Former Broker And Bookkeeper In Agape Ponzi Scheme Sentenced To 78 Months’ Imprisonment
Defendant Took $3.6 Million in “Commissions” in Ponzi Scheme That Caused Losses of More Than $150 Million
Earlier today, at the United States District Court in Central Islip, New York, the Hon. Denis R. Hurley sentenced Diane Kaylor, a former broker and bookkeeper of Agape World, Inc. (Agape), to 78 months’ imprisonment and ordered that she pay approximately $179 million in restitution following her convictions on April 21, 2015, after a four-week jury trial, for securities fraud, conspiracy, mail fraud, and wire fraud. These convictions arose out of the Kaylor’s participation in a Ponzi scheme, in which she took $3.6 million in commission payouts for herself, which she spent on home improvements, luxury automobiles, exotic vacations, and other items.
The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service (USPIS).
“For more than three years, Diane Kaylor and her co-defendants sold lies to thousands of unsuspecting investors,” stated United States Attorney Capers. “Victim investors have been saddled with huge debts, some lost their life’s savings, their retirements have been delayed, and their children have been saddled with unforeseen student loan payments. Kaylor has now been held to account for her role in these crimes.” Mr. Capers expressed his grateful appreciation to the FBI and USPIS, the agencies that led the government’s investigation, and thanked the United States Securities and Exchange Commission for its assistance in the case.
Nicholas Cosmo founded Agape in August 2000, following 21 months in a federal prison for defrauding investors. Between October 2005 and January 2009, Kaylor played a critical role in the scheme, soliciting and obtaining tens of millions of dollars from investors. To induce investments and discourage withdrawals, she misled investors by assuring them that their money would only be used to fund specific, short-term secured bridge loans to commercial borrowers, or to make short-term loans to small businesses, promising to pay investors unusually high rates of returns and representing that investing in Agape carried little or no risk of loss. As a result of these inducements, Kaylor actually raised significantly more money than was needed for the loans, and for her efforts she made approximately $3.6 million.
Kaylor and her co-conspirators paid returns to Agape investors, not from any profits earned on investments, but rather from existing investors’ deposits or money paid by new investors. They then took more than $370 million – approximately $55 million of which came from investors that Kaylor or her sub-brokers convinced to invest in the Ponzi scheme – from approximately 5,000 investors. Of that $370 million, only $22 million actually went to fund bridge loans. Approximately $113 million of investors’ money was used to trade high risk futures and commodities, over $80 million of which was lost in these markets.
As the fraudulent scheme began to unravel, Kaylor continued to deceive investors about Agape’s financial health. On November 3, 2008, Kaylor learned that all of Agape’s 2007 bridge loans were in default or on extension, but did not disclose this information to existing or new investors. Instead, she continued to solicit money from investors. Ultimately, approximately 3,800 investors sustained actual losses totaling more than $150 million.
On October 14, 2011, Cosmo, following his guilty plea, was sentenced to a term of imprisonment of 25 years for his role in the scheme; on February 24, 2016, following his convictions after the same four-week jury trial as Kaylor, Jason Keryc, a broker at Agape, was sentenced to a term of imprisonment of nine years for his role in the scheme; and on April 22, 2016, following his guilty plea, Anthony Ciccone, who was also a broker at Agape, was sentenced to a term of imprisonment of seven years for his role in the scheme. In addition to the convictions of Cosmo, Kaylor, Keryc, and Ciccone, the government’s investigation led to the conviction of five other defendants in the scheme, who are awaiting sentencing before Judge Hurley.
The government’s case is being handled by the Office’s Long Island Criminal and Civil Sections. Assistant United States Attorneys Christopher C. Caffarone, Bradley T. King, Grace M. Cucchissi, and Vincent Lipari are in charge of the prosecution.
Bethpage, New York
E.D.N.Y. Docket No. 12-CR-357 (S-4)(DRH)