Federal regulators filed civil charges Tuesday against 14 associates of convicted Long Island swindler Nicholas Cosmo, saying they sold bogus investments in his $415-million Ponzi scheme.
The Securities and Exchange Commission said the defendants "turned a blind eye to red flags of fraud" as they peddled worthless securities with promises of low risk and fabulous returns. But instead of investing the money, Cosmo used funds from new investors to repay existing ones, bilking more than 5,000 victims between 2005 and 2009, according to the suit filed Tuesday in federal court in the Eastern District of New York.
Cosmo, who pleaded guilty in 2010, ran the scheme through two Hauppauge-based companies, Agape World Inc. and Agape Merchant Advance. He was sentenced in October to 25 years in prison and must pay $179 million in restitution.
Five others have been charged criminally in the case. They include Richard Barry, the former office manager of Agape, who pleaded guilty in 2010 and is scheduled to be sentenced July 6. The other four criminal defendants were also named in yesterday's civil action: Jason Keryc, 34, of Wantagh; Anthony Ciccone, 39, of Locust Valley; Anthony Massaro, 40, of Boynton Beach, Fla.; and Diane Kaylor, 36, of Bethpage.
The SEC's suit accuses the defendants of acting as Cosmo's "brokers" and "sub brokers" who told victims they were investing in high-interest bridge loans that within weeks paid returns of up to 14 percent. They earned commissions ranging from $600,000 to $17 million, according to the complaint.
Attorneys for several of the defendants, however, said their clients were unaware the investments were fictitious. Some sold them to friends and relatives, the attorneys said. One defendant, Michael P. Dunne, 34, of Massapequa, lost money in the scheme himself, according to his attorney.
"Michael Dunne was a victim of Agape. He and his family and friends lost a lot of money," said the attorney, Peter Tomao.