October 25, 2012
CFTC Obtains Federal Court Order against Nicholas Cosmo for Engaging in Unauthorized Futures Trading that Resulted in Tens of Millions of Dollars in Investor Losses
Cosmo ordered to pay a $240 million penalty and permanently barred from the commodities industry
In a related criminal case, Cosmo sentenced to 300 months in prison and ordered to pay over $179 million in restitution to defrauded investors
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Leonard D. Wexler of the U.S. District Court for the Eastern District of New York entered a default judgment and permanent injunction order against defendant Nicholas Cosmo, formerly of Lake Grove, N.Y., charged with defrauding investors of tens of millions of dollars in a commodity futures trading scheme (see CFTC Press Release 5606-09, January 27, 2009).
The court’s order finds that, from at least January 2004 through December 2008, Cosmo engaged in a fraudulent scheme in which tens of millions of dollars were solicited from investors to invest in bridge loans and merchant advances. Instead, Cosmo used investors’ funds, in part, to engage in unauthorized commodity futures trading that resulted in tens of millions of dollars in trading losses, according to the order. The order also finds that Cosmo’s futures trading and trading losses were never disclosed to investors.
The order requires Cosmo to pay a $240 million civil monetary penalty, imposes permanent trading and registration bans, and permanently bars Cosmo from engaging in any commodity-related activity, including trading, and from registering or seeking exemption from CFTC registration.
In a related criminal case, United States of America v. Nicholas Cosmo, Docket No. CR-09-255 (DRH), Judge Denis R. Hurley sentenced Cosmo to 300 months in prison and ordered him to pay restitution to investors in the amount of $179,195,232.63.
The CFTC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York, the Federal Bureau of Investigation, the U.S. Postal Inspection Service, and the U.S. Securities and Exchange Commission.
The CFTC Division of Enforcement staff members responsible for the action are Elizabeth C. Brennan, Philip Rix, Steven Ringer, Lenel Hickson, Jr., Stephen J. Obie, and Vincent McGonagle.
Last Updated: October 25, 2012