Tuesday, March 10, 2009

Dunn & Bradstreet under the gun...


An Agape World investor filed a $5-million lawsuit yesterday against Dun & Bradstreet, accusing the venerable business information firm of misleading the public about the Hauppauge company that federal authorities allege is part of a Ponzi scheme.Meanwhile, the attorney overseeing the Agape World bankruptcy has moved to force into Chapter 7 bankruptcy five other companies owned by accused swindler Nicholas Cosmo. A hearing will be held in U.S. Bankruptcy Court in Central Islip at 2 p.m. Thursday on whether to include Agape Merchant Advance, Agape World Bridges, Agape Community, Agape Construction Management and 114 Parkway Drive South Llc. "We're going to give an extensive status report to the court indicating what litigation and what investigations we have commenced," said Agape bankruptcy trustee Kenneth Silverman.John Scherillo, a construction contractor from East Northport, said he bought a Dun & Bradstreet report on Agape World in September 2008 when he was reconsidering his $50,000 investment, according to the lawsuit filed in U.S. District Court in Central Islip.
The D&B Comprehensive Plus Report said Agape World was unlikely to stop paying investors and was unlikely to experience financial distress in the next 12 months, the suit said. On Sept. 22, six days after receiving the report, Scherillo decided to maintain his $50,000 investment and invest an additional $25,000, the suit said.Four months later, federal authorities arrested Cosmo, charging him with mail fraud and accusing him of running a $370-million Ponzi scheme through his companies Agape World and Agape Merchant Advance. Cosmo is being held at the Nassau County Correctional Center in East Meadow while his attorney and federal prosecutors try to arrange a bail package.The lawsuit accused Dun & Bradstreet of gross negligence, saying it failed to "conduct a proper investigation" or "a reasonable and diligent evaluation of" Agape World. The suit asks for $150,000 in compensatory damages and $5 million in punitive damages.Ana Cano, a spokeswoman for Dun & Bradstreet, declined to comment yesterday. Scherillo did not return calls. His attorney, Eliot Bloom of Mineola, was traveling yesterday and could not be reached.Dun & Bradstreet is typically used by businesses to evaluate other businesses and not by potential investors. But some Agape investors have said the favorable Dun & Bradstreet reports - along with Agape's appearance on Entrepreneur Magazine's "Hot 100" list of fast-growing businesses and its membership in the trade group Commercial Finance Association - lent the company undue credibility.

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