If it sounds too good to be true ...

By Scott Feldman

First Bernie Madoff. Now another suspected Ponzi scheme. This one on Long Island. Agape World headquartered in Hauppauge. The CEO is a guy named Nicholas Cosmo, a convicted swindler who spent time in a federal lockout. When they sprang him, he immediately started Agape World. It made so-called commercial "bridge loans" to businesses. Investors were promised double digit returns. And now, like the Madoff investors, more than 6 thousand Agape investors will also be left holding the bag. Because Agape didn't sell stocks or bonds, the company wasn't required to register with the securities industry. But all anybody had to do was Google Cosmo and they would have found out about his criminal past.

So, how can investors protect themselves from shady operators? Jon Ten Haagen, a certified financial planner in Huntington, says it's not difficult to check out a financial professional. All you have to do is go to the website for the national association of personal financial planners. If you are dealing with a stock or bond broker, there's the national association of securities dealers, the securities and exchange commission and the NYS Attorney General's office. All of those agencies will tell you if a broker has had problems in the past, and it will detail his or her professional licenses--what kind of securities they are authorized to sell. Ten Haagen also advises you scrutinize your financial statements. Don't get bought off by a generic listing that says your money is in "fixed income securities." You want to see exactly what stocks and bonds you own. How many shares and their value. For bonds look for the maturity date and the CUSIP number. 

Given the current state of the economy, it is likely we are going to see more Madoff and Agape's unfold. The old saw is worth repeating, "if it sounds too good to be true, it probably is."

  

www.napfa.org

www.nasdr.com/2000.htm

www.CFP-Board.org/cons

www.oag.state.ny.us

Comments

[John]

(Oops. Looks like I got impatient while the software accepted my first comment. Sorry about the clog.)

[John]

While I'm scraping together rent for next month, rest assured that my heart bleeds for people with six-figure disposable savings who were greedy enough to get roped into a transparent scam. Really, I do. That sound you hear in the background is my actual heart, bleeding. For them.

Perhaps we can get the government to bail them out with more taxpayer money so they can afford to retire early in their summer homes.

"So, how can investors protect themselves from shady operators?"

Perhaps by realizing that (a) guaranteed revenue and (b) a push--noted but ignored in several interviews with the "investors"--to recruit family and friends as new investors adds up to an obvious Ponzi scheme.

And of course, you could check with the authorities, but keep in mind that the SEC knew all about Bernie Madoff and did nothing.

(By the way, what the heck's with all the Dickensian symbolism in the financial sector? At least Agape isn't pronounced like its jaw-dropping homonym. But Bernie Madoff/Made-off? Neel Kashkari/Cash-Carry? Are they just messing with us, now?)

[John]

My heart bleeds for people who had six figures of disposable savings and were greedy enough to invest in a transparent scam. Really. That sound you hear is my actual heart bleeding. For them.

Maybe we can get the government to bail them out with more taxpayer money.

"So, how can investors protect themselves from shady operators?"

By realizing that guaranteed income, combined with (gleaned from interviews with Agape's investors, such as yours) a push to recruit friends and family as investors is absolutely a Ponzi scheme, maybe?

(Incidentally, what's with all the Dickensian symbolism in the financial industry? At least Agape isn't pronounced like the jaw-dropping homonym. But Kashkari? Madoff? Are they kidding us? Where's Mr. Robber-Baron and Dr. Conman?)