A federal judge found Friday that accused Ponzi scheme operator Nicholas Cosmo can't be trusted and ended his house arrest after less than three months and returned him to jail to await trial.
"It seems to me that he is unlikely to abide by any conditions of release," said U.S. District Judge Denis Hurley. "Mr. Cosmo is the type of individual - he will bend the rules if he thinks it advances his interests."
Cosmo, of Lake Grove, is charged with defrauding thousands of people out of more than $400 million through his Hauppauge firm, Agape World. He was arrested in January and was in jail until he posted $1.25 million bail in July.
But Hurley found that Cosmo violated three conditions of bail - that he used a computer, asked his girlfriend to access the Internet on his behalf and lied to his federal Pretrial Services officer about what he was doing on the computer. In addition, Hurley said he was troubled by evidence that Cosmo orchestrated the sale of an expensive watch, in violation of two court orders not to sell or transfer any of his assets.
Several of Cosmo's investors said they were relieved to see Cosmo remove his tie and be taken into custody by U.S. marshals.
"It's about time," said firefighter Michael Casey of Long Beach.
Earlier, as Hurley's decision approached, there was tension between Cosmo's sister, Fran Kegel, and another investor, Lou Piccoli, a Center Moriches contractor who said he's on the verge of losing everything he owns.
Piccoli said he was about to get on an elevator with Cosmo and Kegel when Kegel called for security. Later, Piccoli approached Kegel in the courtroom to explain himself and she told him sternly, "I don't want you near my brother."
In an attempt to keep her client out of jail, defense attorney Stacey Richman of the Bronx argued that Cosmo's violations were inconsequential and posed no risk to victims or to the public. All he was trying to do by accessing Agape documents was prepare for trial, she said.
"There has been no aspect of economic crime to any individual at all since Mr. Cosmo's release," Richman said. She noted that Ponzi schemer Bernard Madoff gave away millions of dollars in jewelry after his arrest, but was allowed to stay out of jail until he pleaded guilty.
Assistant U.S. Attorney Grace Cucchissi said that Cosmo could easily victimize people again if he was allowed to gain access to investors' personal information. Putting him back in jail would protect the public from Cosmo's willingness to ignore the rules, she said.
Piccoli said later he was frustrated with the slow pace of the case - and Richman said with her client in jail again, it probably would be even slower.
Piccoli noted that foreclosure and repossession proceedings against him haven't slowed, and he said there ought to be a way to put those proceedings on ice until the criminal case is resolved and he gets any restitution he may be owed.
