Scam artist Nicholas Cosmo said that even as his latest scheme was imploding and putting the life savings of 4,000 people at risk, he thought he was “helping people.”
“I was able to go through every single day because I thought I was helping people,” Cosmo said in a phone interview from prison. “That I was going to be able to fix this problem that I created.”
Cosmo failed, however, and his $400 million scheme cost many hardworking investors everything. Soldiers serving in Iraq, policemen, construction and immigrant workers were among the people hurt by Cosmo’s fraud.
Hairdresser Ellen Gabriel is one victim who said Cosmo destroyed her life when he duped her into investing her $130,000 in savings in his scam.
“Retirement isn’t even an option,” said 64-year-old Gabriel, who said she worked for 30 years to build a nest egg. “I do work seven days a week. I’ve worked holidays … I just go … I go, I do.”
Louis Piccoli, 48, now has a home in foreclosure and wonders where his family and he will go.
“You panic one day that, you know, the sheriff department’s gonna come knock on the door,” he said.
Cosmo pleaded guilty to one count each of mail and wire fraud in 2010 and was sentenced to 25 years in prison. He and workers at his Agape World investment firm on Long Island misled investors about the “safe” short-term bridge loan securities the firm was offering with high rates of interest. It even sold bogus insurance policies, claiming the investments would be covered in case of loss.
Instead, more than $170 million was lost by Cosmo in high-risk futures trading.
Millions more was looted by Cosmo to pay for a life of luxury and to reward account representatives, who the FBI said lied to customers to get them to invest in what was a classic Ponzi scheme — as new investor money comes in, it's used to make payouts to other investors.
"I was able to go through every single day because I thought I was helping people. That I was gonna be able to fix this problem that I created.”
The scheme came crashing down just weeks after Bernard Madoff’s $64 billion fraud was exposed, earning Cosmo the nickname “The Mini-Madoff.”
After Cosmo’s arrest, victim after victim ran into Agape World's lobby fearing their money was gone. They appeared frantic; some were in tears as they tried to learn what was going on.
What was happening to them was only beginning to settle in — some had seen the Madoff case weeks earlier unfold in similar fashion.
It was not the first time Cosmo found himself in prison. At age 26, he was busted for taking part in a boiler room scheme, where he served jail time for lying and stealing.
“I basically told people I was going to manage their money … I lost money in the market with them and at the same time I was gambling and paying my debts,” Cosmo said of his first crime, which was supposed to bar him from the securities business for life.
Once free, however, Cosmo founded Agape.
“Agape is a very popular word in the Bible. It means perfect love … I guess to say I am a romantic at heart,” he said.
At his sentencing, victims watched as Cosmo said he was truly sorry, but knew his apology would fall on “deaf ears.”
Four of Agape’s so-called brokers were arrested and charged in April with allegedly helping in the fraud while pocketing millions.
“These defendants allegedly convinced thousands of men and women to part with their hard-earned money for what was supposed to be a safe investment,” U.S. Attorney Loretta Lynch said. “In reality, the investors were duped.”
Investors like Kevin Milano, who works with children who are developmentally disabled, realize they have little hope of ever recovering their money.
“If he stayed in jail for the rest of his life, that would be fine,” Milano said.
This story was first published on CNBC.com.
To hear the full story of Cosmo’s scam, watch "American Greed" Wednesday, May 2 at a special time — 8 p.m. ET, with a re-air at 12 a.m. ET.