SEC Charges 14, Many Brothers, in $415M Ponzi Scheme

Agents illegally sold securities for a Long Island-based investment firm that was not registered with the SEC

The SEC headquarters in Washington. The SEC headquarters in Washington.

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Fourteen sales agents, many of them pairs of siblings, were charged by the SEC on Tuesday for selling nonexistent securities that promised unrealistic returns and almost nonexistent risk.

The agents illegally sold securities for a Long Island-based investment firm that was not registered with the SEC, but was instead the creator of a $415 million Ponzi scheme. The SEC’s litigation will be led by Paul G. Gizzi and Philip Moustakis.

The sales agents were alleged to have misled investors about securities supposedly offered by Agape World Inc., run by President Nicholas J. Cosmo, who organized the scheme. Falsely promising returns as high as 12%–14%, the agents were also alleged to have told more than 5,000 investors nationwide that risk was minimal on their money, misleading them to believe that only 1% of their principal was at risk.

“This Ponzi scheme spread like wildfire through Long Island’s middle-class communities because this small group of individuals blindly promoted the offerings as particularly safe and profitable,” Andrew M. Calamari, acting regional director for the SEC’s New York regional office, said in a statement. “These sales agents raked in commissions without regard for investors or any apparent concern for Agape’s financial distress and inability to meet investor redemptions.”

Celeste Chase, assistant director of the SEC’s New York regional office, declined to make an additional comment.

During the course of the scheme, the agents collected more than $52 million in commissions and payments out of investor funds, and in the course of selling the nonexistent securities ignored the fact that Cosmo had previously been convicted for fraud—as well as the warning signs about Agape itself, which was relatively small and unknown as a private issuer of securities and had a series of extensions and defaults.

The money gathered from investors was supposed to be used to make high-interest bridge loans to commercial borrowers or businesses that accepted credit cards; instead, all or nearly all was used to make payouts to earlier investors to keep the Ponzi scheme going, and also for the agents’ sales commissions—as well as $80 million lost by Cosmo while trading futures in personal accounts.

None of the Agape securities offerings were registered with the SEC—and for that matter, neither were the agents registered to sell securities, nor were they associated with a registered broker or dealer.

The scheme lasted from 2005 to January 2009, when Cosmo was arrested. He was later sentenced to 300 months in prison and ordered to pay more than $179 million in restitution.

Charged in the scheme were:

  • Brothers Bryan Arias and Hugo A. Arias of Maspeth, N.Y., who offered and sold Agape securities to at least 195 and 1,419 investors, respectively, and who received more than $9.5 million combined in commissions and payments
  • Brothers Anthony C. Ciccone of Locust Valley, N.Y., and Salvatore Ciccone of Maspeth, N.Y., who offered and sold Agape securities to at least 535 and 348 investors, respectively, and who received more than $17 million combined in commissions and payments
  • Brothers Jason A. Keryc of Wantagh, N.Y., and Michael D. Keryc of Baldwin, N.Y. Jason offered and sold Agape securities to at least 1,617 investors and received at least $16 million in commissions and payments. He also paid sub-brokers, including his brother, at least $7.4 million to sell Agape securities for him. Michael offered and sold Agape securities to at least 177 investors and received more than $1 million in commissions and payments
  • Siblings Martin C. Hartmann III of Massapequa, N.Y., and Laura Ann Tordy of Wantagh, N.Y. Hartmann enlisted his sister in his sales effort while working as a sub-broker for Jason Keryc. Hartmann and Tordy offered and sold Agape securities to at least 441 investors and received more than $3.5 million in commissions and payments
  • Christopher E. Curran of Amityville, N.Y., who worked as a sub-broker for Keryc. Curran offered and sold Agape securities to at least 132 investors and received at least $531,890 in commissions and payments
  • Ryan K. Dunaske of Ronkonkoma, N.Y., who worked as a sub-broker for Keryc. Dunaske offered and sold Agape securities to at least 70 investors and received more than $700,000 in commissions and payments
  • Michael P. Dunne of Massapequa, N.Y., who worked as a sub-broker for Keryc. Dunne offered and sold Agape securities to at least 99 investors and received more than $1.5 million in commissions and payments
  • Diane Kaylor of Bethpage, N.Y., who offered and sold Agape securities to at least 249 investors and received at least $3.7 million in commissions and payments
  • Anthony Massaro of Boynton Beach, Fla., who offered and sold Agape securities to at least 826 investors and received more than $5.9 million in commissions and payments
  • Ronald R. Roaldsen Jr. of Wantagh, N.Y., who worked as a sub-broker for Keryc. Roaldsen offered and sold Agape securities to at least 159 investors and received more than $600,000 in commissions and payments.

Anthony Ciccone, Kaylor, Jason Keryc, and Massaro were previously arrested on a criminal complaint that charged each of them with conspiracy to commit mail fraud, based on their conduct as Agape sales agents.

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