FILED

u s ci~sEIWAK~o?ft:i~D.N:lN THE UNTED STATES DISTRICT COURT

* JAN 27 200 fRTßEASTERNDISTRCTOF;Õ9,,03 51

. am~~ 8lglnC6lfty Futures Trading Case No.:

Commission,

vs.

COMPLAINT FOR INJUNCTIVE AND

THER EQUITABLE RELIEF AND FOR

CIVIL MONETARY PENALITES

URSUANT TO THE COMMODITY

XCHAGEACT

Plaintiff,

Nicholas Cosmo, Agape Worid, Inc., and Agape

Merchant Advance LLC,

Defendants. WEXLER, J

LINDSAY, M.J.

I. SUMARY

I. From at least Januar 2004 though December 2008 ("Relevant Period"), defendants

Nicholas Cosmo ("Cosmo") and Agape World, Inc. ("Agape World"), and from at least

November 2007 defendant Agape Merchant Advance LLC ("Agape Merchant") (collectively,

"Defendants") engaged in a fraudulent scheme in which they solicited tens of milions of dollars

from dozens of investors for the stated purose of investing in bridge loans and merchant

advances but instead, engaged in unauthorized commodity futures trading which resulted in

milions of dollars in losses. None of ths trading activity or these trading losses were disclosed

to investors.

2. By virte of this conduct and the fuer conduct described herein, Defendants have

engaged, are engaging, and/or about to engage in fraudulent acts and practices that violate the

anti-fraud provisions of Sections 4b(a)(2)(i) and (iii) of the Commodity Exchange Act (the

"Act"), 7 U.S.C. §§ 6b(a)(2)(i) and (ii), and Sections 4b(a)(I)(A) and (C) of the Act as amended

by the Food, Conservation, and Energy Act of2008, Pub. L. No. 110-246, Title XII (the CFTC

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Reauthorization Act ("CRA")), § 13102, 122 Stat. 1651 (effective June 18, 2008), to be codified

at 7 U.S.C. §§ 6b(a)(I)(A) and (C).

3, Cosmo committed the acts and omissions described herein within the course and

scope of his employment at both Agape World and Agape Merchant. Therefore,both Agape

World and Agape Merchant are liable under Section 2(a)(I)(B) of the Act, 7 U.S.C. § 2(a)(I)(B)

(2006), as principals for Cosmo's violations of the Act.

4. Cosmo is liable under Section 13(b) of the Act, 7 U.S.C. § 13c(b) (2006), as a

controllng person of Agape World and Agape Merchant for their violations of the Act, because

he did not act in good faith or knowingly induced, directly or indirectly, the acts constituting

their violations.

5. Accordingly, the United States Commodity Futues Trading Commission

("Commission" or "CFTC") brings this action pursuant to Section 6c of the Act, 7 U.S.C. § 13a1 (2006), to enjoin Defendants' unawfl acts and practices and to compel Defendants'

compliance with the Act and the Commission's Regulations. In addition, the Commission seeks

civil monetar penalties and remedial ancilar reliéf, including, but not limited to, preliminar

and permanent injunctions, trading and registration bans, a civil monetar penalty, restitution,

pre-judgment and post-judgment interest, and such other relief as the Cour may deem necessary

and appropriate.

6. Unless restrained and enjoined by the Cour, Defendants are likely to continue to

engage in the acts and practices alleged in ths Complaint and in similar acts and practices as

more fully described below.

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II. JURISDICTION AND VENUE

7; The Cour has jurisdiction over ths action pursuant to Section 6c(a) of the Act,

7 U.S. C.§ 13a-l (2006), which authorizes the Commission to seek injunctive relief against any

person whenever it shall appear to the Commission that such person has engaged, is engaging, or

is about to engage in any flct or practice constituting a violation of the Act or any rule, regulation,

or order thereunder.

8. Venue properly lies with the Cour pursuant to Section 6c(e) of the Act, 7 U.S.C. §

13a-l(e) (2006), in that Defendants transact business in this Distrct, and acts and practices in

violation of the Act have occured, are occurg, or are about to. occur withi this Distrct. .

III. THE PARTIES

9. Plaintiff United States Commodity Futures Trading Commission is an independent

federal regulatory agency charged with the responsibilty for admstering and enforcing the

provisions of the Act, 7 U.S.C. §§ 1 et seq. (2006).

10. Defendant Nicholas Cosmo resides in Lake Grove, New York. Cosmo has never

been registered with the CFTC in any capacity.

11. Defendant Cosmo is the owner of both Defendants Agape World and Agape

Merchant. Cosmo's ~riminal history includes a federal conviction for mail fraud. The

Defendant Cosmo pleaded guilty and was sentenced on Janua 15, 1999 to a prison term of21

months followed by thee years of supervised release and ordered to pay restitution of $1778,000

plus interest.

12. Furermore, according to the National Association of Securties DealersT'NASD"),

Defendant Cosmo's broker's license was revoked in 2000 due to his 1999 conviction. According

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to the NASD, Cosmo was censured, fined $68,209 and bared from association with any NASD

members in any capacity.

13. Defendant Agape World, Inc. is a New York corporation with its main offices

located at 150 Motor Parkway, Hauppauge, New York 11788. Agape World has never been

registered with the COIIission in any capacity.

14. Defendant Agape Merchant Advance LLC isa New York limited liability

company with its main offces located at 15Q Motor Parkway, Hauppauge, New York 11788.

Agape Merchant has never been registered with the Commission in any capacity.

IV. FACTS

15. Durng the Relevant Period, Cosmo and Agape World have been operating an

investment scheme in which they solicit investors to supply fuds for short-term loans, known as

bridge loans, paying a high interest rate to those who invest.

16. Since at least November 2007 to December 2008, Cosmo and Agape Merchant

have been operating an investment scheme in which they solicit investors to supply fuds to

commercial merchants. in exchange for proceeds from futue credit cards sales.

17. Cosmo exercised control over the ban accounts maintained by Agape World and

Agape Merchant into which investors deposited fuds.

18. Dur~g the Relevant Period, without the consent or knowledge of the Agape

World and Agape Merchant investors, Cosmo caused Agape World investors' fuds and Agape

Merchant investors' fuds to be transferred from the Agape World and Agape Merchant ban

accounts to varous commodity futures trading accounts maintained in the name of Cosmo,

individually, Agape World, and/or Agape Merchant at varous futures commission merchants

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("FCMs "),all of whom are registered with the Comnission, for the purpose of trading

commodity futues.

19. For example, in account openig docUIentsfor a commodity futures trading

account in the name of Agape World at MF Global Inc. ("MF Global"), Cosmo identified

himself as President of Agape World and that he had sole control over trading in this trading

account.

20. Cosmo fuer represented in his account paperwork at MF Global that no other

persons or entities had a financial interest in this trading account. This statement is false since

ths account was fuded with fuds from investors.

21. Without the consent or knowledge of investors, Cosmo traded futues contracts in

these varous FCM trading accounts and lost tens of millons of dollars. Ths trading activity and

these trading losses were never disclosed to investors.

V. VIOLATIONS OF THE COMMODITY EXCHANGE ACT

COUNT I

Violations of Section 4b of the Act and the Act as Amended by the CRA

(Fraud by Misrepresentations and Omissions)

20. The allegations set fort in paragraphs 1 though 21 are re-alleged and

incorporated herein by reference.

21. Sections 4b(a)(2)(i) and (ii) of the Act, 7 U.S.C. §§ 6b(a)(2)(i) and (iii) (2006),

make it unawfl for any person to cheat or defraud or attempt to cheat or defraud; or willfully

deceive or attempt to deceive by any mean whatsoever other persons in or in connection with

orders to make, or the makng of, contracts of sale of commodities, for futue delivery, made, or

to be made, for or on behalf of such other persons where such contracts for future delivery were

or may have been used for (a) hedging any transaction in interstate commerce in such

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commodity, or the produce or byproducts thereof, or 

(b) determining the price basis of any

transaction in interstate commerce in such' commodity, or ( c) delivering any such commodity

sold, shipped or received in interstate commerce for the fufillment thereof.

22. Sections 4b(a)(I)(A) and (C) of the Act as amended by the CRA, to be

codified at, 7 U.S.C. §§ 6b (a)(l)(A) and (C), make it UIawfl for any person, in or in

connection with any order to make, or the makng of, any contract of sale of any

commodity in Ìnterstate commerce or for .futue delivery that is made, or to be made, on

or subject to the rules of a designated contract market, for or on behalf of any other

person - (A) to cheat or defraud or attempt to cheat or defraud the other person; or (C)

willfully to deceive or attempt to deceive the other person by any means whatsoever in

regard to any order or contract or the disposition or execution of any order or contract, or

in regard to any act of agency performed, with respect to any order or contract for the

other person.

23. As set fort above, in or in connection with futues contracts, made, or to be

made, for or on behalf of other persons, Defendants cheated or defrauded or attempted to cheat

or defraud clients or prospective clients, and wilfully deceived or attempted to deceive clients or

prospective clients by, among other things, soliciting fuds from investors for the stated purose

of investing in bridge loans and merchant advances but, instead, engaging in unauthorized

commodity futues trading which resulted in tens of milions of dollars in losses. None of these

trading activities or these trading losses were disclosed to investors.

24. Defendants engaged in the acts and practices described above knowingly or with

reckless disregard for the truth.

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25. By this conduct, Defendants violated Sections 4b(a)(2)(i) and (iii) of the Act, 7

U.S.C. §§ 6b(a)(2)(i) and (iii) (2006), with respect to acts occurng before June 18, 2008, and

violated Sections 4b(a)(I)(A) and (C) of the Act as amended by the CRA, to be codified at 7

U.S.C. §§ 6b(a)(l)(A) and (C), with respect to acts occurg on or after June 18,2008,

26. Cosmo controlled Agape World and Agape Merchant, directly or indirectly, and

did not act in good faith or knowingly induced, directly or indirectly, Agape World's and Agape

Merchant's conduct alleged in this Count. Therefoi:e, pursuant to Section 13(b) of the Act, 7

U.S.C. § 13c(b) (2006), Cosmo is liable for Agape World's and Agape Merchant's violations of

Sections 4b(a)(2)(i) and (iii) of the Act, 7 U.S.C. § 6b(a)(2)(i) and (iii) (2006), with respect to

acts occurring before June 18,2008, and for their violations of Sections 4b(a)(1 )(A) and (C) of

the Act as amended by the eRA, to be codified at 7 U.S.C. §§ 6b(a)(l)(A) and (C), with respect

to acts occurng on or afer June 18, 2008.

27. Cosmo is liable under Section 13(b) of the Act, 7 U.S.C. § 13c(b), as a controllng

person of Agape World and Agape Advance for its violations of the Act, because he did not act

in good faith or knowingly induced, directly or indirectly, the acts constituting the violations.

28. Each misrepresentation or omission of material fact, including but not limited to

those specifically alleged herein, is alleged as a separate and distinct violation of Sections

4b(a)(2)(i) and (iii) of the Act, 7 U.S.C. §§ 6b(a)(2)(i) and (iii) (2006), with respect to acts

occuring before June 18,2008, and Sections 4b(a)(l)(A) and (C) of the Act as amended by the

CRA, to be codified at 7 U.S.C. §§ 6b(a)(l)(A) and (C),with respect to acts occuring on or afer

June 18, 2008.

VI. RELIEF REQUESTED

WHEREFORE, the CFTC respectfuly requests that the Court, as authorized by Section

6c of the Act, 7 U.S.C. § 13a-l (2006), and pursuant to its own equitable powers, enter:

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a) An order finding that Defendants violated Sections 4b(a)(2)(i)-(iii) of the Act,

7 U.S.C. § 6b(a)(2)(i)-(iii) (2006), and Sections 4b(a)(l)(A)-(C) of the Act as amended by the

CRA, to be codified at 7 U.S.C. §§ 6b(a)(l)(A)-(C)..

b) An order of preliminar and permanent injunction prohibiting Defendants and any

of their agents, servants, employees, assign, attorneys, and persons in active concert or

parcipation with any Defendat, including any successor thereof, from engaging, directly or

indirectly:

(i) in conduct in violation of Sections 4b(a)(2)(A) and (C) of the Act as

amended by the CRA, to be codified at 7 U.S.C. §§ 6b(a)(2)(A) and (C); and

(ii) in any activity related to trading in any commodity, as that term is defined

in Section la(4) of the Act, 7 U.S.C. § la(4) (2006) ("commodity interest"), including but

not limited to, the followig:

(aa) from trading of any commodity interest account for himself or on

behalf of any other person or entity;

(bb) from soliciting, receiving, or accèpting any funds in connection

with the purchase or sale of any COInodity interest contract;

(cc) from applying for registration or claiing exemption from

registration with the CFTC in any capacity, and engaging in any activity requiring

such registration or exemption from registrtion with the CFTC, except as

provided for in Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) (2008), or acting as

a principal, agent, or any other offcer or employee of any person registered,

exempted from registration or required to ~e registered with the CFTC, except as

provided for in Regulation 4.14(a)(9); and

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(dd) from engaging in any business activities related to commodity

interest trading.

c) An order directing Defendants to make full restitution to every person or entity

whose fuds Defendants received or caused anöther person or entitY to receive as a result of acts

and practices that constituted violations of the Act, as described herein, and pre- and postjudgment interest thereon from the date of such violations;

d) An order directing Defendants to disgorge, pursuant to such procedure as the

Court may order, all il-gotten gains or benefits received from the acts and practices which

constitute violations of the Act, as described herein, and pre- and post-judgment interest thereon.

from the date of such violations;

e) An order directing each Defendant to pay a civil monetar penalty in the amount

provided pursuant to Section 6c(d)(1) of the Act, 7 U.S.C. § 13a-l (2006), and Commission

Regulation 143.8, 17 C.F. R. § 143.8 (2008), or trple the monetar gain to each Defendant for

each violation of the Act described herein, plus post-judgment interest;

f) An order requiring Defendants to pay costs and fees as permtted by 28 U.S.C.

§§ 1920 and 2412(a)(2); and

g) Such other and furter relief as the Cour deems proper.

Dated: New York, NY

Januar 27, 2009

U.S. COMMODITY FUTURES

TRADING COMMISSION

LeneI Hickson

Acting Regional Counsel

By: ~oJbp . Z \.

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David Acevedo

Chief Trial Attorney

Steven i. Ringer

Chief Trial Attorney

Elizabeth C. Brennan

Senior Trial Attorney

Linda Y. Peng

Senior Trial Attorney

Division of Enforcement

U.S. Commodity Futues Trading

Commission

Eastern Regional Offce

140 Broadway, 19th Floor

New York, NY 10Q05

(646) 746-9747

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