $415 million Ponzi scheme. According to authorities, Cosmo used his companies, Agape World Inc. and Agape Merchant Advance LLC (collectively, Agape), to solicit investors by promising high returns through purportedly making private bridge loans to commercial real estate companies and builders. The scheme used a network of agents that received lucrative commissions in exchange for soliciting investors. After pleading guilty in October 2010, Cosmo received a 25-year sentence in October 2011.
After Cosmo was sentenced to prison, authorities began investigating the scheme's use of commissioned agents to attract investors. This included an assortment of false claims made to lure investors, including the safety of an investment, the intended use of investor funds, and the attractive rate of return. Authorities soon zeroed in on alleged misrepresentations and omissions made by agents in 2008 despite learning that previous bridge loans made in 2007 were either in default or on extension. Cosmo's sales agents were richly rewarded for their efforts; Cosmo paid more than $50 million in commissions during the scheme's existence.
The sales commissions paid to both Arias and Luciano pale in comparison to their co-defendants. While Arias earned approximately $1.7 million in commissions and Luciano received $275,000, their co-defendants Ciccone, Kaylor and Keryc allegedly received $10.7 million, $4.75 million, and $16 million, respectively. While irrelevant for charging purposes, the disparities in commissions would likely be a factor in any resulting sentences.
A copy of a prior civil enforcement action filed by the Securities and Exchange Commission against the sales agents is below: