Largest Grossing Broker In Agape Ponzi Scheme Sentenced To 108 Months’ Imprisonment
Defendant Took $8.9 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 Jason Keryc, a former broker of Agape World, Inc. (Agape), to 108 months’ imprisonment and ordered that he pay $179 million in restitution following his 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 Keryc’s participation in a Ponzi scheme, in which he took $8.9 million in commission payouts for himself, which he spent on a Long Beach condominium, a million-dollar Montauk vacation home, jewelry, designer clothing, automobiles, and other items. The defendant has been incarcerated since his conviction.
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 years, Jason Keryc was the chief fundraiser for a Ponzi scheme that devastated the lives of thousands of middle class Americans whom Keryc and his co-conspirators deceived into investing in a scam,” stated United States Attorney Capers. “Keryc will now pay the price for his self-enrichment and deceit.” Mr. Capers expressed his grateful appreciation to the United States Securities and Exchange Commission for its assistance in the case.
“After being convicted of his crimes, Jason Keryc will now pay for his greed and deception with years of his life behind bars and restitution to the victims. It is unfortunate the destruction his actions have caused. Perhaps this sentence will serve as a warning to others that fraud and Ponzi schemes are serious offenses, not worth risking the cost to self, others, and society,” stated FBI Assistant Director-in-Charge Rodriguez.
“Today’s sentencing represents the continued commitment of United States Postal Inspectors to bring to justice all parties involved in Agape World who participated in an egregious Ponzi scheme defrauding hundreds of investors of their hard earned money,” stated Postal Inspector-in-Charge Bartlett.
Nicholas Cosmo founded Agape in August 2000, following 21 months in a federal prison for defrauding investors. Between October 2005 and January 2009, Keryc played a critical role in the scheme, soliciting and obtaining hundreds of millions of dollars from investors. To induce investments and discourage withdrawals, he 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, Keryc actually raised significantly more money than was needed for the loans, and for his efforts he made approximately $8.9 million – more than twice the $4 million that Cosmo personally profited from the scheme.
Keryc and his 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 Keryc or his 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 dollars of which was lost in these markets.
As the fraudulent scheme began to unravel, Keryc continued to deceive investors about Agape’s financial health. On November 3, 2008, Keryc 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, he continued to solicit money from investors, obtaining an additional $13 million. Ultimately, approximately 3,800 investors sustained actual losses totaling more than $150 million.
On October 14, 2011, Cosmo was sentenced to a term of imprisonment of 25 years for his role in the scheme. In addition to the convictions of Cosmo and Keryc, the government’s investigation led to the conviction of seven other defendants in the scheme, who are awaiting sentencing before Judge Hurley.
The government’s case is being prosecuted by the Office’s Long Island Criminal and Civil Divisions. Assistant United States Attorneys Christopher C. Caffarone, Bradley T. King, Grace M. Cucchissi, and Vincent Lipari are in charge of the prosecution.
Wantagh, New York
E.D.N.Y. Docket No. 12-CR-357 (S-4)(DRH)