Meeting with Mark Mulholland of "Ruskin Moscou & Faltischek"
February 25, 2009
The purpose of the meeting was to give us a status report regarding the bankruptcy proceeding.
2/5/09, Mulholland filed petition on behalf of five Agape victims who have retained him in order to ignite the process of forcing bankruptcy and freezing assets.
Bankruptcy was filed and on 2/12/09 and the judge immediately appointed an Interim Trustee (Kenneth Silverman, Esq). Subsequently, the court granted an emergency application to stop Nick Cosmo and Agape from disposing of assets.
in the days that followed, Nicholas Cosmo’s indictment was postponed to 3/13/09 to give his recently aquired counselor time to prepare to defend him.
Plea negotiations with prosecutors are alleged to be ongoing, however both side have denied any such discussions.
Cosmo is currently facing mail fraud charges but other charges are expected to be formalized before 3/13/09.
It is presumed that the strategy may be to keep adding charges and the probability of more jail time to entice Cosmo to divulge the location of additional assets.
The court now:
Empowered Trustee to collect assets.
Directed Trustee to prepare list of creditors and provide notice of bankruptcy to them.
Scheduled 3/12/09 hearing to appoint Interim Trustee as the Permanent Trustee.
The Trustee is Kenneth Silverman, Esq. and he will probably be appointed permanent Trustee. He is already working on the case. His duties are:
Operate Agape business-defunct
Investigate Agape financial affairs (where did the money come from and where did it go)
Collect and preserve assets.
He will commence suits to recover Agape assets and convert the assets to money.
(by selling, auctioning, etc)
He will examine claims submitted by investors and other creditors.
He will notify public of deadlines for filing and important dates.
Kenneth Silverman has the reputation of being a bankruptcy “heavy weight”. His fee is paid 2-3% of the restitution. The fee is capped at 3% by statute.
Steps Taken by Kenneth Silverman so far:
Established contact procedure-compiling a list of investors.
Requested appointment of official auctioneer (David R. Maltz & Co.) to liquidate assets
Issued subpoenas to the following: The list keeps growing…
Bank of America
Alaron Futures & Options
Sawmill Development Corp
Levittown Wantagh Baseball
Status of Agape Funds
$380,000,000. deposits by investors
$ 80,000,000. lost in commodities trading
$ 55,000,000. paid in commissions to brokers
$ 15,500,000. actual bridge loans invested in
$ 1,000,000. Woodbury Sperenza Food Studio
$ 746,000. on deposit in Agape accounts (cash)
$ 300,000. invested in baseball league
Potential Sources of Recovery:
Nick Cosmo personal assets (Levittown home, Hauppauge commercial bldg., offshore accounts)
Brokers: case by case analysis as necessary
see newsday articles:
Banks: Bank of America, Citibank: Trustee now has records. Is there negligence? “reckless disregard”? To be investigated.
CTFC-Commodity Futures Trading Commission: Cosmo was not supposed to be trading because he was not registered or licensed. If the CTFC gets fined, the proceeds will probably be moved to the creditors.
Accountants who may have helped perpetuate the fraud.
IF YOU KNOW ANY BROKER WHO IS LIQUIDATING HIS ASSETS…SELLING A HOUSE, ETC. LET THE TRUSTEE KNOW IMMEDIATELY.
Proof of Claim Procedure:
If you have not already done so, send the trustee your information.
Kenneth Silverman, Esq. 516-479-6300
Your best bet when you call is to ask for Rachael Dioguarde or David Mahoney.
They will be easier to reach
From this list, Kenneth Silverman will send investors and other creditors “proof of claim” forms. It will be a simple written statement of creditors claim and should be received by us shortly. The trustee will issue instructions of how much information should be put on the form (name, address, phone, amount of loss, etc.).
Claw Back: the law states that “no one should profit from a Ponzi scheme” and therefore, if you have received profits, according to the law it is possible for the govt to take back, or claw those profits. HOWEVER, in this instance, bridge loans were rolled over and then lost and it is highly unlikely that the claw back law will play a role. In addition 1) you had to have knowledge or suspect that there was fraud and continue to invest for it to apply and 2) it only applies to NET loss.
For example if you invested $200,000 and took out $100,000 plus profits, you would still have a net loss and therefore the claw back would not apply. Your “net loss” is the amount that also goes on the creditor’s claim form.
Mark Mulholland has been told that Nick Cosmo was in Zurich in November or December. The trustee has that information to investigate. If anyone has any knowledge of that, please contact the Trustee.
There is a “stay” in place that will prohibit any attorney from instituting suit against Agape other than the Trustee. If any attorney brings a suit, the trustee will evaluate it and if it has merit, he will either ask the attorney to withdraw it and the Trustee will do it himself or allow him to do it but the proceeds becomes part of the whole and as creditors, we would benefit from it with or without an attorney representing us.
Therefore, it is not in anyone’s best interest to hire an attorney.
We need to follow the Trustees lead. He was appointed by a Judge but also has the motivation to collect as much as he can recover because his fee is based on the recovery amount. In addition, without an attorney we have the same rights of recovery and do not have additional legal and disbursement fees to contend with.
What we need to do:
Stay in touch with the case so that we are informed. Call the trustee from time to time to check on status, use the internet, follow the case in the news and be as up to date with developments as you can be. There is a possibility that the Trustee will have a web site shortly and we will need to find out if he does. Mark Mulholland gave a very informative presentation and we thank him for being so gracious and generous with his time and efforts on our behalf. There is a possibility that he may do another seminar if there are any new developments in the future.
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