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F.# 9705057
cosmo. ind
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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I N D ! C T MEN T
UNITED STATES OF AMERICA'
- against
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NICHOLAS COSMO, §§ 1341 and 3551
APPROX. DESCRIPTION
DA.TE OF OF MAIL
COUNT MAILING MATTER SENDER ADDRESSEE
J. 7/97 . 5/97 & 6/97 Nichola.s Cosmo John Doe
monthly 3178 Cherrywood
.account Drive
sta.tetnents Carle PJ.ace, NY Schulenburg, TX
11793 78956
COUNT 'l'HREE
APl?ROX. DESCRIPTION
DATE OF OF MAIL
COUNT MAILING MATTER SENDER ADDRESSEE
3 9/J.7/97 $50,000.00 J.W. Charles
.check Nicholas Cosmo 980 N. Federal
3178·Cherrywood Highway
Drive Boca Raton, FL
Carle Place, NY 11793
33432
ZACHARY W. CARTER
UNIIED STATES ATTORNEY
EASTERN DISTRICT OF NEW YORK
~fb.~~'\ .~. u/L·4..-L-.- ~ .
BY:
O:'J.C,.lNG UJ\HTED ST!\TFS ~.TTOPN'EY 4
[··'UnSU/H~T1'0:28 C.ER. 0.131
ABV:IJ',
F.# 9705057
mailfrd.com
NICHOLAS COSMO,
Defendant.
------------------------------x
Wfi..LIAM McGROGAN, being duly sworn, deposes and say~ that he is a Special
as such.
Upon infonnation and belief;. in or about and between March 1997 and September
1997, both dates being approximate and inclusive, within the Eastern District ofNew York and
elsewhere, the defendant NICHOLAS COSMO, having devised a scheme and artifice to defraud
and obtain money by means offatse and fraudulent pretenses and representations, did knowingly
deposit and cause to be deposited VariOllS documents to be sent and delivered by a commercial
interstate carrier, namely, Federal ExpreSs, for the purpose of exccuti.ng such scheme and artifice.
The source of your deponeot1s infonnation and the grounds for his belief are as
fonows:
I
2
COSMO. In the course of my i.nvestigation, I have reviewed pertinent financial documents and
interviewed individual and institutional Victims.. In addition, on October 30, 1997, I interviewed
NICHOLAS COSMO, who provided me with a signed three..page confession regarding this fraud.
The information cOlJt~ined herein is only a summary ofthe extensive information derived from
these sources.
from January 1994 through April 1997. According to his customers, they principally owned
customers, COSMO began to represent himself as a broker for Charles Schwab & Co., Inc.
(IfS~hwab") to· his old customers from Continental Broker Dealers and to new customers as well.
Officials of Schwab have informed me that COSMO has never been employed there.
transfer their assets from Continental Broker Dealers to Schwab. He also told them that each
customer would have his own separate .account, or his own subaccount of "Cosmo & Associates,"
at Schwab.
account at Schw~ in the name of "Cosmo & Associates," into which he deposited and
intermingled the funds and securities ofhis customers, totaling approximately $118,000.00. This
these funds to execute unauthorized trades in options and warrants. Based on my review of the
a.nd believed that they continued to own ~heir securities. To lull his customers, NICHOLAS
COSMO sent them by Federal Express false and fictitious account statements reflecting continued
ownership ofvarious securities that COSMO had already liquidated. In additio.n, when a
customer asked COSMO to execute the purchase or sale of stock, COSMO sent via Federal
Express a "trade confirmation" headed with the Schwab logo. Officials of Schwab have
reviewed these account statements. 9 t told me that these statements were representative of
the portfolio that COSMO led him to believe that he had at Schwab. Schwab iDfonned me~
however, that this account statement is entirely false and fictitious -- and COSMO admitted as
much to me.. COSMO an~old me th~t the statements were sent and received via
Federal Express. I reviewed the Federal Express airbill corresponding to the delivery of the
a.ccount statements. The "sender" area of the bill bears the name ofNICHOLAS COSMO and
.lists his address as 3178 Cherrywood Drive, Carle Place, New York 11793. The "recipient" is
listed a
documents that NICHOLAS COSMO sent to his customers. I have reviewed the corresponding
4
Federal Express airbills as well, which indicate that COSMO sent these materials from his Carle
10. Any funds remaining from customers' liquidated 'securities were spent by
NICHOLAS COSMO to repay personal debts, including gambling debts. Based on my review of
documents, and based on COSMO's admissions, J estimate that these personal disbursements
11. Numerous checks drawn on the uCosmo & Associates" account 'at Schwab
payable to customers were returned due to insufficient funds. COSMO admitted. knowing that
12. One check COSMO issued was payable to a securities clearing fum, JW
Charles, in order for COSMO to open a trading account with Corporate Securities Group. On or
about September 17~ 1997, COSMO issued'this check to JW Charles'in the amount of
$50~OOO.OO. COSMO told me that he sent this check to JW Charles via Federal Express. I have'
reviewed a copy of the check and the corresponding Federal Express airbill. It indicates the
sender as NICHOLAS COSMO of 3178 Cherrywood Drive, Carle Place, New York 11793 and
the recipient as JW Charles, 980 N. Federal Highway, Boca. Raton, Florida 33432.
before this check cleared. The check did not clear; it was returned for insufficient funds.
COSMO's account with Corporate Securities Group was immediately closed and all trading
13. Schwab froze the Cosmo & Associates account on or about July 31] 1997
an arrest warrant, he agreed to surrender voluntarily this morning, which he has done.
~~IJ1~~
Sp~' t Agent
WILLIAM McGROGAN,
Federal Bureau of Investigation
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H'.NI ./
IS;ATES MAGISTRATE RIDGE
THE DEPBNDAm:
~TLE &. SECTION NA'l'URE &: OFFENSE i.<.. :~ ~, ;';, ',.',. \, ::cbtINT NUMBElHS)
18 :1341 MAIL FRAUD, a Class D Felony 1
The defendant is sentenoed as provided in pages 2 throu~~~5' of~~is Judgment.
The sentence is imposed pu~suant to the Sentencing Reform' Act of 1984.
The de£Qndant has been found not guilty on count (8) and. is
Count (a) 2 and 3 (ax-e) dismissed on the motion of the l1n~d ~~s.
It is further ORDERED that the defendant shall. notify the United States Attorney
for tb.is di'strict within 30 days of any change of residence or mailing address
~til all fines, restitution, costs r and special assessments imposed by this
Judgment are fully paid.,
SAME...AS ABOYB
.fI5:~~;:r:
DY.~y CL;-rr
(AMEm)ED)
Defendant: N~CHOLAS COSMO JUdgment - Page 2 of 5
case Number: CR-98-00B9-01 (ADS)
The defendant is hereby oommi~ted to the custody of the United States Bureau
of Prisons to be imprisoned for a term of TWENTY ONE (21.) MONTHS ......
THAT THE DEFENDANT SERVE HXS ENTXaS SENTENCE IN A FACILITY THAT OFFERS AN
J:NTENSIVE GAMBLING 'l'RERAPY PROGRAM.
By ~.~-.
(AMENDED)
Defendant: N~CROLAS COSMO Judgment - Page 3 of 5
Case Number: CR-98-0089-01 (ADS)
SUPERVIS~D RELEASE
3.· THE DEFENDANT SHALL PAY RESTITUTION !l' THE SUM OF ONE
HUNDRED SEVENTY SEVEN THOUSAND DOLLARS ($177,000.00).
PAYMENTS ARE AT .A. RATE OF 10% OF THE DEFENDANT'S GROSS
MONTHLY INCOME TO COMMENCE AT THE START OF HJ:S TERM OF
SUPERVXV!SED RELEASE TO 'l'HE U. S. ATTORNEY'· S OFFICE, ONE
P~ERRBPONT PLAZA, BROOKLYN, NY 11201 TO DISTRXEUTE TO
TBE VICTIMS PRO RATA. ANY MONI:ES PAID BY MONEY FROM THE
CHARLES SCHWAB ACCOUNT SHOULD BE PAID TO THE CLERK OF
THE COURT,. 225 CADMAN PLAZA EAST, BROOKLYN, NY 11201.
While on supervised release, the defendant sha11 not oommit another Federal,
state, or looal orime and shall. comply with the standard conditions tbat have been
adopted by this oou:rt (set forth on the following page). If this jUdgxnent imposes
a restitution obligation, i t ahall be a condition of supervised release that the
defendant pay an.y auc:!h restitution that reJDains unpaid at the commencement of the
term of supervised release. The defendant shall comply with the fo~lowing
additional oonditions:
The defendant shall pay any fines that remain unpaid at the c:!ommencement
of the te~ of supervised release.
(AMEWEIl)
Defendant: NICHOLAS COSMO Judgment - Page 4 of 5
Case Number: CR-89-00S9-01 (ADS)
1} The defendant shall not oommdt another Federal, state or local crime;
2} the defendant shall not leave the judicial district without the per.mission
of the court or probation officer;
3) the defendant shall report to the probation officer as directed by the court
or probation office:r: and shall submit a truthful and camp.lete writ.ten report
within the first five days of each month;
4) the de:eendant ahall answer tJ:"Uthfully all inquiries by the probation officer
and follow tbe instructions of the probation officer,
5) the defendant shall support his or her dependents and meet other family
responsibil~ties,
6) the defendant shall work regularly at a lawful occupation unless excused by
the p:r:obation officer for schooling, training, or other acceptable reasons;
7) the defendant shall notify the probation offioer within seventy-two hours of
any change in resid@nce or employment;
8) the defendant shall refrain from excessive use of a1cohol and shall not
purchase. possess, use .. distribute, or administer any narcotic or other
aontro11ed substance, or any paraphernalia related to such substances,
except as prescribed by a physician;
9) the defendant shall not frequent places where controlled substances are
illegally sold, used, distributed, or a~inistered;
10) the defendant ahall not associate with any persons engaged in crim.inal
activity, and shall not associate witb any person convicted of a felony
unless granted per.mission to do so by the probation officer;
11) the defendant shall permit a probation.officer to visit him or her at any
t~e at home or elsewhere and shall permit oonfiscation of any contraband
observed in plain view by the probation officer;
12) the defendant shall. notify the probation office:r: within seventy-two hours of
being a~rested or questioned by a law enforcement officer;
13) the defendant shall not enter into any agreement to aot as an infor.mer or a
special agent of a 1aw enfor~ement agenoy without the perBdssion of the
oourt;
14) as. directed by the probation officer, the defendant shall notify third
parties of risks that may be occasioned by the defendant's cri~nal reoord
or pe:rsona~ history or characteristics.. and shall permit the probation
officer to make such notifications and to confirm the defendant1s oompliance
with such not1fication requir@ment.