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Alleged Ponzi-Schemer Cosmo Granted Continuance

Nicholas Cosmo, the Long Island man accused by federal prosecutors of running a $380 million Ponzi scheme, was granted a 30-day continuance by United States District Court Judge Thomas E. Boyle on Friday.

The continuance had been requested by Cosmo's attorney and the government. Prosecutors told the judge that victims of the scheme continue to call to report their losses.

Court papers filed Wednesday say "both sides want the extension because they are engaged in plea negotiations which they believe are likely to result in a disposition of this case without trial", but Stacey Richman, who recently replaced Cosmo's first attorneys, says no plea negotiations have taken place. She says both the defense and prosecution continue to investigate the case.

Cosmo remains in jail as the two sides have yet to agree on his bail conditions.

Nicholas Cosmo
CNBC.com
Nicholas Cosmo

Cosmo was arrested on Jan. 26 on one count of mail fraud. He and a cadre of brokers allegedly persuaded over 1,000 investors to give them money in exchange for returns of up to 60 percent.

Cosmo says that money was used in turn to provide short-term loans to businesses to cover their credit card receivables and to real estate developers through his company Agape World.

Investors, many of whom had been receiving hefty payouts from Agape, say the payouts stopped last summer. Agape claimed it could not repay its investors because the businesses it had lent to had stopped repaying the loans.

Richman says it is her belief that some of those loans are properly secured.

This is not Cosmo's first brush with the law. He served 21 months in prison starting in 1999 for financial fraud.

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