Christopher J. Gray and his co-counsel, Louis F. Burke and Benjamin L. Del Vento, have filed a class action case against Nicholas Cosmo, an alleged Ponzi scheme promoter, as well as Bank of America and several commodities brokerages that carried accounts to which Cosmo allegedly diverted investor funds. The class action complaint alleges that starting in 2003, Cosmo, a convicted felon who had just completed a 21 month sentence in Federal Prison in Allenwood, Pennsylvania, commenced a fraudulent investment scheme through Agape, which was eventually comprised of two companies he controlled and approximately 12 brokers acting on Agape’s behalf. Agape obtained approximately $400 million from investors using false pretenses. Thousands of blue collar investors, including police officers, post office employees, social security clerks, and widows investing life insurance proceeds, lost their entire life and retirement savings. Cosmo then surreptitiously transferred a large portion of these funds to commodities trading accounts, in which he traded the investors’ funds and operated an unregistered commodities pool.
The class action complaint further alleges that Bank of America substantially assisted this fraud as follows: (a) Bank of America assigned one or more representative to work directly out of Cosmo’s office, which was approximately 28 miles from the branch where Agape and Cosmo had their bank accounts; (b) Bank of America provided its onsite representatives at Agape with on site bank equipment and/or computer systems to enable direct access to Bank of America’s accounts and systems; and (c) Bank of America’s onsite representatives at Agape had the ability to monitor and check account balances, accept deposits and issue checks. The class action complaint alleges that based on this arrangement, Bank of America had knowledge of all of Cosmo’s financial activities, including his transfers of funds to commodities accounts to operate Cosmo’s unregistered commodities pool.
The class action complaint can be accessed below.