CENTRAL ISLIP, NY (CBSNewYork/AP) -- A New York 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 $179 million in restitution -- money he doesn't have.
Unlike Bernard Madoff, who admitted cheating charities, celebrities and institutional investors out of billions, Nicholas Cosmo targeted mainly blue-collar workers in his Ponzi scheme, prosecutors said.
Cosmo, 40, who apologized as he was sentenced, has had a gambling problem since high school, his lawyer said. He admitted to taking in more than $400 million from investors; more than $80 million was lost in failed investments in commodities futures trading, prosecutors said.
He was arrested in January 2009 and pleaded guilty last year to mail and wire fraud.
U.S. District Court Judge Denis Hurley explained to the courtroom that he had used the examples of other high-profile white-collar prosecutions in determining the 25-year sentence; Cosmo had faced the possibility of 40 years in prison because of a prior conviction in 1999 for mail fraud.
Hurley said Cosmo "is a real risk to the community" and noted that his promise to repay those who were swindled "is delusional at best." He ordered that Cosmo receive treatment for his addiction while in prison.
The courtroom gallery was packed with investors who were bilked.
"I'm going to be working until they put me in the grave," said one of the victims, Ellen Gabriel, of Yaphank, N.Y., who did not address the court but wept throughout the hearing. The hairdresser said she lost $130,000 -- "my entire life savings."
Gabriel added that she had researched before investing: "It's not like we were stupid."
Four victims did address the court.
Paul Priore of New York City said he and his father lost $25,000 between them. He said he is currently on disability from a car accident and his father was recently hospitalized with heart problems.
"There are times when we are lucky to be able to eat one meal a day," Priore said. "We were looking at making money, but we thought we were dealing with a legitimate businessman."
One jilted investor screamed at Cosmo from the lectern, demanding he acknowledge the damage he had done. Cosmo stared straight ahead, but later apologized when he was given a chance to speak.
"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 percent 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. I know that probably falls on deaf ears. There's not a day that goes by that I am not ashamed for what I have done."
Assistant U.S. Attorney Demetri Jones said that because Cosmo was a repeat offender, having spent 21 months in prison on the 1999 conviction, he already had been given a second chance. She said claims by Cosmo that he had donated generously to local sports organizations and other charities were disingenuous because the money came from bilked investors.
"The defendant should be embarrassed to stand before you and ask for leniency. He preyed on people's personal relationships and trust," Jones said. "The victims are everyman -- generations of families."
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."
She added that the scandal "caused a mind-boggling amount of damage" and said of Cosmo: "He is a manipulator, a liar and a thief."
Investors believed they would make returns as high as 80 percent 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 scheme.
Cosmo had been free on $1.25 million bail until October 2009, when U.S. District Judge Denis Hurley revoked bail after finding Cosmo had violated bail conditions barring him from access to any computer or the Internet.
Madoff is serving a 150-year prison sentence for his fraud.
Please leave a comment below...
(TM and Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2011 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
for more features.