A New York businessman nicknamed a "mini-Madoff" because he was arrested only weeks after the billion-dollar swindler, pleaded guilty Friday to charges he orchestrated a $413 million Ponzi scheme that victimized thousands of investors.
Nicholas Cosmo, 39, pleaded guilty to mail and wire fraud in U.S. District Court on Long Island in a plea agreement with federal prosecutors. He faces up to 40 years in prison when he is sentenced in February.
Cosmo is the former head of the Long Island-based Agape World and Agape Merchant Advance in New York City.
Agape solicited investors to fund short-loans, called bridge loans, to help companies get temporary financing, and promised up to 80 percent returns, according to an indictment.
Cosmo admitted he used the investors' money for his personal investments in commodities futures trading, all of which tanked. Prosecutors found that much of the money paid back to investors was actually money provided by subsequent investors _ a Ponzi scheme. Prosecutors estimate at least 3,000 investors lost more than $195 million.
Cosmo had faced 22 counts of mail fraud and 10 counts of wire fraud. Friday's plea to one count of each settles the entire prosecution.
Unlike the more notorious Bernard Madoff, who admitted cheating charities, celebrities and institutional investors out of billions, Cosmo's victims were largely blue-collar workers, firefighters, police officers and military veterans.
Before accepting Cosmo's guilty plea, U.S. District Court Judge Denis Hurley allowed about a half dozen victims to address the court. Victims also will be permitted to speak at Cosmo's sentencing.
Frank Caserta of Staten Island lamented that he convinced his elderly father and other relatives to invest with Cosmo; he said he even invested his 5-year-old daughter's college fund with Cosmo.
"We have nothing because of him," Caserta said, although he did not specify how much his family lost in the scheme. Then he turned dramatically toward the jam-packed gallery and bellowed: "This is what a broken man looks like."
Bob Young said he worked 10 years to pay off his home, then took a mortgage to invest with Cosmo only to lose $300,000. "I didn't think I was being greedy, I was just doing the right thing for my future," he told the judge. "Bernie Madoff was stealing billions while this guy was stealing millions. For me it's not about the money any more. That's gone. It's the whole emotional roller-coaster ride."
Cosmo had been free on $1.25 million bail until October 2009, when U.S. District Judge Denis Hurley revoked bail after finding Cosmo had violated bail conditions barring him from access to any computer or the Internet.
Cosmo "will bend the rules if he feels it will serve his interests," the judge said at the time. "He is unlikely to abide by any condition or conditions of his release."
Cosmo also spent 21 months in federal prison for a 1999 mail fraud conviction. His attorney declined to comment after the court proceeding.
Assistant U.S. Attorney Grace Cucchissi said prosecutors were "gratified that the defendant has finally pled guilty."