Archive for January, 2009

Sentinel Staff
The Keene Sentinel: January 28, 2009
At least 10 Keene-area residents have thousands of dollars tied up in a New York firm whose owner is accused of scheming investors and squandering millions.

Agape World Inc. owner Nicholas Cosmo was arraigned Tuesday in U.S. District Court for the Eastern District of New York on mail fraud charges that carry a 20-year maximum prison sentence.

Cosmo allegedly took more than $380 million from an estimated 1,500 investors who bought into his Ponzi scheme thinking they were investing in high-yield loans.

A Ponzi, or pyramid, scheme pays early investors with money from subsequent investors. New investors are lured with the promise of unusually large short-term returns on their investments.

The scheme was named after the famous swindler Charles Ponzi, who duped New England residents into investing in discount postage stamps in the 1920s.

Adam Wright, a 32-year-old former Keene resident who now lives in Boston, said he first heard of Agape through a friend who went to college with one of the company’s top brokers.

Wright invested $100,000 with Agape and was told that he earned $90,000 in interest on his account since late 2005. Wright said he’s Keene’s largest investor with Agape, and he stands to lose it all.

“I feel bad for bringing it here. If it wasn’t for me, this wouldn’t have gotten to Keene,” he said. “You just want to hook up your friends. I would tell people not to put in more money than they could stand to lose. I’ve still got to take responsibility for what happened.”

Wright said he knows of nine Keene-area residents who invested an estimated total of $120,000 with Agape. Wright said his parents put $35,000 into the company.

“We were getting returns of 14 percent every 60 days, sometimes every 45 days. As things changed and got worse, the returns started coming every 65 days at 12 percent,” he said. “Everybody started getting freaked out about the economy and (Bernard) Madoff and everybody started asking for their money. I guess (Cosmo) didn’t have enough money to shell out.”

Madoff, formerly a powerful Wall Street broker, is accused of masterminding a $50 billion Ponzi scheme that may be one of the biggest cases of fraud in history.

Cosmo’s case is similar to Madoff’s, but on a much smaller scale.

Agape was supposed to be turning a profit through high-interest loans, but Cosmo only issued $10 million in loans and paid $55 million to brokers who recruited new investors, according to a criminal complaint.

Agape transferred $100 million into commodities future trading accounts that Cosmo controlled, and about $80 million of that was lost on bad trades, the complaint stated.

Cosmo allegedly spent investors’ money on jewelry, hotel rooms, limousines, payments to his wife and a private baseball league.

Agape had only $746,000 in the bank as of last Thursday, according to federal prosecutors.

Even as Agape was on the verge of collapse, the smooth-talking Cosmo, who is in his late 30s, was still capable of instilling confidence in the most skeptical investors, Wright said.

“I met him twice in New York. The guy was slick,” he said. “I had a buddy I used to work with and he was a very, very smart guy. He went and sat down with (Cosmo) about a month ago and looked at all the company’s financial statements and he felt so good he gave him $75,000.”

Keene resident Fred H. Haas, 47, said he learned of Agape through Wright, and invested a total of $15,000 in the company over three years.

Haas said he received monthly statements from the company that showed significant increases in his account, which boosted his confidence and kept him investing.

“You got these statements and it all looked very legit,” Haas said. “When the (business plan) was laid out it didn’t seem unreasonable that people would borrow money to close out a deal. If you’re building a $3 million project and need $200,000 to finish it out, then that’s what the company loaned you. It made sense.”

Haas said he was told that Agape charged 18 percent interest on its loans, and 14 percent of the interest came back to investors as profit.

Before he invested in Agape, Haas researched the company online and discovered that Entrepreneurial Magazine ranked it 73rd in its Hot 100 list of the fastest-growing businesses in America last year.

“Keep things simple and your business will encounter fewer speed bumps,” Cosmo told the magazine when asked about his secret to success.

What Haas found while looking into Agape put his mind at ease, he said, but he never thought to check out the company’s owner.

If he had, Haas may have discovered that Cosmo pleaded guilty in 1999 to a federal charge of fraud.

Cosmo was sentenced to a year and nine months in prison, ordered to pay $135,000 in restitution and placed on probation for three years, according to court records. The judge also recommended that Cosmo undergo intensive gambling therapy.

Haas was surfing the Internet late last week when he stumbled across information that showed Cosmo had served prison time.

“I had made a conscious decision last Friday to pull my money out,” said Haas, who hasn’t received the funds. “It just stinks.”

Another Keene resident who requested to remain nameless said he invested $14,000 in Agape in 2006. He said he was leery of the company and its promises of instant wealth from the beginning, but decided to invest after speaking with friends who already had.

“I was suspicious the whole time,” he said. “But when I was talking to people that told me they took out money, and when I put in money and actually got money out, it increased my confidence in it.”

The Associated Press contributed to this report.

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Sentinel Staff
The Keene Sentinel: January 27, 2009

NORTH SWANZEY — When a plane had electrical problems Sunday in the inky black sky above Keene, a young pilot inside a dark cockpit relied on a flashlight, her training and help from air-traffic controllers and a local pilot.

The local pilot, Richard S. Bendel, was working at the Keene-owned Dillant-Hopkins Airport in North Swanzey when a telephone call came in around 6:30 p.m. from the Boston Center National Air Traffic Control Association.

Bendel was told to turn on the runway lights. A 19-year-old pilot, Sarah Steves, was in the middle of an in-flight emergency and she was headed his way in a Cessna 172 Skyhawk.

“They told me it was an electrical issue. She was having problems with the lights, radio and navigation. At this point it’s imperative that she gets on the ground,” Bendel said. “You could continue to fly, but without a navigation system it becomes kind of dicey.”

Bendel chose not to communicate with Steves, a first-year aviation student at Daniel Webster College in Nashua, because she needed to leave her radio open to talk with Boston air-traffic controllers. They were acting as her ears and eyes.

This was Steves’ first solo night flight to another airport. She’d flown out of Nicholas N. Tamposi Aviation Center in Nashua, where the college has a flight training center, landed in Glens Falls, N.Y., and was coming back to Nashua when she realized the plane was having electrical problems.

“She figured out early enough that she was losing power and started turning off nonessential electrical items to start shedding the load to save as much battery power as possible,” Bendel said. “This is all part of flight school training.”

Bendel manages Monadnock Aviation, which has a contract with Dillant-Hopkins to provide services to pilots and their aircraft. He also works as a flight instructor.

As Steves closed in on Dillant-Hopkins, air-traffic controllers relayed information to her on wind speed and direction and approach patterns, Bendel said.

The chance of the plane descending too quickly and crashing into homes or terrain as it approached the runway was slim, he said.

“If you know the pattern of the airport, and she did, because it’s fairly standard, then I don’t see an issue with flying the pattern at night,” Bendel said. “As a pilot, if you think they’re worried about me running into their house, trust me, I’m worried about running into their house.”

Bendel could only listen to Steves’ responses to Boston Center as she descended into the valley, and then her communication with air-traffic controllers ceased.

The mountains act as a shield, blocking radio signals being sent long distances after a plane reaches a certain altitude, Bendel said.

“She had to do everything in the dark. She had no landing light. She had no panel or instrument lights. The only light she had was a handheld light, which she had in the cockpit,” Bendel said. “It’s extremely difficult to fly at night without lights.”

While Steves had the flashlight, Bendel said it would have been hard to use while steering the plane and using the radio. That’s why she had to trust the air-traffic controllers, and her skill, he said.

All Bendel could do was wait and listen for the rumble of the plane’s engine in the darkness.

“Then I get another call from Boston Center. They’re saying she has landed. I couldn’t see her at this point. It was very dark that night,” Bendel said. “I’m out there listening for her and then I can hear the engine in the background. Sure enough, here she comes around the corner.”

Bendel directed Steves to a spot where she could park the plane, and then he helped her step out onto the runway.

“She opened the aircraft and she just started crying,” he said. “The first thing I did was hug her. I just let her know I was really, really glad she was safe. I was obviously very worried about her. It was a tough, traumatic experience for her, but she did an absolutely fantastic job.”

Bendel was not scheduled to be at the airport that night, but he was called back earlier in the evening to help another pilot whose plane was having electrical problems before takeoff. He’d just gotten the plane fixed and off the ground, and was closing his office when Boston Center called.

“I don’t know what would have happened if I wasn’t there. I guess she would have landed at an empty airport,” Bendel said. “I was basically there for emotional support more than anything else. She can still key up the (runway) lights with her radio, but that’s only if she can communicate.”

The plane’s alternator may have died in mid-flight, according to Bendel and Tom L. Teller, a professor of aeronautics at Daniel Webster.

The cause of the electrical malfunction will not be known until the plane, which Teller said was not damaged during the landing, is inspected.

Daniel Webster’s maintenance coordinator was working with officials at Dillant-Hopkins to make sure the plane is checked out and mechanically sound before it’s flown back to Nashua.

Every plane at Daniel Webster is given a pre-flight inspection to ensure it is in working order before it leaves the runway, but that check does not include the alternator, Teller said.

More thorough mechanical inspections are conducted periodically, and records from the past three years showed no reports of in-flight electrical malfunctions with any of the college’s 25 planes, he said.

The Federal Aviation Administration has launched an investigation into the incident, which is standard procedure, said New England Region spokeswoman Arlene Salac.

“We have to look at the aircraft, talk to the pilot and any witnesses and then put together a report,” Salac said. “The main concern is the actions of the pilot. We’ll also look at the aircraft to see what, if any, mechanical problems exist.”

Steves obtained her pilot’s license last summer when she was 17. She works at the Nashua airport moving planes in and out of hangars, and aspires to a career as a commercial or corporate pilot, said her father, John W. Steves of North Granville, N.Y.

Sarah Steves, who could not be reached for comment, had a brief visit with her family before she tried to fly back to Nashua. She called them after her harrowing landing.

“She was a little upset,” John Steves said, “but we told her she did a good job and to use it as a lesson so you’ll know what to do next time when something happens.”

Sarah Steves — who was flying the day after her emergency — learned more Sunday night than many pilots learn after hundreds of hours of flight experience, Bendel said.

“While it was traumatic for her, it was important that she went through that,” he said. “The pilots that are able to put a passenger jet in the Hudson River and everybody walks away, they started out with small things like that.”

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Sentinel Staff
The Keene Sentinel: January 17, 2009
MANCHESTER — The Hinsdale Greyhound Park’s president and chief executive is denying that he ever told state gambling regulators that bettors would be paid if the track went bankrupt and closed its doors.

The track filed for Chapter 7 bankruptcy last month, leaving hundreds of bettors across the country at risk of losing a half-million dollars they had in wagering accounts.

The Hinsdale Greyhound Racing Association, which owns the track, does not have the assets to fully reimburse these bettors, Chief Executive Joseph E. Sullivan 3rd said Friday during a creditors meeting in Manchester.

Sullivan also provided details about the transfer of the property the track sits on to a holding company he manages and his pending land deal with Wal-Mart.

The N.H. Racing and Charitable Gaming Commission asked the state Attorney General’s Office last week to determine whether Sullivan did anything illegal when he filed for bankruptcy.

Commission Chairman Timothy J. Connors said Sullivan promised bettors would be paid, and then kept quiet about the bankruptcy so they wouldn’t try to withdraw their accounts.

Connors is adamant that he and his fellow commissioners heard Sullivan make assurances during several meetings that bettors would be protected.

“I’m kind of shocked that Joe would make that kind of statement. I personally will attest that he said that (he would repay the bettors) on more than one occasion. The other commissioners also feel strongly the same way,” Connors said in a telephone interview with The Sentinel after the creditors meeting.

Sullivan’s promises were verbal and made during nonpublic commission meetings that were not recorded, Connors said. The meetings were private because the track’s finances were being discussed, he said.

Sullivan said during the creditors meeting that he would have told bettors the track was going bankrupt, but they never asked. He acknowledged that bettors lacked sufficient knowledge about the track’s finances to inquire about its future.

Andrew Beyer, who writes a horse racing column for The Washington Post, could lose more than $20,000 in Hinsdale’s bankruptcy. Beyer and 11 of Hinsdale’s largest betting account holders have hired Manchester attorney Jennifer Rood in an attempt to collect what they’re owed.

“It certainly feels like a fraudulent criminal enterprise,” Beyer said. “At what point did Hinsdale say, ‘This money is ours, we’re entitled to take it’?”

The majority of Hinsdale’s bettors placed wagers on races over the telephone. Some never stepped foot on the track.

Bettors who spoke with The Sentinel said they thought they were depositing their gambling funds directly into accounts they held at the track.

They were wrong.

When any bettor sent the track a check or made a cash deposit, the funds would show up electronically in their wagering account.

But the money was actually deposited into the track’s general fund. This fund was used to pay for any track expenses, from dog food to the electric bill to payroll, according to Sullivan.

“All of the money was swirling around all of the time,” he said.

The track’s profits were plummeting in the years preceding the bankruptcy. It pulled in $5.9 million in revenue through Dec. 16, the day after its bankruptcy filing, a decline of $2.6 million compared with the same period last year.

The state gambling commission knew Hinsdale was having financial hardships, and began sending auditors to the track on a weekly basis in the months leading to the bankruptcy, according to Connors. He refused to explain why the commission did not pull the track’s pari-mutuel license before it went bankrupt.

In November 2007, Sullivan sold the track’s land and buildings to Hinsdale Real Estate Development LLC, a holding company, for $3.3 million, according to bankruptcy filings.

Sullivan and Carl Thomas, owner of Spofford-based Carl Thomas Construction Corporation, are the principals of the holding company.

The land transfer allowed Sullivan to obtain a $1 million loan on the holding company from TD Banknorth and use it as a cash infusion for the struggling track, Sullivan said. The bank had refused to lend the money to the track, he said.

Thomas also bought the track’s mortgage for $2 million, Sullivan said. The track was paying $20,000 a month to the holding company for its debt on the mortgage, he said.

In the year before the track went bankrupt, Sullivan said his salary was $225,000.

Sullivan also borrowed a total of $650,000 from the track while he was its CEO. He refused to say where that money went.

Wal-Mart is looking to purchase 22 acres of land from Sullivan’s holding company for $2.1 million. Sullivan said the deal is expected to be finalized by mid-year.

So far, one of the track’s accountants has collected $60,000 that will go to the bettors and non-betting creditors. The track owes a total of $1.7 million.

The track’s bankruptcy attorney has said that bettors might receive 10 to 25 cents on the dollar, if they are ever reimbursed.

A bankruptcy judge will decide who gets paid and how much. The case is expected to be hung up in court for at least a year.

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Sentinel Staff
The Keene Sentinel: January 09, 2009
Years before Michael Addison murdered a police officer and became the first state resident in half a century to face execution, he showed up at a center for troubled youths seeking help.

Gilsum resident Steve Bernstein was running that center, Compassionate Connections in Manchester, and said he saw hope in Addison.

Addison was in his early 20s and had the rap sheet and rough upbringing that was ubiquitous among the young people Bernstein knew.

What set Addison apart from some of the others, Bernstein said, was his optimism and drive to succeed. He said Addison wanted an education and to learn a trade.

“He had a rapid realization that there was hope. A lot of people would be doubtful and skeptical and cynical in his situation,” Bernstein said. “This is a young man, at that time, with all the baggage he was carrying around, who really wanted to change his life.”

Addison came to Bernstein’s center in 2001 with a group of acquaintances with gang ties and significant criminal backgrounds, Bernstein said.

He said he saw many new faces come through the center’s doors, but they often failed to return or their visits were sporadic at best.

“Michael came in one day and more or less never left for a good year or so,” he said. “If people would come and show up and show up and show up I knew they were more serious than not. And he kept showing up.

“This is a guy who would wake up every day and have to weigh out if he was going to go out and do drugs and sell drugs or if he was going to come down to my teen center and not make any money.”

What Bernstein had to offer Addison and others like him was a career opportunity through his connections with various employers in the community. He would determine what they enjoyed, whether it was carpentry or tattoo artistry, and hook them up with a professional in that field.

“Michael was looking at me and my work as a way to better himself,” Bernstein said. “My sense is that he never got that kind of one-on-one attention before and he never got that kind of interest in him as a person before.”

Growing up in the crime-infested South Bronx “jungle” of New York City gave Bernstein firsthand knowledge of the allure and negative consequences tied to the street life.

Bernstein said he began committing petty crimes when he was young and eventually landed in jail.

“They fortunately had a wonderful mentoring program where I was able to do jail alternatively and I was taught a trade,” said Bernstein, now a master plumber. “My mentor was a guy who was in my shoes when he was younger. My work now is largely related to my experience with him.”

Under Bernstein’s guidance, Addison obtained his driver’s license, sought counseling for his behavioral problems and began pursuing his GED. Addison also expressed interest in becoming an electrician, and Bernstein said he was working on setting him up with an internship.

“I saw a sociability developing,” Bernstein said. “I would say he was getting more comfortable with his surroundings, and that was largely based on him developing a sense of hope for his future. That was certainly not in the cards for him before.”

Domestic violence, drug addiction, alcoholism and neglect shaped Addison’s upbringing, according to Bernstein and court testimony in Addison’s capital murder trial.

“Here was a young man who showed up to change his destiny,” Bernstein said. “He was as good if not better than most that I’ve ever met.”

Addison never left the center. The center left him. After working with Addison for about a year and a half, Bernstein said the grant money that was the lifeblood of his center dried up and he was forced to close its doors.

The next time he saw Addison’s face it was on the news.

Manchester police Officer Michael Briggs was trying to stop Addison in October 2006 in an inner city alley when Addison turned on him and fired a bullet into his head. Briggs later died at a nearby hospital, leaving behind his wife and their two sons.

“This was a good guy, a great cop and a great person,” Bernstein said.

Briggs may have been among the dozens of police officers who visited the center to interact on neutral ground with the city’s troubled youths, he added.

Bernstein now sees Addison, 28, through prison glass. The two visited before and during the trial.

They talked about sports and current events, especially the presidential election. Addison enjoyed seeing Barack Obama elected, Bernstein said.

“He was excited about an African American becoming our president. Not with respect to him (Obama) maybe cutting him some slack,” he said. “He was just very articulate about politics. It wasn’t racially motivated. If this guy had gone to school I think he would have been a very eloquent speaker.”

They talked about the murder mystery and detective novels Addison likes to read. They even talked a little about what was happening in the courtroom, but were restricted from discussing details of the shooting or the case because of the ongoing trial.

“Michael never talked about his guilt or innocence, the goodness or badness of his deeds. It was more like, ‘I’m here.’ I got the impression that the last thing he wanted to talk about is what he did,” Bernstein said. “He talked around it. He told me what he didn’t do, that he didn’t premeditate the murder.”

A member of Addison’s team of public defenders, Richard C. Guerriero of Concord, said Addison and Bernstein have a close relationship. He said Addison feels he can depend on Bernstein.

“Steve has been very supportive and a trustworthy and reliable friend to Michael and it’s very much appreciated,” Guerriero said. “He’s in a fairly desperate situation and regardless of what you think of the case it’s good to have people support you.”

Bernstein recently received authorization to visit Addison for the first time since he was sentenced to death. He said he expects they’ll pick up where they left off, which is exactly what happened during their first prison visit when they’d been apart for more than four years.

As Addison’s attorneys appeal his sentence, Bernstein is still fighting to change lives.

He oversees the AIM High apprenticeship, internship and mentorship program in Keene, which is similar to his first program in Manchester.

Fifteen youths are enrolled at Bernstein’s center. Many of them are high school dropouts. Some have substance abuse problems. Others come from broken homes.

Bernstein is determined to give them all an opportunity at a better life.

“The doors don’t open for the Michael Addisons of the world,” he said, “that’s why my work exists.”

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Sentinel Staff
The Keene Sentinel: January 01, 2009
The head of the Hinsdale Greyhound Racing Association kept quiet about his intent to file for bankruptcy to protect employees and keep bettors from withdrawing an estimated half-million dollars from their accounts.

“If we leaked it to a handful of people and said, ‘We’re filing for bankruptcy, so come and cash out your account,’ there would have been a run on the track and we wouldn’t have been able to pay off the employees,” said John M. Sullivan of Concord, the track’s lead bankruptcy attorney.

The track filed for Chapter 7 bankruptcy Dec. 15, leaving in jeopardy more than 500 betting accounts that are not protected by state law, according to Sullivan.

“This was or should have been a known fact to people,” he said, adding that the track was not required to notify bettors of the risk associated with their accounts.

“There was no obligation under state law to hold their hands and tell them what to be worried about.”

Account holders should prepare to receive a fraction of what they’re owed, if they see any reimbursement at all.

“It’s not realistic to expect to receive full reimbursement,” Sullivan said. “The range is probably between 10 to 25 cents on the dollar.”

And it will be at least a year before the bankruptcy is resolved in court.

Among the account holders are bettors such as Herschel Bird of Nevada, who stands to lose $138,150; Byrne J. Kinney, also from the Silver State, who is owed $48,167; and David Cuscuna of Florida, who had nearly $24,000 tied up at the track, according to bankruptcy filings.

There are also dozens of account holders who are owed a few thousand to a few hundred dollars. Some accounts held only a couple dollars or even change.

The track recently lost one of its first arguments in U.S. Bankruptcy Court in Manchester to be excluded from paying 288 bettors with $10 or less in their accounts.

The price of postage for notifying some of these account holders of the bankruptcy exceeds what they’re owed, Sullivan said.

“Our concern is that if somebody is owed 30 cents, they’re going to be confused when they receive a piece of mail about it,” he said. “The judge just didn’t feel that there was any exception in the law for a 5 cents claim or a $5,000 claim.”

Richard Mackey, a resident of Westminster, Mass., had $606 in his track account, and said he never expected to be at risk of losing it. Mackey said a friend broke the news to him about the track’s closure.

“It’s not about the money, it’s the principle of the thing. To me, that money was, in its own way, in a bank account that couldn’t be touched by anybody but me,” he said.

“My money should never have been commingled with the track’s other expenses. I don’t owe their employees a damn penny. That money should not be coming out of my pocket.”

Horse racing author Andrew R. Beyer of Washington D.C. told the Thoroughbred Times that he had “already written off” the $20,440 he had in an account at the track. He said he believed his money was safe with a licensed operator, rather than competing offshore bookmakers.

The N.H. Racing and Charitable Gaming Commission in Concord regulates the state’s thoroughbred and greyhound racing operations, but can do nothing to protect bettors’ accounts, according to Sullivan.

Sudhir Naik, the commission’s deputy director, declined comment on the Hinsdale track situation. Naik referred all questions to Director Paul M. Kelley, who was out of the office this week.

Business at the track had been suffering as the economy worsened, but skyrocketing fuel prices caused gamblers to further tighten their budgets and put one of the final nails in its coffin, track president and chief executive Joseph E. Sullivan 3rd said in a prepared statement. He is not related to the bankruptcy attorney.

“People simply have less money to wager in New Hampshire and nationally,” he said.

The track pulled in $5.9 million in revenue through mid-December, a decline of $2.6 million compared to the same period last year, according to the gaming commission.

So far this year, the state’s other tracks — The Lodge at Belmont, Rockingham Park and Seabrook Greyhound — have each posted more than $1 million drops in revenue.

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