Swindler called 'mini-Madoff' gets 25 years

A businessman called a "mini-Madoff" because he was arrested weeks after the billion-dollar swindler was sentenced Friday to 25 years in prison and ordered to pay US$179 million in restitution - money he doesn't have.

Nicholas Cosmo, who apologised as he was sentenced, has had a gambling problem since high school, his lawyer said. He was arrested in January 2009 and pleaded guilty last year to mail and wire fraud.

"I'm going to be working until they put me in the grave," said one of the victims, Ellen Gabriel, who did not address the court but wept throughout the hearing. The hairdresser said she lost US$130,000 - "my entire life savings".

Gabriel added that she had researched before investing: "It's not like we were stupid."

Four victims addressed the court.

"Everything that these people said about me, for the most part, is true," said Cosmo, the former head of the Long Island-based Agape World and Agape Merchant Advance in New York City.

Agape solicited investors to fund short loans to help companies get temporary financing. Cosmo promised up to 80 per cent returns but admitted using investors' money for personal investments.

"It wasn't my intention to ever hurt anyone. But I hurt them and I stand here as a guilty man," Cosmo told the court. "I am truly sorry from the bottom of my heart ..."

Unlike the more notorious Bernard Madoff, who admitted cheating charities, celebrities and institutional investors out of billions, Cosmo targeted mainly blue-collar workers.

"He preyed on people's personal relationships and trust," said Assistant US Attorney Demetri Jones, who had urged a 40-year term. "The victims are Everyman - generations of families."

More than 4,000 victims

The more than 4,000 victims include teachers, police officers, firefighters, nurses and construction workers, Jones said. "They're not banks. They're not corporations. They're people."

Investors believed they would make returns as high as 80 per cent a year from interest collected on short-term loans to businesses. But an investigation revealed that "much of the money paid back to investors ... was actually money provided by subsequent investors" - a Ponzi, or pyramid, scheme.

Cosmo also spent 21 months in federal prison for a 1999 mail-fraud conviction.

He had been freed on US$1.25 million bail until October 2009 when US District Judge Denis Hurley revoked bail after finding Cosmo had violated bail conditions barring him from access to any computer or the Internet.

Cosmo "will bend the rules if he feels it will serve his interests," the judge said at the time. "He is unlikely to abide by any condition or conditions of his release."