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Archive for the ‘WHITE COLLAR’ Category

By PHILLIP BANTZ
Sentinel Staff

The Keene Sentinel: June 30, 2009

Knowing that Bernard L. Madoff will spend the rest of his life in prison provides no solace for Barbara G. Moore, a former Keene resident living in New Mexico, who was left in financial ruins along with thousands of other investors who trusted the once-powerful Wall Street broker.

Madoff, 71, was sentenced Monday to 150 years in prison for bilking investors out of at least $13 billion with the largest Ponzi scheme in history.

He pleaded guilty in March to 11 felony charges of securities fraud, theft and money laundering.

A Ponzi scheme — also known as a pyramid scheme — pays early investors with money from new investors who are lured with the promise of unusually large, short-term returns.

The illegal tactic takes its name from Charles Ponzi, who defrauded New England residents in the 1920s with a scheme involving postage stamps.

Moore invested her life savings with Madoff after learning about him through friends. She lost $350,000.

“I didn’t even have enough money to keep my house. I had to put it on the market,” she said. “I’m 78 years old and I’m not going to be able to get another job.”

Moore now depends on Social Security checks to pay for groceries and other necessities.

She said she’s not worried about being homeless after her house sells because she has a large network of friends.

“I’ll move in with somebody,” she said.

Moore spent 18 years as a nun. She left the convent when she was 35 and obtained a master’s degree in software engineering, securing a job in Boston before she retired in 1992 and moved to Keene.

“I didn’t get a decent pension when I retired,” she said. “I didn’t know anything about investments. I just wanted an income.”

Moore was friends with a couple who invested with Madoff and were seeing large average annual returns, she said. Moore said the interest on her investment with Madoff was enough to live on, at first.

“But the interest was getting lower and lower,” she said.

In the wake of Madoff’s conviction and sentencing, Moore said she does not feel that justice was served.

“I think the SEC should get a term in jail. They’re supposed to be the protectors,” she said, referring to the U.S. Securities and Exchange Commission.

Moore said she doesn’t care about Madoff’s prison sentence or whether his associates will be charged and convicted.

“There’s no good in thinking about revenge. It doesn’t help you at all,” she said. “I understand there’s the same kind of fraudulence all over corporate America. So I don’t really think of Madoff as ‘The One.’”

Moore also no longer obsesses about the money she lost.

“I’ve discovered that it’s better to have friends than to have money,” she said. “That really makes up for a lot in life.”

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By PHILLIP BANTZ
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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By PHILLIP BANTZ
The Keene Sentinel: June 03, 2008
The saga of an ill 69-year-old woman who embezzled more than $1.5 million from a Keene-based toy company and handed the money over to an alleged extortionist, her faux family and a casino neared its conclusion Monday.

Anne M. Everett was sentenced in Cheshire County Superior Court on two felony counts of theft by unauthorized taking and could spend the next 14 years in prison.

Everett, a former Keene resident who had been living in Candia, suffers from lung cancer and will likely die behind bars, said her public defender, Michael C. Shklar.

“Mrs. Everett is not long for this world,” he said during the hearing. “That’s a sad fact.”

Everett pleaded guilty in December 2007 to masterminding a complex embezzlement scheme targeting Douglas Co., where she worked for 44 years as a controller in the accounting department.

She was responsible for paying the company’s bills, signing checks and reconciling accounts.

Because of her age and failing health, Shklar had recommended that Everett serve a minimum of two years in prison, while Assistant Cheshire County Attorney Kathleen G. O’Reilly argued for a sentence of 14 to 28 years.

“This was a massive undertaking by the defendant to pull the wool over the eyes of the people that trusted her,” O’Reilly said in court. “She had to doctor the books repeatedly, constantly, for years.”

Judge John P. Arnold ultimately ordered Everett to serve seven to 14 years behind bars and pay $1,524,087 in restitution to Douglas, a family-owned business that manufactures and imports stuffed animals and other toys.

The likelihood that Douglas will ever see a fraction of the embezzled funds is slim because Everett gave away or spent the cash and she doesn’t own a home or have life insurance, O’Reilly said.

Everett actually gave the bulk of the stolen money to an alleged extortionist and a group of people she considered to be her family but are of no biological relation, according to court testimony. She used the rest to pay bills and play bingo at Foxwoods Resort Casino in Connecticut, according to court testimony.

“I don’t have an answer for this defendant because she doesn’t fit any molds for conventional criminal activity,” Shklar said during the hearing. “Her motives were not selfish. She did not live high on the hog. There were no fancy cars. There were no fancy houses.”

Shklar called Everett’s case “one of the strangest that I have seen in 23 or 24 years” and O’Reilly described Everett’s motives as “puzzling at best.”

From at least January 2003 to December 2006, Everett wrote checks from the Douglas account to herself and others, forging their names and cashing the checks without their knowledge, according to court testimony. She also opened a fraudulent credit account under the company’s name, O’Reilly said.

While Everett’s scheme did not financially cripple the company, it hurt employees because their annual raises were cut to make up for the lost funds, according to Douglas President Scott T. Clarke.

“This has been a breach of trust and friendship that has been very detrimental to our company,” he said in court in support of the state’s sentencing recommendation. “It certainly has affected our company deeply. … She was a friend to my parents. She was a friend to all of us. Something like this should not go unpunished.”

Shortly before launching the embezzlement scheme, Everett came into a small inheritance and distributed the money to a group of people that had taken her in after she moved from Maine to Keene as a young woman, Shklar said.

When her inheritance dried up, Everett decided to write a check to herself from the Douglas account so she could continue to provide for the group.

“She considered them all to be her family. She had nieces, nephews and grandsons,” Shklar said. “She liked that people thought she had money and could help them out.”

Everett said in a brief statement during the hearing that she was “just trying to keep everyone safe” and apologized for her crimes.

She had already cashed a few fraudulent checks when Donald C. Whitten, 59, formerly of Keene, learned of the scheme and threatened to harm her or notify authorities if she didn’t give him money, Shklar said.

“Mrs. Everett was genuinely terrorized by this extortionist,” he said. “He turned this scheme into what it became.”

After she’d already given him thousands of dollars, Everett decided to cut off Whitten, who was her “nephew” and the black sheep of the family, according to Shklar.

“He was constantly in trouble and never had money,” he said.

When Everett cut off the cash flow, Whitten sent an anonymous e-mail to The Sentinel and another regional paper blowing the whistle on the embezzlement scheme, Shklar said.

“He essentially killed the goose that laid the golden egg,” he said.

Whitten was later arrested and charged with attempted theft by extortion and receiving stolen property, both felonies. He has pleaded guilty to both charges and is scheduled to be sentenced June 12 in Cheshire County Superior Court.

It’s impossible to know exactly how much money Whitten received from Everett because it was given to him in cash and checks, Shklar said.

Meantime, Everett plans to request a sentencing review by a panel of three judges in Concord. The panel could increase, decrease of leave her sentence unchanged.

Everett secured a better fate by negotiating a plea with prosecutors rather than facing trial, Shklar said.

“The state has a paper trail a mile long and a mile wide and a full confession from Mrs. Everett,” he said outside the courtroom. “Mrs. Everett’s trial could have been ugly. The state could have sought additional charges and broken down each transaction over $1,000.”

In prison, Everett will receive cancer treatments as needed and may be sent to the N.H. State Prison in Concord because, unlike the women’s prison in Goffstown, the facility has a full-time nursing staff that can provide long-term care to inmates, said Jeffrey J. Lyons, department of corrections spokesman.

Everett would be separated from the all-male inmate population, Lyons said.

“We would diagnose her and provide whatever medical treatment is necessary,” he said. “We have people who spend significant periods of their prison incarceration bedridden for medical treatment. … We can also bring them to the hospital if need be.”

Inmates who are terminally ill or severely debilitated can qualify for medical parole under a state law that became effective June 2004. Since then, only six prisoners have qualified, said John F. Eckert, executive assistant to the state’s adult parole board.

Eckert said he receives a few medical parole requests every month from inmates saying they have cancer, diabetes, heart conditions or other ailments. But without a referral from the doctor at their facility, they’re not even considered candidates.

“The only inmates that we’ve been asked to consider have been granted parole,” Eckert said, “but they literally cannot walk out of here. They have to be wheeled out.”

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