ponzi scheme suspects

Ponzi Scheme Suspect Appears in Court

John Donnelly, a 52-year-old Charlottesville man accused of conducting a multi-million dollar Ponzi scheme, made an appearance in Charlottesville Federal Court Thursday morning. His defense attorney, John Davidson, asked the judge to continue the court proceedings regarding bail and a preliminary hearing until next week.

"Both the government and the defense and the court have a lot of work to do before we're able to more forward substantively on anything," said Davidson. He went on to say that he did not believe Mr. Donnelly is any sort of flight risk, but the judge will ultimately have to make that decision.

Donnelly's wife, Deborah was also in the courtroom Thursday, but had no comment on the case.

"Mr. Donnelly is very very concerned and worried about his family. In these rush of accusations that have come out against him we just hope that the public respects his family privacy," said Davidson.

A federal court spokesperson said John Donnelly was arrested Wednesday morning after agents executed a search warrant at his home in Ivy. According to the U.S. Securities and Exchange Commission, John Donnelly fraudulently obtained at least $11 million from as many as 31 investors since 1998.

SEC officials say Donnelly runs a number of companies including Tower Analysis, which is located on the 600 block of Water Street in Charlottesville. Donnelly allegedly scammed the companies by selling investment fund securities but never actually traded any securities and used new investor money to pay off the people that were already involved. The feds also say Donnelly paid himself about $1 million in salary and fees during the last three years.

The SEC has frozen all assets under the control of Donnelly and his firms. Donnelly is being held at the Central Virginia Regional Jail in Orange County and will be in court again next Thursday.

Madoff Guilty Of Ponzi Scheme, SEC Charges Two Others

After Bernie Madoff is pleaded guilty in a Ponzi Scheme and ordered to jail SEC has charged two others from California in a multi-million dollar Ponzi scheme type of investment fraud.

The Securities and Exchange Commission today charged Northern California residents Anthony Vassallo and Kenneth Kenitzer for orchestrating a multi-million dollar investment fraud. Vassallo agreed to a court order freezing his assets. The SEC is seeking an emergency court order to also freeze the assets of Vassallo's company, Equity Investment Management and Trading, Inc. (EIMT).

According to the SEC's complaint, Vassallo and Kenitzer raised more than $40 million from about 150 investors from approximately May 2004 to November 2008. Vassallo told investors, many of whom he met through his church, that he had a proprietary computer software program that allowed him to buy and sell stock options and generate returns of 3.5 percent per month with little risk of loss. The SEC alleges that Vassallo and Kenitzer instead used investors' money for unauthorized purposes, including a variety of other schemes never disclosed to investors.

"Today's action reaffirms that the SEC will take immediate steps to preserve assets for investors victimized in fraudulent investment schemes," said Marc Fagel, Director of the SEC's San Francisco Regional Office. "The defendants' deception went so far as fabricating computer 'screen shots' for investors that purported to show more than $50 million in securities holdings, when in fact they had completely emptied the brokerage accounts."

The SEC's complaint, filed in federal court in Sacramento, alleges that Vassallo told investors that their money was being invested in securities pursuant to a proprietary trading strategy that promised high returns with minimal risk. From September 2007 through approximately November 2008, Kenitzer, who participated in EIMT's day-to-day operations, posted false trading results on the company's Web site and distributed phony investment reports to investors that led them to believe EIMT was achieving consistent, positive returns. According to the SEC's complaint, EIMT actually had not conducted any stock trades since at least September 2007, when its brokerage firm terminated Vassallo's trading privileges. The SEC alleges that Vassallo and Kenitzer kept the scheme going by using money raised from new investors to pay earlier investors, a classic hallmark of a Ponzi scheme.

The SEC's complaint charges Vassallo, Kenitzer and EIMT with violations of the anti-fraud provisions of the federal securities laws. In addition to an emergency order freezing EIMT's assets, the SEC seeks injunctive relief, disgorgement of defendants' ill-gotten gains, and financial penalties.

The SEC acknowledges the assistance of the United States Attorney's Office, Federal Bureau of Investigation, and Internal Revenue Service.

FBI raids Agape World

Agape World chief Nicholas Cosmo turned himself in to authorities on Monday night after the FBI and U.S. Postal Inspection Service raided the Hauppauge-based investment firm’s headquarters earlier in the day.

They said Nicholas Cosmo, head of Agape World Inc on New York's Long Island, was said to provide commercial bridge loans, but was instead operating a traditional Ponzi scheme in which early investors are paid with the money of new clients.

Agape chief Nicholas Cosmo is accused of scamming $380 million out of thousands of Agape World clients with promises of high returns that couldn’t be met.

The arrest warrant is expected to be unsealed Tuesday and sources said he would be charged with defrauding investors out of $380 million.

Agape, which once boasted it had 6,000 investors, now has about 2,000, after thousands of investors pulled out after the stock market collapsed in the fourth quarter.

Investors starting showing up at Agape World’s office last week demanding to know why the company stopped making promised payments of principal and interest, with one investor punching Cosmo in the head.

"Nicholas Cosmo took the advice of an attorney and complied with an arrest warrant," said Al Weissmann, spokesman for the U.S. Postal Inspection Service, which is investigating Agape World and Cosmo along with the FBI.

Cosmo built the business by promising clients lofty returns on their investments and for years, they say, he delivered.

Until the end, Cosmo emphatically denied he did anything wrong. He spoke to Long Island Business News on Monday and deflected accusations that he was running a classic Ponzi scheme. He then vanished ahead of the FBI’s arrival.

Investors also showed up at Agape’s Motor Parkway offices, demanding to know why the company stopped making promised payments of principal and interest. On Friday, one angry investor punched Cosmo in the head while others crowded the hallway of the building. Cosmo needed a Suffolk police escort to safely get back to his Mercedes.

One broker owns a $2.7 million, 10-room house in Montauk, which he bought this summer, according to public records. Records also show he owns an apartment in Long Beach purchased for $850,000 in November 2006. The broker also owns a 2008 Bentley Continental and a 2008 Cadillac Escalade.

Another Agape broker owns a $400,000 Lamborghini, a 2008 Escalade and a 2008 Bentley, according to the DMV. That broker also bought a house in Huntington for $655,000 in January 2007. He also owns a condo in Miami.

Cosmo has history in scams, accused and found guilty In 1997 misappropriating funds while working as a stockbroker at Continental Broker-Dealer Corp. He was sentenced at the time to serve 21 months in prison and pay at least $135,000 in restitution. Agape World was founded in 1999.

Cosmo is currently wanted by the police, although some reports suggest that he may be about to hand himself in.

Agape World Inc, a private firm with its office in Hauppauge, New York was not registered with the U.S. Securities and Exchange Commission.