CY12-

2937
ANDREW M. CALAMARI
Acting Regional Director
Attorney for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
SPAn, J.
3 World Financial Center, Suite 400
New York, NY 10281-1022
(212) 336-0542
BROWN,M.J.
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
SECURITIES ANDEXCHANGECOMMISSION,
Plaintiff,
-- against --
BRYAN ARIAS, HUGO A. ARIAS, ANTHONY C.
CICCONE, SALVATORE CICCONE, DIANE KAYLOR,
JASON A. KERYC, ANTHONY MASSARO,
CHRISTOPHER E. CURRAN, RYAN K. DUNASKE,
MICHAEL P. DUNNE, MARTIN C. HARTMANN III,
MICHAEL D. KERYC, RONALD R. ROALDSEN,JR.,
AND LAURA ANN TORDY,
Defendants.
ECFCASE
. COMPLAINT
JURYTRIAL
DEMANDED
PlaintiffSecuritiesandExchangeCommission("Commission"),foritsComplaintagainst
defendantsBryanArias,HugoA. Arias,AnthonyC. Ciccone,SalvatoreCiccone,DianeKaylor
("Kaylor"),JasonA. Keryc,AnthonyMassaro("Massaro"),ChristopherE. Curran("Curran"),
RyanK. Dunaske("Dunaske"),MichaelP. Dunne("Dunne"),MartinC. HartmannIII
("Hartmann"),MichaelD. Keryc,RonaldR. Roaldsen,Jr. ("Roaldsen"),andLauraAnn Tordy
("Tordy")(collectively,"Defendants"),alleges:
SUMMARY
1. TheDefendantsweretheprincipalsalesagentsforAgapeWorld,Inc. ("Agape"),
a$415 millionPonzischemeorganizedbyNicholasJ. Cosmo("Cosmo"),thepresidentof
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Agape,that,from2005throughJanuary2009(the"relevantperiod"),impactedmorethan5,000
investorsnationwide,includingmorethanathousandinvestorsonLongIsland,NewYork.
2. DefendantsBryanandHugoArias,AnthonyandSalvatoreCiccone,Kaylor,
JasonKeryc,andMassaroheldthemselvesouttoinvestorstobebrokers,account
representatives,andvicepresidentsforAgape(collectively,"Brokers"). DefendantsCurran,
Dunaske,Dunne,Hartmann,MichaelKeryc,andRoaldsenworkedasso-called"sub-brokers"
forJasonKeryc,andDefendantTordy,inturn,workedasasub-brokerforHartmann
(collectively,"Sub-brokers").
3. TheDefendantsrepeatedlysoldinvestmentsofferedbyAgapethatpromised
investorsoutsizereturns,typically12-14%inaslittleaseighttotenweeks(orapproximately62-
91%annually),fromtheirparticipationinhighinterestbridgeloanspurportedlymadebyAgape
tocommercialborrowers("AgapeInvestmentContracts"). TheDefendantsalsosold
investmentsofferedbyAgapeMerchantAdvanceLLC("AMA"),alateroff-shootof Agape,
thatpromisedinvestorsa4%monthlyreturnfromtheirparticipationinshorttermloansmadeby
AMAtobusinessesthatacceptedcreditcards("AMAInvestmentContracts"and,togetherwith
theAgapeInvestmentContracts,"AgapeSecurities"). Allof theAgapeSecuritiespromised
investorsthatonly 1 % oftheirprincipalwasatrisk.
4. TheAgapeSecuritieswerefictitiouswith, atbest,afractionofinvestorfunds
usedasrepresentedtoinvestorsbytheDefendants.
5. TheBrokersandSub-brokersDunne,Hartmann,MichaelKeryc,andTordyeach
knowinglyorrecklessly,andrepeatedly,mademisrepresentationstoinvestorsconcerningthe
AgapeSecurities,theusetowhichinvestorfundswouldbeput,andthesafetyof the
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investments,andurgedinvestorsto"rollover"theirprincipalandearnedinterestfrom oneAgape
Securitytothenext,toperpetuatethescheme.
6. TheBrokersandSub-brokersDunne,Hartmann,MichaelKeryc,andTordyeach
knowinglyorrecklessly,andrepeatedly,offeredandsoldAgapeSecuritiesdespitenumerous
signsoffraud, includingCosmo'spriorconvictionforfraud; thetoo-good-to-be-truereturnsand
incrediblesafetyofprincipalpromisedtoinvestors;Agape'sstatusas arelativelysmall,
unknown,privateissuerofsecurities;aseriesof extensionsanddefaultsbyAgape;anddire
warningsaboutAgape'sfinancial condition.
7. TheDefendants,andinstructionscontainedintheAgapeSecuritiesthemselves,
directedinvestorfundstoaccountscontrolledbyCosmo. Cosmomadecommissionorother
paymentsofmorethan$52milliontotheBrokers;helost$80milliontradingfuturesinpersonal
accounts;andhereturned$232milliontoinvestors. Atbest,$21.9million,or5.28%,ofthe
fundsraised,wasused,asrepresentedtoinvestors,tomakeloanstocommercialborrowersorto
businessesthatacceptedcreditcards.
8. TheAgapeSecuritieswerenotregisteredwiththeCommissionand,whileselling
AgapeSecurities,noneoftheDefendantswasregisteredwiththeCommissioninanycapacityor
associatedwitharegisteredbrokerordealer.
9. TheschemecametoanendonJanuary27,2009,whenCosmowasarrestedona
criminalcomplaintfiledintheUnitedStatesDistrictCourtfortheEasternDistrictof NewYork
(United States v. Cosmo, CR-09-255 (DRH)(E.D.N.Y.)). Cosmosubsequentlypleadedguiltyto
onecoUnteachofwireandmailfraud, andwassentencedto 300monthsinprison.
10. OnApril25,2012,AnthonyCiccone,Kaylor,JasonKeryc,andMassarowere
arrestedonacriminalcomplaintfiledintheUnitedStatesDistrictCourtfortheEasternDistrict
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of NewYork(United States v. Kerye et aI., 12-mj-000410(E.D.N.Y.)),chargingeachofthem,
basedontheirconductas AgapeBrokers,withonecountofconspiracytocommitmailfraud.
VIOLATIONS
11. Byvirtueoftheconductallegedherein,theBrokersandSub-brokersDunne,
Hartmann,MichaelKeryc,andTordyeach,directlyorindirectly,singlyorinconcert,engaged
intransactions,acts,practices,orcoursesofbusinessthatconstituteviolationsofSection17(a)
oftheSecuritiesActof1933 ("SecuritiesAct") [15 U.S.C. 77q(a)],andSection10(b)ofthe
SecuritiesExchangeActof1934("ExchangeAct") [15 U.S.c.78j(b)] andRule10b-5 [17
C.F.R. 240.10b-5]thereunder.
12. Byvirtueoftheconductallegedherein,alloftheDefendants,directlyor .
indirectly,engagedintransactions,acts,practices,orcoursesof businessthatconstitute
violationsofSections5(a)and5(c)oftheSecuritiesAct[15 U.S.c.77(e)(a)and77(e)(c)],and
Section15(a)oftheExchangeAct[15 U.S.C. 78o(a)].
JURISDICTION AND VENUE
13. ThisCourthasjurisdictionoverthisactionpursuanttoSections20(b),20(d),and
22(a)oftheSecuritiesAct[15 U.S.C. 77t(b),77t(d),and77v(a)],andSections21(d),21(e),
and27of theExchangeAct[15 U.S.C. 78u(d),78u(e),and78aa]. TheDefendants,directly
orindirectly,madeuseofthemeansorinstrumentsoftransportationorcommunicationin
interstatecommerce,orthemails,inconnectionwiththetransactions,acts,practices,and
coursesofbusinessallegedinthisComplaint.
14. VenueliesintheEasternDistrictof NewYork,pursuanttoSection22(a)ofthe
SecuritiesAct[15 U.S.c. 77v] andSection27oftheExchangeAct[15 U.S.c. 78aa],
becauseAgape'sofficeswerelocatedintheDistrict;alloftheDefendants(exceptMassaro)
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resideintheDistrict;andcertainofthetransactions, acts,practices,andcoursesofbusiness
allegedinthisComplaintoccurredwithintheDistrict,includingtelephonecalls,emails,andthe
offerandsaleofAgapeSecurities,bytheDefendants,tomorethan1,000investors.
DEFENDANTS
TheBrokers
15. BryanArias,age39,ofMaspeth,NewYork,duringtherelevantperiod,offered
andsoldAgapeSecuritiestoatleast195investors. In July2005,BryanAriasincorporated
PrecisionProcessServiceInc.,aNewYorkcorporation,andheusedatleastoneaccountinits
nameforhisAgape-relatedbanking. Duringtherelevantperiod,BryanAriasreceivedatleast
$1,720,260grossincommissionsorotherpaymentsfromAgapeandAMA.
16. HugoArias,age42,ofMaspeth,NewYork,duringtherelevantperiod,offered
andsoldAgapeSecuritiesto atleast1,419investors. HeisBryanArias'sbrother. Bryanand
HugoAriasmaintainedandmanagedAgape'sJacksonHeights,NewYorkoffice. InJuly2005,
HugoAriasincorporatedHugoAriasInc.,aNewYorkcorporation,andheusedaccountsinits
nameforhisAgape-relatedbanking. Duringtherelevantperiod,HugoAriasreceivedatleast
$7,926,835grossincommissionsorotherpaymentsfromAgapeandAMA.
17. AnthonyCiccone,age39,ofLocustValley,NewYork,duringtheperiodfrom
April2006throughJanuary2009,offeredandsoldAgapeSecuritiestoatleast535 investors. In
April2006,AnthonyCicconeincorporatedAnthonyCicconeEnterprisesLLC,aNewYork
limitedliabilitycompany,andheusedaccountsinitsnameforhisAgape-relatedbanking.
DuringtheperiodheofferedandsoldAgapeSecurities,AnthonyCicconereceivedatleast
$11,735,518grossincommissionsorotherpaymentsfromAgapeandAMA.
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18. SalvatoreCiccone,age43,ofMaspeth,NewYork,duringtheperiodfrom
January2008throughJanuary2009,offeredandsoldAgapeSecuritiestoatleast348investors.
HeisAnthonyCiccone'sbrother. InFebruary2008,SalvatoreCicconeincorporatedMSNK
Inc.,aNewYorkcorporation;inJune2008,heincorporatedMISKRISInc.,aNewYork
Corporation;and,heusedaccountsintheirnamesforhisAgape-relatedbanking. Duringthe
periodheofferedandsoldAgapeSecurities,SalvatoreCicconereceivedatleast$5,502,898
grossincommissionsorotherpaymentsfromAgapeandAMA.
19. Kaylor,age36,ofBethpage,NewYork,duringtheperiodfromJanuary2007
throughJanuary2009,offeredandsoldAgapeSecuritiestoatleast249investors. InJanuary
2007,KaylorincorporatedBrandinoCorp.,aNewYorkcorporation,andsheusedatleastone
accountinitsnameforherAgape-relatedbanking. Duringtheperiodsheofferedandsold
AgapeSecurities,Kaylorreceivedatleast$3,708,818grossincommissionsorotherpayments
fromAgapeandAMA.
20. JasonKeryc,age34,ofWantagh,NewYork,duringtherelevantperiod,offered
andsoldAgapeSecuritiestoatleast1,617investors. InMarch2006,JasonKerycincorporated
Cyrek,Inc.,aNewYorkcorporation,andheusedatleastoneaccountinitsnameforhisAgape-
relatedbanking. Duringtherelevantperiod,JasonKerycreceivedatleast$16,225,664grossin
commissionsorotherpaymentsfromAgapeandAMA. Duringthesameperiod,JasonKeryc
paidotherindividuals,includingalloftheSub-brokers(exceptTordy),collectively,atleast
$7,400,573,fromCyrek,Inc.accounts,incommissionsorotherpayments,to sellAgape
Securitiesforhim.
21. Massaro,age40,ofBoyntonBeach,Florida,duringtherelevantperiod,offered
andsoldAgapeSecuritiestoatleast826investors. InJuly2005,MassaroincorporatedNikki
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TricaricoInc.,aNewYorkcorporation,andheusedatleastoneaccountinitsnameforhis
Agape-relatedbanking. Duringtherelevantperiod,Massaroreceivedatleast$5,920,732gross
incommissionsorotherpaymentsfromAgapeandAMA.
The Sub-Brokers
22. Curran, age32,ofAmityville,NewYork,duringtheperiodfromMarch2007
throughJanuary2009,workingasaSub-brokerforJasonKeryc,offeredandsoldAgape
Securitiestoatleast132investors. InJanuary2008,CurranincorporatedCurranConsulting
Inc.,aNewYorkcorporation,andheusedatleastoneaccountinitsnameforhisAgape-related
banking. DuringtheperiodheofferedandsoldAgapeSecurities,Curranreceivedatleast
$531,890incommissionsorotherpaymentsfromJasonKeryc. Curranwasassociatedwitha
registeredbroker-dealerpriortohisinvolvementinAgape,fromNovember2000throughMarch
2001,andhewasagainassociatedwitharegisteredbroker-dealer,afterhisinvolvementin
Agape,fromAugustthroughNovember2009.
23. Dunaske, age 37,ofRonkonkoma,NewYork,duringtheperiodfromMay2007
throughJanuary2009,workingas aSub-brokerforJasonKeryc,offeredandsoldAgape
Securitiestoatleastseventyinvestors. InApril2007,DunaskeincorporatedLegasea,Inc.,a
NewYorkcorporation,andheusedatleastoneaccountinitsnameforhisAgape-related
banking. DuringtheperiodheofferedandsoldAgapeSecurities,Dunaskereceived,atleast,
$483,765incommissionsorotherpaymentsfromJasonKeryc,and$234,669grossinpayments
fromAgape.
24. Dunne, age34,ofMassapequa,NewYork,duringtheperiodfromJuly2007
throughJanuary2009,workingasaSub-brokerforJasonKeryc,offeredandsoldAgape
Securitiestoatleastninety-nineinvestors. InJanuary2008,DunneincorporatedArcticWolf,
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Inc., a New York corporation, and he used accounts in its name for his Agape-related banking.
During the period he offered and sold Agape Securities, Dunne received at least $1,584,413 in
commissions or other payments from Jason Keryc. Dunne was associated with a registered
broker-dealer, prior to his involvement in Agape, from September 2005 through January 2007.
25. Hartmann, age 37, of Massapequa, New York, during the period from September
2006 through January 2009, working as a Sub-broker for Jason Keryc, offered and sold Agape
Securities to at least 441 investors. In August 2006, Hartmann incorporated Ocean to Bay Tours
Inc., a New York corporation, and he used accounts in its name for his Agape-related banking.
During the period he offered and sold Agape Securities, Hartmann received, at least, $3,285,084
in commissions or other payments from Jason Keryc, and $309,734 gross in payments from
Agape and AMA. During the same period, Hartmann paid Tordy at least $981,899, from Ocean
to Bay Tours Inc. accounts, in commissions or other payments, to sell Agape Securities for him.
26. Michael Keryc, age 38, of Baldwin, New York, during the period from
September 2006 through January 2009, working as a Sub-broker for his brother, Jason Keryc,
offered and sold Agape Securities to at least 177 investors. In September 2007, Michael Keryc
incorporated Liquid Dreams Corp., a New York corporation, and he used accounts in its name
for his Agape-related banking. During the period he offered and sold Agape Securities, Michael
Keryc received at least $1,002,812 in commissions or other payments from Jason Keryc.
27. Roaldsen, age 35, of Wantagh, New York, during the period from January 2007
through January 2009, working as a Sub-broker for Jason Keryc, offered and sold Agape
Securities to at least 159 investors. In July 2007, Roaldsen incorporated Roaldsen Jr. Consulting,
Inc., a New York corporation, and he used at least one account in its name for his Agape-related
banking. During the period he offered and sold Agape Securities, Roaldsen received, at least,
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$512,610incommissionsorotherpaymentsfromJasonKeryc, and$92,751 grossinpayments
fromAgape.
28. Tordy,age42,ofWantagh,NewYork,duringtheperiodfromFebruary2007
throughJanuary2009,togetherwithherbrother,Hartmann,offeredandsoldAgapeSecuritiesto
atleast441 investors. InJanuary2007,TordyincorporatedLujanoHoldingLimited,aNew
Yorkcorporation,andsheusedaccountsinitsnameforherAgape-relatedbanking. Duringthe
periodsheofferedandsoldAgapeSecurities,Tordyreceived,atleast,$981,899incommissions
orotherpaymentsfromHartmann,and$80,000grossinpaymentsfromAgape.
OTHERRELEVANTPERSONSANDENTITIES
29. Cosmo,age41,of LakeGrove,NewYork,wasthefounder, owner,andpresident
ofAgapeandAMA. OnOctober29,2010,CosmopleadedguiltyintheUnitedStatesDistrict
CourtfortheEasternDistrictof NewYork(United States v. Cosmo, CR-09-255(DRH)
(E.D.N.Y.))toonecounteachofmailandwirefraud, and,inhisallocution,admittedthat,
contrarytopromisesmadeto Agape'sinvestors,onlyasmallamountofinvestorfundswasused
tomakeloanstocommercialborrowersorbusinessesthatacceptedcreditcards;heusedinvestor
fundstotradefuturesinpersonalaccounts;andheusednewinvestorfundstopayearlier
investors. OnOctober14,2011,hewassentencedto 300monthsinprisonandorderedtopay
$179,195,233 restitution. In1999,Cosmowascensured,barred,andfined$68,209bythe
NationalAssociationofSecuritiesDealers(nowFINRA)forstealingfundsfromcustomer
accounts. Forthesameconduct,hepleadedguiltytoonecountofmailfraud intheUnitedStates
DistrictCourtfortheEasternDistrictof NewYork,wassentencedtotwenty-onemonthsin
prison,andwasorderedtopay$177,000inrestitution.
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30. Agape,aNewYorkcorporation,incorporatedinAugust2000,maintainedoffices
at150MotorParkway,Hauppauge,NewYork,64-13BGrandAvenue,Maspeth,NewYork,and
82-11 37
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Avenue,JacksonHeights,NewYork. Duringtherelevantperiod,Agapehelditself
outtobeaproviderofshort-term,highinterestbridgeloanstocommercialborrowers,including
borrowersintherealestateandconstructionindustries,andofferedandsoldAgapeInvestment
Contracts,toitsinvestors,representingparticipationinthebridgeloansitpurportedlymadeto
commercialborrowers. AgapewasneverregisteredwiththeCommissioninanycapacity. On
February5, 2009,certaininvestorsfiledaninvoluntaryChapter7petitionintheUnitedStates
BankruptcyCourtfortheEasternDistrictof NewYork(In re Agape World, Inc., et a!., 09-
70660(DTE)(E.D.N.Y.))againstAgape,AMA,andrelatedentities.
31. AMA,aNewYorklimitedliabilitycompany,incorporatedinNovember2007,
operatedfromAgape'soffices. AMAhelditselfouttobeaproviderofshort-term,highinterest
loans,or"advances,"tobusinessesthatacceptedcreditcards,andofferedandsoldAMA
InvestmentContracts,toitsinvestors,representingparticipationintheadvancesitpurportedly
madetobusinessesthatacceptedcreditcards. AMAwasneverregisteredwiththeCommission
inanycapacity.
32. Premium Protection Plan LLC ("PPP"),aDelawarecompany,incorporatedin
October2008,operatedfromAgape'soffices. PPPofferedpoliciesthatpurportedtobe
insurancefortheAgapeSecurities,i.e.,foranannualpremiumbasedonanAgapecustomer's
accountbalance,PPPpurportedtooffertheinvestorcertainrightsinthecaseofanextensionor
default,includingguaranteedreturnof principal,less 1 %,in120days,regardlessof thestatusof
theunderlyinginvestment.
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FACTS
TheFraudulentOfferingofAgapeSecurities
33. During the relevant period, the Agape Investment Contracts that the Defendants
sold to investors falsely represented participation in short-term, high interest bridge loans
purportedly made by Agape to specific commercial borrowers in the real estate, construction, or
other industries. Each Agape Investment Contract was named for the project purportedly being
financed by the Agape loan underlying the investment.
34. The Defendants gave investors an Agape Investment Contract, signed by Cosmo,
as proof of each of their Agape investments.
35. The Agape Investment Contracts promised that: (a) investors would receive
between 8% and 19% returns, on maturities from thirty to seventy-four days, with only 1 % of
principal at risk; (b) 99% of each investment was "secured by first position asset lien (VCC)
equaling 100% of investment;" and (c) the investment "[was] 'held' at Agape World, Inc. in
'custodian' to client's account."
36. Aninvestor information page of Agape's website, available to the general public
at least as early as August 2007, promised investors that: (a) "All loans [made by Agape to
commercial borrowers] are secured by commercial asset liens equaling 1 00% of the loan for your
investment's safety;" (b) Agape provides "99% security of your investment by first position
VCC filing;" (c) "Investors are in complete control of their funds and are able to access at any
time;" and (d) "Each loan is collateralized by 100% commercial asset lien."
37. During the relevant period, neither the Agape Investment Contracts nor the Agape
website disclosed to investors that their money would not be used to make high interest bridge
loans to commercial borrowers, or that the promised returns would be paid using funds received
from new investors, not from money earned by Agape from making bridge loans.
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38. AseachAgapeInvestmentContractmatured,theDefendantsofferedinvestorsthe
opportunitytoreinvest,or"rollover,"theirprincipalandinterestearned,andtoinvestadditional
principal,intoanewAgapeInvestmentContractthatwouldbeofferedshortlythereafter,usually
withintwoweeks,orto withdrawsomeoralloftheirfunds, which, atAgape,wasreferredtoas
makinga"checkrequest." TheDefendantsalsoofferedinvestorstheopportunitytorollover
fundsbetweenAgapeandAMAInvestmentContracts.
39. Astheschemeprogressed,thenumberof investmentopportunitiesofferedby
Agapeincreased. Atfirst, duringtherelevantperiod,AgapeofferedoneortwoAgape
InvestmentContractsatatime. ByMarch2007,AgapeoffereduptothreeAgapeinvestment
Contractsatonceand,bySeptember2007,thenumberincreasedtofour. InDecember2007,
AgapeintroducedtheAMAInvestmentContract,atwo-yearcontractofferedcontinuouslyto
Agapeinvestors. ByJuly2008,AgapeofferedtheAMAInvestmentContractanduptofive
AgapeInvestmentContractsatonce. AtthetimeofCosmo'sarrest,inJanuary2009,investors
wereleftholdinguptonineoutstandingAgapeInvestmentContractsandtheirAMAInvestment
Contracts.
40. TheAMAInvestmentContractssoldtoinvestorsfalselyrepresentedparticipation
inshort-term,highinterestloans,or"advances"thatAMApurportedlymadetoretailmerchants
andotherbusinessesthatacceptedcreditcards. TheDefendantsgaveinvestorsanAMA
InvestmentContract,signedbyCosmo,asproofofeachof theirAMAinvestments.
41. TheAMAInvestmentContractsfalselypromisedinvestors4%monthlyreturns
and,further,thatAMAwould"use[a] diversificationmodel,underwritingguidelines,eightyear
advanceindustryaverageandreserves/collateralonalladvancestolimitriskonalladvancesto
merchantsto 1 % perannum."
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42. Duringtherelevantperiod,theAMAInvestmentContractsdidnotdiscloseto
investorsthattheirfundswouldnotbeusedtomakehigh-interestadvancestobusinessesthat
acceptedcreditcards,orthatthepromisedreturnswouldbepaidusingfundsreceivedfromnew
investors,notmoneyearnedbyAMAfrommakingsuchadvances.
43. Duringtherelevantperiod,therepresentationsmadetoinvestorswhopurchased
AgapeSecuritieswerefalsewith,atbest,afractionofinvestorsfundsusedasrepresentedto
investors.
44. Duringtherelevantperiod,theDefendantsraised,togetherwithCosmoand
othersinCosmo'semploy,atleast$415,413,336frominvestors,with,atbest,$21,943,479,or
5.28%,usedasrepresentedtoinvestors. (Cosmomadepaymentstotaling$16,181,379toentities
thatmay havebeencommercialborrowers,and,$5,762,100,toafactoringcompany.) During
thesameperiod,CosmopaidtheBrokers,collectively,$52,740,726;usedatleast$232,274,276
innewinvestorfundstopayearlierinvestors;andlost$80,798,587thathedivertedtohis
personalfuturescommissionmerchantaccounts.
The Brokers and Sub-Brokers Dunne, Hartmann, Michael Keryc, and Tordy Made
Misrepresentations and Omissions to Investors in Connection with the Offer and Sale of
Agape Securities.
45. TheBrokersandSub-brokersDunne,Hartmann,MichaelKeryc,andTordyeach
offeredandsoldAgapeSecuritiestoinvestorswithknowledge,orinrecklessdisregard,ofthe
false statementscontainedintheAgapeSecuritiesthemselves,andthefalse statementsmadeby
Cosmo,Agape,andAMAconcerningtheAgapeSecurities. ThesesameDefendantsknowingly
orrecklessly,andrepeatedly,urgedinvestorstorollovertheirprincipalandearnedinterestfrom
oneAgapeSecuritytoanothertoperpetuatethescheme.
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46. TheBrokersandSub-brokersDunne,Hartmann,MichaelKeryc,andTordyeach,
knowinglyorrecklessly,andrepeatedly,mademisrepresentationstoinvestorsconcerningthe
AgapeSecurities,includingmisrepresentationsconcerningthebusinessofAgapeandAMA,the
usetowhichinvestorfundswouldbeput,andthesafetyof theinvestments. Examplesof
particularmisrepresentationsmadebyeachof thesedefendantsaresetforthbelow.
Bryan and Hugo Arias
47. Beginningatleastasearlyas2007,BryanandHugoAriasmaintainedandused
aninvestorpresentationtosolicitinvestors,whichfalsely stated,amongotherthings,that: (a)
Investorscouldeama14%returnontheirinvestments;(b)investorscould"Reinvestinterests
[sic] paidandeam119.5%yearlyreturn[sic];"(c)"99%securityofyourinvestmentbyDCC
filing;"(d)eachloanwascollateralized"by100%commercialassetlien"or"125%commercial
assetlien;"and(e)"Investors[were]incompletecontrolof theirfundsandareabletoaccessat
anytime[sic]."
48. OnoraboutJuly 16,2007,BryanAriassentanemaiitoaninvestororprospective
investor,attachinganinvestorpresentation,andfalselywrote:
Thepresentationshouldexplainmostifnotallofit,butherea
quicklesson. Weareabridgeloancompany,so wedealwith
commercialconstructionbridgeloans,sotheresidentialmarkethas
nothingtodo withus. Nowbasicallywhatwedo isputmoneyin
escrowaccountsothataconstructioncompanycanusetheaccount
asshowmoneytoobtainabiggerloanfromthebank. Intumthey
payusahighinterestfortheseshorttermloans,whichwesplit
withourinvestors. Themoneyjustsitsinanescrowaccount,the
constructioncompanydont[ sic] actuallytakeholdof themoney
thatwhy[sic] wegettopromisethat99%of themoneyissafeand
secure. The 1 %riskisif theydon'tcloseontheloanwiththebank
wehavetopaya1 % lawyersfeetogetthemoneyoutofescrow.
49. PriortoInvestorA'sSeptember200SpurchaseofanAgapeInvestmentContract,
BryanAriasfalselytoldInvestorAthat: (a)Ag<:tpe madeshort-termbridgeloanstoconstruction
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companies;(b)theborrowersusedtheloanproceedstofundconstructionprojectsuntilthey
receivedtraditionalfinancingfromabank,atwhichtimetheywouldrepayAgapewithinterest;
(c)Agape'sloansweresecuredbyspecificcollateralfromtheborrowers;(d)Investorfunds
Agapeusedtomakethebridgeloanswere99%guaranteed,meaningthatifaborrowerdefaulted
andAgapehadtosellthecollateralsecuringtheloanonly1 % of theinvestors' principalwould
belost;(e)AgapewoulduseInvestorA's money,togetherwithmoneyfromotherinvestors,to
makeashort-termbridgeloantoaconstructioncompany;and(f)becauseeachAgape
investmentrepresentedparticipationinaloantoadifferentborrower,noAgapeinvestment
wouldbeaffectedbytheperformanceof anyotherAgapeInvestment. InvestorAcontinuedto
purchaseAgapeSecuritiesfromBryanAriasandremainedinvestedinAgapeSecuritiesuntil
January2009.
50. PriortoInvestorB'sJanuary2008purchaseofanAgapeInvestmentContract,
HugoAriasfalselytoldInvestorBthatAgapemadebridgeloanstocommercialborrowers,
includingborrowersintheconstructionindustry,othersmallbusinesses,andLLC's,and,that
AgapewoulduseInvestorB'smoney,togetherwithmoneyfromotherinvestors,tomakebridge
loanstocommercialborrowers. InvestorBcontinuedtopurchaseAgapeSecuritiesfromHugo
AriasandremainedinvestedinAgapeSecuritiesuntilJanuary2009.
Anthony and Salvatore Ciccone
51. PriortoInvestorC' sMarch2005purchaseofanAgapeInvestmentContract,
AnthonyCicconefalselytoldInvestorCthat: (a)Agapeinvestedwithcontractorsand
constructioncompanies;(b)theseborrowerspaidAgapehighratesofinterestbecausetheycould
notgettraditionalbankfinancing; (c)Agapewouldpoolthecontributionsofinvestorstomake
loanstotheborrowers;(d)CosmowasthedealmakerforAgapeand,therefore,he,Anthony
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Ciccone, didnotreceivedetailsabouttheloansfromCosmo;and(e)theloanswereguaranteed
bytheSECorFDIC. InvestorCcontinuedtopurchaseAgapeSecuritiesfromAnthonyCiccone
andremainedinvestedinAgapeSecuritiesuntilJanuary2009.
52. PriortoInvestorD'sMay2007purchaseofanAgapeInvestmentContract,
SalvatoreCicconefalselytoldInvestorDthat: (a)Agapemadeshort-termbridgeloansto
companies,usuallycommercialconstructioncompanies,thatcouldnotgettraditionalloansfrom
abank;(b)theAgapeinvestmentswere 100%safebecausetheloanstoborrowersweresecured
bypropertyandAgapetookapartialownershippositionintheborrowervaluedatupto 125%of
theloanamountintheeventofdefault;(c)noneoftheborrowershadeverdefaultedonan
Agapeloan;and(d)AgapewoulduseInvestorD'smoney,togetherwithmoneyfromother
investors,tomakeashort-termbridgeloantoacommercialconstructioncompany. InvestorD
continuedtopurchaseAgapeSecuritiesfromSalvatoreCicconeandremainedinvestedinAgape
SecuritiesuntilJanuary2009.
Kaylor
53. PriortoInvestorE'sJanuary2008purchaseofanAgapeInvestmentContract,
KaylorfalselytoldInvestorEthat: (a)Agapemadeshort-termbridgeloanstocommercial
borrowers,includingconstructioncompanies;(b)InvestorE'smoneywouldbepooledwith
otherinvestors'moneytomakeashort-termbridgeloantoacommercialborrower;and(c)the
investmentwassafe. PriortoInvestorE'sMarch2008 ofanAMAInvestment
Contract,KaylorfalselytoldherthatAMAmadeshort-termloanstoretailandothermerchants,
andthatInvestorE'smoneywouldbeused,togetherwithmoneyfromotherinvestors,tomake
suchloans. InvestorEcontinuedtopurchaseAgapeSecuritiesfromKaylorandremained
investedinAgapeSecuritiesuntilJanuary2009.
16
Jason Keryc
54. PriortoInvestorF'sFebruary2006purchaseofanAgapeInvestmentContract,
JasonKerycfalselytoldInvestorF,that: (a)Agapemadeshort-termbridgeloanstocommercial
borrowers,includingcompaniesintheconstructionbusiness; (b)AgapewouldpoolInvestorF's
moneywithmoneyfromotherinvestorstomakeashort-termbridgeloantoacommercial
borrower;(c)Agapehadneverexperiencedadefaultbyoneofitsborrowers;and(d)ifoneof
Agape'sborrowersweretodefault,theAgapeInvestmentContracttiedtothedefaulting
borrowerwouldbesafebecauseAgapewouldseizetheassetsoftheborrowerandsellthemto
satisfytheloan. PriortoInvestorF'sJanuary2008purchaseofanAMAInvestmentContract,
JasonKerycfalselytoldhimthat: (a)AMAwouldpoolInvestorF'smoneywithmoneyfrom
otherinvestorstomakeloanstorestaurants,merchants,andotherbusinessesthatacceptedcredit
cards;(b)AMAfunctionedlikealineofcreditfortheseborrowers;and(c)eachtimeaborrower
waspaidbyoneofitscustomersusingacreditcard,adedicatedpercentageofthattransaction
wouldbesentautomaticallytoAMAtorepaytheprincipalorinterestontheborrower'slineof
credit. InvestorFcontinuedtopurchaseAgapeSecuritiesfromJasonKerycandremained
investedinAgapeSecuritiesuntilJanuary2009.
Massaro
55. PriortoInvestorG'sMay2006purchaseofanAgapeInvestmentContract,
MassarofalselytoldInvestorGthat: (a)Agapemadebridgeloanstocompaniesinvolvedin
commercialrealestatetransactions,includingcompaniesthatwerepurchasingapartment
buildingsorotherlargeproperties,orundertakingconstructionprojects,thatneededshort-term
financingwhilewaitingfortraditionalfinancingtocomethrough;(b)AgapewouldpoolInvestor
G'smoneywithotherinvestors'moneytomakeabridgeloantoacommercialrealestate
17
borrower;(c)oncetheborrowerrepaidAgape,InvestorGwouldreceiveareturnonher
investment;and(d)theinvestmentwas99%secure,meaningonly1 %ofInvestorG'sprincipal
wasatrisk. InvestorGcontinuedtopurchaseAgapeSecuritiesfromMassaroandremained
investedinAgapeSecuritiesuntilJanuary2009.
56. Duringtherelevantperiod,Massarocreated,maintained,andprovidedto
investors,includingInvestorG,fictitiousaccountstatementspurportingto showeachcustomer
hisorherinitialinvestmentinAgape,accountbalance,annualreturn,andpurportedinvestment
gaintodate.
Dunne
57. PriortoInvestorH'sApril2007purchaseofanAgapeInvestmentContract,
DunnefalselytoldInvestorHthat: (a)Agapeusedinvestorfundstomakehighinterestbridge
loans,mostlytoconstructionfirmsandrealestatedevelopmentcompanies;(b)investorfunds
werepooledbyAgapetomaketheloansand, attheendofeachloan,investorswouldbepaidon
theinvestment;(c)Agape'sloanswerecollateralized;(d)Agapehadfirstpositionliensonthe
propertiesbeingdevelopedorotherpropertiesof theborrowers(e)eachAgapecontract
representedaninvestmentinadifferentloan;and(f)theAgapeinvestmentswerealmost
guaranteed. InvestorHcontinuedtopurchaseAgapeSecuritiesfromDunneandremained
investedinAgapeSecuritiesuntilJanuary2009.
Hartmann and Tordy
58. PriortoInvestor1'sMarch2007purchaseofanAgapeInvestmentContract,
HartmannfalselytoldInvestorIthat: (a)Agapemadeshort-termbridge,orhardmoney,loansto
commercialborrowersintherealestateindustry;(b)theborrowersusedtheloanproceedsto
fundtheinitialstagesofconstructionprojectsuntiltheyreceivedtraditionalfinancingfroma
18
bank,atwhichtimetheywouldrepaytheAgapeloanswithinterest; (c)Agape'sloansto
commercialborrowersweresecuredbyUCCliensagainstthepropertiesbeingdeveloped;(d)
investorfundsAgapeusedtomakebridgeloanstocommercialborrowerswere99%guaranteed,
meaningthatifaborrowerdefaultedandAgapehadtosellthecollateralsecuringtheloanonly
1 %oftheinvestors' principalwouldbelost;and(e)AgapewoulduseInvestor1'smoney,
togetherwithmoneyfromotherinvestors,tomakeashort-termbridgeloantoacommercial
borrower. PriortoInvestor1'sJanuary2008purchaseof anAMAInvestmentContract,
Hartmannfalselytoldhimthat: (a)AMAmadeshort ....term,highinterestloanstoretail
merchants; (b)AMA'sloanstoretailmerchantswerepaidbackthroughadedicatedpercentage
ofthemerchants' future creditcardreceipts;(c)theAMAinvestmentwassafebecauseitdidnot
relyonrepaymentbytheborrowersbut,rather,theloanswererepaidautomaticallyeverytime
theborrowers' customersusedacreditcardtopayfortheirpurchases;(d)AMAdidthorough
duediligenceontheborrowersandonlymadeloansto retailmerchantswithademonstrated
trackrecordofconsistentcreditcardsales;and(e)Investor1'smoneywouldbeusedbyAMA,
alongwithmoneyfromotherinvestors,tomakeadvancestoretailmerchants. InvestorI
continuedtopurchaseAgapeSecuritiesfromHartmannandremainedinvestedinAgape
SecuritiesuntilJanuary2009.
59. Priorto Investor1'sJuly2007purchaseofanAgapeInvestmentContract,Tordy
falselytoldInvestorJthat: (a)Agapemadeshort-termbridgeloanstoconstructioncompanies
andrealestatedevelopers;(b)theborrowersneededtoshowmoneyontheirbooksinorderto
securetraditionalloansfrombanks,atwhichtimetheywouldpaybacktheAgapeloanswith
interest;(c)theborrowersdidnotspendthemoneytheybOlTowedfromAgapeand,infact, they
couldnotactuallytouchthemoney,whichiswhytheinvestmentwassafe;(d)Agapehadnever
19
experiencedadefaultwithanyofitsborrowers;and(e)AgapewoulduseInvestor1'smoney,
togetherwithmoneyfromotherinvestors,tomakeashort-termbridgeloantoaconstruction
companyorarealestatedeveloper. PriortoInvestor1'sJanuary2008purchaseofanAMA
InvestmentContract,TordyfalselytoldhimthatAMAmadeloanstoretailmerchantsthatwere
repaidbyadedicatedpercentageofthemerchants' futurecreditcardreceipts,andthatAMA
wouldusedInvestor1'smoney,togetherwithmoneyfromotherinvestors,tomakeloanstoretail
merchants. InvestorJcontinuedtopurchaseAgapeSecuritiesfrom T ordyandremainedinvested
inAgapeSecuritiesuntilJanuary2009.
Michael Keryc
60. PriortoInvestorK'sSeptember2007purchaseofanAgapeInvestmentContract,
MichaelKerycfalselytoldInvestorJthat: (a)Agapemadehighinterestbridgeloansto
commercialborrowers,mostlycompaniesintherealestateindustry,thathadashort-termneed
forfundswhilewaitingformorepermanentfundingfromabankoramortgagecompany;(b)
InvestorK'smoney,togetherwithmoneyfromotherinvestors,wouldbeusedtomakeabridge
loantoacommercialborrower;(c)eachAgapeInvestmentContractrepresentedparticipationin
aloanbeingmadebyAgapetoadifferentcommercialborrower;and(d)attheendofeach
bridgeloan, investorswouldhavethreechoices- towithdrawallfunds,towithdrawearned
interestandrollovertheprincipalintothenextbridgeloan,ortorolloverbothprincipaland
earnedinterestintothenextbridgeloan. Priorto InvestorK'sApril2008purchaseofanAMA
InvestmentContract,MichaelKerycfalselytoldherthatAMAwasacreditcardprocessing
company,meaningthatAMAownedorleasedcreditcardterminalsusedbysmallbusinessesto
processpayments; and, that,eachtimeacustomerswipedhisorhercreditcardthroughanAMA
terminalusedbyasmallbusiness,AMAwouldreceiveapercentageoftheamountbeing
20
charged. InvestorKcontinuedtopurchaseAgapeSecuritiesfromMichaelKerycandremained
investedinAgapeSecuritiesuntilJanuary2009.
TheBrokersandSub-BrokersDunne,Hartmann,MichaelKeryc,andTordySoldAgape
SecuritiesinRecklessDisregardofRedFlagsofFraud.
61. NotwithstandingtherepresentationsthattheBrokersandSub-brokersDunne,
Hartmann,MichaelKeryc,andTordymadetoinvestorsconcerningtheAgapeSecurities,each
wasawareofnumerousredflagsindicatingthatthoserepresentationwereuntrue. Nonetheless,
theycontinuedtosellAgapeSecuritiesasfurtherdescribedbelow.
The Brokers Knowingly or Recklessly Oversold an Agape Investment Contract.
62. OnoraboutJune26,2008,anAgapeemployeesentanemailtotheBrokers
attachinga"FinancingTermSheet"foraloanapparentlybeingmadebyAgapetoacompany
called144East30
th
StreetLLC.
63. Thetotalloanamount,accordingtothetermsheet,was$1,586,000. Thus,the
totalamountthatcouldberaisedfrominvestorsparticipatingintheloan,eveniftheloanwas
real,wasnomorethan$1,586,000.
64. AlthoughDefendantsHugoArias,Kaylor,JasonKeryc,andMassarounder,stood
thattotalinvestmentscouldnotexceedtheamountofthepurportedloan,theyeachsold
significantlyhigherparticipationsintheloanthantheloanamountprovidedforinthetermsheet.
FortheAgapeInvestmentContractcalled"144East30
th
St.LLC,"theyraised,ineithernew
principalorfundsrolledoverbyinvestorsfromapreviousAgapeinvestment,atleast,the
followingamounts:
Broker Amount
HugoArias $4.9million
Kaylor $2.6million
21
JasonKeryc $21 million
Massaro $5.2million
65. Moreover,BryanArias,workingoutofthesameJacksonHeights,NewYork
officeashisbrother,Hugo,raisedatleast$750,000forthe 144East30
th
St.LLCcontractin
additionto the$4.9millionthathisbrotherraised. AnthonyandSalvatoreCiccone,respectively,
raised,innewprincipalalone,atleast,$929,500and$792,175forthe 144East30
th
St. LLC
contract. Thus,eachof theseDefendantsknew,orrecklesslydisregarded,thatmuchofthe
investormoneytheyraisedcouldnothavebeenusedasrepresentedtoinvestors.
The Brokers and Sub-brokers Dunne, Hartmann, Michael Keryc, and Tordy
Sold Agape Securities Despite Learning 0/Cosmo's Prior Conviction for
Fraud.
66. ByAugust2008,theBrokersandSub-brokersDunne,Hartmann,MichaelKeryc,
andTordyeachknew,orwererecklessinnotknowing,thatCosmohadacriminalhistoryof
fraudbeforehecreatedAgape. Yet,theycontinuedtosellAgapeSecuritiestoinvestors,making
positiverepresentationsabouttheinvestments' safetyandreturns.
67. Inthemid-August2008,afteritwasrevealedonawebsitecalledfatwallet.com
thatCosmohadapriorfelonyconvictionandspenttimeinfederalprisonforfraud, Cosmoheld
ameetingofallBrokersandSub-brokerstoaddresstheissue.
68. OnAugust18,2008,Cosmo'sassistantsentanemailtotheBrokersandothers
stating:
***** PLEASEFORWARDTOALLYOURSUB-BROKERS
IMMEDIATELY*****
AsperNicholas[Cosmo],pleaseDONOTrespondtoquestionsor
makeanystatementsregardingtherecentbloggingincidentto
inquiriesreceivedoutsideofyourofficeorfrompeoplethatyoudo
notknow. Oneofourstaffmembersreceivedarequestfrom
DavidWinselberg[sic] ofL!BusinessNewsforaninterviewwith
22
Nicholas. Webelievehisintentionsarearesultof theblogs. Due
totheslanderousuntruthfulstatementspostedontheblog,allsuch
inquiriesandallfuture statementswillbehandledbyaPublic
Relationsfirmwearehiring.
69. OnAugust29,2008,theLongIslandBusinessNews,aLongIsland,NewYork
newspaperpublishedanarticleaboutAgape,byareporternamedDavidWinzelberg,
mentioning,amongotherthings,that"In1999,Cosmowassentencedto21 monthsinfederal
prisonandorderedtopay$177,000restitutionforhisroleindefraudinginvestorsofaLong
Islandsecuritiesdealer."
70. Thereafter,theBrokersandSub-brokersDunne,Hartmann,MichaelKeryc,and
Tordyeach,withknowledgeof,orrecklessdisregardforthetruth,continuedtoofferandsell
AgapeSecurities,anddidnottellexistingorprospectiveinvestorsthatCosmohadaprior
convictionforfraud.
The Brokers and Sub-brokers Dunne, Hartmann, Michael Keryc, and Tordy
Sold Agape Securities after Agape's First Default and Dire Warnings about
Agape's Financial Condition.
71. BeginninginSeptember2008,thePonzischemebegantofalter: Cosmobegan
alertingtheBrokersthatAgapewasinfinancialdistressandunabletomeetinvestor
redemptions;AgapefailedtoreturntoinvestorstheirprincipalandearnedinterestonanAgape
InvestmentContractforthefirsttime;andCosmowithheldcommissionsfromtheBrokersand
begananurgentcampaigntoraisemoneytostemthegrowingtideofredemptionsbyinvestors.
Notwithstandingthesedirewarnings,theBrokersandSub-brokersDunne,Hartmann,Michael
Keryc,andTordycontinuedtosellAgapeSecurities,withtheirpromisesofsafetyand
significantreturns,withoutindicatingthatAgapewasinfinancialdistressandexistinginvestors
werenotbeingpaid.
23
72. OnSeptember16,2008,CosmoheldamandatorymeetingwiththeBrokerstotell
themthatAgapewouldnotbeabletopayinvestorstheirprincipalandinterestearnedonan
AgapeInvestmentContractcalledCarriageHomes& MarinaDevelopmentLLCPhaseI
("CarriageHomes")whenitwasduetomatureonSeptember29,2008..Cosmosaidthatthe
CarriageHomescontractwouldbe"extended"untilafuture date.
73. OnSeptember18,2008,Cosmo'sassistantsentanemailtotheBrokerstoinform
themthatanotherAgapeInvestmentContract,the 144East30
th
St. LLC contract,whichwas
supposedtohavematuredtwoweeksearlier,wasbeingextendedto September26, 2008. Onthe
sameday, JasonKerycforwardedthisemailtohisSub-brokers.
74. OnSeptember22,2008(afteremailingadrafttotheBrokers,whichJasonKeryc
forwardedtohisSub-brokers),Cosmosentalettertoinvestorsstating:
AsavaluedinvestorofAgapeWorld,Inc.andaparticipantinour
[CarriageHomes] loancycle,itismyresponsibilitytoinformyou
thattheborrowerisunabletosecuretraditionalfinancingonthe
maturitydatewhichmeansthatourbridgeloanandtheinterestdue
allofuswillnotbepaidbackonthe29
th

PriortoAgapelendingmoneytotheborrower,theyreceiveda
priorcommitmentfornewfinancingbutbecauseofthecurrent
environmentoftighteningcredit,theircommitmenthasbeen
delayed. Wehaveeveryreasontobelievethatthissituationis
temporaryandthattheborrowerwillbeableto securethe
necessaryfinancingtopayoffthebridgeloanwithinterestata
laterpointintime. To facilitatetheprocess,weareextendingthe
termofourloanforanadditional90days....
Nofundrequestswillbepermittedduringtheextensionperiodto
avoidAgapefromdefaultingontheborrower,thusavoidingus
extendingthisloantoanindeterminablelengthoftime.
75. OnSeptember23,2008,Cosmo'sassistantsentanemailtotheBrokersandother
Agapeemployees,statingthatnoinvestoraccountswouldbeclosed"unlesstheclientmeets
24
withNicholas[Cosmo]personally,asperhisinstructions," Thefollowing day, JasonKeryc
forwardedthisemailtohisSub-brokers.
76. OnSeptember26,2008,Cosmo'sassistantsentanemailto,atleast,BryanArias,
AnthonyCiccone,Kaylor,andJasonKerycattachinganewcontract,withathirty-daymaturity,
calledEnsoSteelCompanyAcquisitionFinance("EnsoSteel").
77. TheSeptember26,2008emailstatedthatAgape"ownsthecontractat9%,"
meaningthattheBrokerscouldoffertheEnsoSteelcontracttoinvestorsat9%lesswhatever
theychosetotakeincommissions,andthattherewouldbeno"rollovercommissions"forthe
contract,meaningthattheBrokerswouldbepaidonlyfornewmoneyraised.
78. TheSeptember26;2008emailcontinuedwitha"MessagefromNick"thatshould
haveraisedseveralredflags fortheBrokers. Inthemessage,CosmotoldtheBrokersthatAgape
wasinfinancialdistressandneededtoraisemoney;Agapehadnotcoveredacheckrequest
(which,atAgape,wasthetemlforinvestorwithdrawalsorredemptions)insixmonths;andhe
waswithholdingtheBrokers'commissionsduetoheavyredemptionsbytheircustomers.
AccordingtothestorytheBrokersweresellingtoinvestors,Agape'sabilitytohonorcheck
requestsshouldhavehadnothingtodowithitsownfinancialconditionortheamountofnew
fundsraised. AseachAgapeInvestmentContractsupposedlyrepresentedparticipationby
investorsinaloanbeingmadebyAgapetoaspecificcommercialborrower,theonlythingthat
shouldhaveimpactedAgape'sabilitytohonorcheckrequestswaswhetherornottheloan
underlyinganygivenAgapeInvestmentContractwasrepaid. Evenif theborrowerdidnot
repay,theinvestor'smoneywassupposedly99%secure.
79. Thetextof theSeptember26,2008emailwasasfollows:
MessagefromNick[Cosmo]: Iwouldsuggestthatyouofferthe
contractat8%toincentivizethemtokeeptheirmoneywithus.
25
RoseofThomswillrollintothiscontractandweNEEDto start
raisingmoneyasafirm. Icannotstressthisenough. Wehavesent
outover50milliondollarsinthelast60 daysalone. Weneeda
fewmoresuccessfulloanstorideoutthisstorm. Youmay not
makemuchofaspreadonthiscurrentcontractbutinthelongrun,
youwillbenefitfromclientretainment,whichsomeofyoushould
starttoworryveryseriouslyabout. It isimperativethatyouall
raisefundsforthisshorttermloan. Wehavenotcoveredacheck
requestin6months. Thefirmassetsundermanagementhas
marketly[sic] decreasedduetoseveraldifferentreasons....
Commissionsschedulewillbereleasednextweekforthelast
severalloansthatIhaveheldcommissionsduetomass
liquidationsbyyourclients...
80. OnSeptember29,2008,JasonKerycforwardedtheSeptember26,2008emailto
hisSub-brokers.
81. OnOctober1,2008,JasonKerycsentanemailtohisSub-brokers,withthe
subjectline,"checkrequestforroseofthornsphaseII,"referringtoanAgapeInvestment
Contractcalled"RoseofThomsPhaseII"thathadmaturedtwodaysearlier(ellipsesandbreaks
asperoriginal):
outofthe$1.9millionthatwentintotheloan... $1,096,000came
outinthecheckrequest...i understandthatitistheirmoneybutwe
needtobecallingthesepeopleandtryingharderfromthemto
stay...wehaveanother30dayloanat7percentthattheyshould
wanttorollinto...
otherwiseweneedtoraisemoneytore-placethis...
82. OnOctober2,2008,Cosmo'sassistantsentanotheremailtotheBrokerswiththe
following: "Movingforward, allcheckrequestsmustindicateifclientisclosingout. Ifthe
clientisclosingout,theclientwillnotbegettingacheckunlessmeetingwithNick[Cosmo]."
83. OnOctober16,2008, Cosmo'sassistantsentanotheremailtotheBrokers
indi.catingthattheircommissionchecksforAMAwouldbedelayed.
26
84. OnOctober24,2008,Cosmo'sassistantsentanemailtotheBrokersattachinga
proofofthePPPbrochuretobesenttoinvestors. Accordingtothebrochure,foranannual
premium,PPPofferedAgapeinvestorscertainrightsinthecaseofdefault,includingguaranteed
returnofprincipalless 1 %in120days,regardlessofthestatusof theunderlyinginvestments.
JasonKerycforwardedthisemailtohisSub-brokersthefollowingday.
85. Duringthisperiodfrom September16throughOctober30,2008,Agapeoffered
fournewAgapeInvestmentContracts: Bed-FourLLC,withastartdateofSeptember22,2008;
EnsoSteel,withastartdateofOctober10,2008; andIRNAcquisitionFinance("IRN")and
HoffmanLLC,eachwithanOctober30,2008 startdate. Duringthesameperiod,Agape
continuedtooffertheAMAInvestmentContract.
86. DuringtheperiodfromSeptember16throughOctober30,2008,theBrokers,and
Sub...:brokersDunne,Hartmann,MichaelKeryc,andTordyeach,withknowledgeof,orreckless
disregardforthetruth,continuedtosellAgapeSecurities.
The Brokers and Sub-Brokers Dunne, Hartmann, Michael Keryc, and Tordy,
Sold Agape Securities as the Scheme Collapsed.
87. OnNovember3,2008,Cosmo'sassistantsentanemailwiththesubjectline
"fromNickCosmo"totheBrokersandotherAgapeemployeesthatshouldhaveraisedmorered
flags for them. Inthemessage,CosmosaidthatAgapewasinfinancial distress;itwas"on
extension/defaultoneveryloan[it] didlastyear;"anditneededtoraisemoney, atleastinpart,
dueto"enormousunbalancedcheckrequests." Theemail,liketheSeptember26,2008email,
drewaconnectionbetweennewfundsraisedandAgape'sabilitytohonorcheckrequests,which,
accordingtotherepresentationsbeingmadetoinvestors,shouldhavedependedonlyonwhether
:;:1
ornotthespecificloanunderlyinganygivenAgapeInvestmentContractwasrepaid.
88. ThetextoftheNovember3,2008emailwasasfollows:
27
DuetothepartialpaymentfromourborrowerFridayandtoday,
clientswillonlyreceive6%orhalftheirinterestrequesttomorrow
andtheremaininginterestpaymentatalaterdate. Agapewas
notifiedofthispartialpaymentlatethisafternoon. Clientswill
receivetheirremaininginterestaslongastheyremainourclient.
Wehavenoflexibilityatthispointasafirm duetoyourenormous
unbalancedcheckrequestsandmustacceptthissituation....
Theimmediateeffortneedstobeplacedonyourcurrentclient
baseandweneedtoraisemoney. Agapehassentout$73,400,000
inthelast120days. Wehavesentbackonaverage$11,838to
eachclientinthissametimeframe. Ifyouwentthroughyourbook
andraisedonly$5,000perclientthefirmwouldrecoupover
$31,000,000....
TheVP'softhiscompanyandallof theirsub-brokersneedto
reallyevaluatehowhardtheywanttoworktohelpthisgreat
companygetthroughthesetougheconomictimes. Thefirmis
nowonextension/defaultoneveryloanwedidlastyear....
Ineedyourhelp,Agapeneedsyourhelp,andtogetherwewillget
throughthis.
Thisisaprivateemailandisnottobesharedwithanyoneoutside
ofthisthread. Anyonesharingthisemailwillbeterminated.
89. OnNovember4,2008,JasonKerycforwardedtheNovember3,2008emailtohis
brother,MichaelKeryc,who,onthesameday,forwardedthemessagetoallofKeryc'sother
Sub-brokersunderthesubjectline,"FROMJAYTOALLBROKERSseriousinfo." On
November5,2008,HartmannforwardedMichaelKeryc'smessagetoTordy.
90. OnNovember10,2008,TordysentanemailtoCosmowithablindcopyto
Hartmannthatcontainedthefollowing(asperoriginal):
~ e r r i Meyerswasalsocontract[sic] bythesamepostal
inspeGtor,butshealsohadanFBIagenttoherhousethesameday.
Shedoesnotknowwhetherornottheycametogetherorin
separatecars,her92yroldmotherwouldnotlettheminanMerri
wasnotathome. Shespoketothepostalinspector,nottheFBI
agent.
28
aretheircards
Speranza[referringtoanAgapeInvestmentContract,called
SperanzaLLC,withaNovember21,2008startdate], Ihave
someonethatcanwire20konThursday;itthattoolate?
91. OnNovember13,2008,CosmosentanemailtotheBrokerswithdelayed"check
request"and"checkrelease"datesforthreemoreAgapeInvestmentContracts,effectively
extendingthematuritydatefortheEnsoSteelcontractfromNovember14toDecember2,2008;
thematuritydatefor acontractcalledWakeagLandingLLCfromNovember24toDecember
17,2008;andthematuritydateforacontractcalledBed-FourLLCfromDecember3to
December23,2008. Inthesameemail,CosmoscheduledmandatorymeetingsfortheBrokers
andadded: "Youarestronglysuggestedtohaveyourclientsrolloverinterestandprincipalinto
our2newloans."
92. OnNovember13,2008,JasonKerycsentanemailtohisSub-brokerswiththe
following(ellipsesandbreaksasperoriginal):
wedo nothavetheactualcontractdrawnup butthenewdatesare
goingtobe12/17/08until3/6/09disbursementsforallloans.. .
enso,wakeagandbedfourwillbeavailableondecember17th ...the
contractwillbeat12%forinvestors
theproject:
West135thStreet,NewYork,NewYork,Block2101,Lot58
*** FullyRentedRetailOutlets- ExcellentRentRollAnd
Financials;
allofourloans... enso,wakeag,andbedfour ...aregoingtoroll
intothisitisahugeprojectinharlemapartmentsandaloanfora
parkinggarageoneborrower[sic]...enso,wakeagandbedfour
icannotstresshowimportantitistomakeeveryonerollasmuch
aspossible...
93. OnNovember24,2008,Cosmo'sassistantsentanemailtoHugoArias,Anthony
andSalvatoreCiccone,Kaylor,JasonKeryc,Massaro,Tordy,andothers,withthefollowing:
29
Justsoyouknow,thereisnodatewhen[AMA] checksarebeing
released. Weshouldhaveabetteridealatertoday. Iwillupdate
youallwithanemail. Pleasedonotemailorcallaskingbecause
theanswerwillremainthesame.
Onthesameday,JasonKerycrepliedtoallrecipientsof theemail,"whatarewesupposedtotell
ourclients[?]"
94. InthefirstweekofDecember2008,Cosmopurportedlyextendedfurtherthe
maturitydatesforallof theAgapeInvestmentContractsthathadbeenextendedtodate-
CarriageHomes,EnsoSteel,WakeagLandingLLC,andBed-FourLLC- and,withoutany
explanation,extendedtheremainingAgapeInvestmentContracts- IRN,HoffmanLLC,and
SperanzaLLC- forthefirsttime.
95. Thereafter,Kaylorfalselytoldatleastsomeof hercustomersthatthedelaysin
paymentsontheoutstandingAgapeInvestmentContractswereduetoan"attomey/bank
conflict."
96. OnDecember9,2008,BryanAriasrepliedtoanemailfromaninvestorasking
aboutaninterestcheck,falsely, asfollows: "Theproblemisthatweare gettingslowpayed[sic]
duetoallthebankingproblemswhichiscausingustoreceivepaymentlate,whichintum is
cause[sic] ourpayoutdatetobelate.... Wewillbejustfine comeJanuaryandFebruaryandwe
shouldbebacktonormal."
97. DuringthisperiodfromNovember3, 2008throughCosmo'satTest, onJanuary
27,2009,AgapeofferedthreenewAgapeInvestmentContracts: SperanzaLLC,withastartdate
of November21,2008;andtheSeries"A"InvestmentandSeries"B"Investment,eachwitha
January 1,2009startdate. Duringthesameperiod,AgapecontinuedtooffertheAMA
InvestmentContractand, forthefirsttime,offeredPPPtoinvestors.
30
98. DuringtheperiodfromNovember3, 2008throughCosmo'sarrest, onJanuary
27,2009,theBrokersandSub-brokersDunne,Hmtmann,MichaelKeryc, andTordyeach,with
knowledgeof,orrecklessdisregardforthetruth,continuedtoofferandsellAgapeSecurities,
andofferedandsoldthePPP,to investors.
The Defendants Were Not Registered with the Commission.
99. EachoftheDefendantsactedasbrokers,regularlyandactivelysoliciting
investorstopurchaseAgapeSecurities,repeatedlyofferingandsellingAgapeSecurities,and
receivingcommissionsorothercompensationfortheirsalesofAgapeSecurities.
100. DuringthetimeheorsheofferedandsoldAgapeSecuritiestoinvestors,noneof
theDefendantswasregisteredwiththeCommissionasabroker,orassociatedwitharegistered
brokerordealer.
The Agape Securities Were Not Registered with the Commission.
101. TheAgapeandAMAInvestmentContractsweresecurities.
102. AgapeneverfiledaregistrationstatementwiththeCommissionwithrespectto
anyof theofferingsofAgapeSecuritiesbytheDefendantsand, duringtherelevantperiod,no
registrationstatementwasotherwiseineffectforanyoftheAgapeSecurities.
103. Duringtherelevantperiod,investorswhopurchasedAgapeSecuritiesdidnot
receiveanyofferingmaterialsotherthantheAgapeandAMAInvestmentContractsprovidedto
thembytheDefendants.
104. Duringtherelevantperiod,theAgapeSecuritieswereofferedtothepublic,
includingonAgape'swebsite,withoutlimitationsonwhocouldpurchasethem.
105. Duringtherelevantperiod,Defendants,togetherwithCosmo,andothersin
Cosmo'semploy,offeredandsoldAgapeSecuritiestoatleast5,000investors.
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FIRSTCLAIMFORRELIEF
ViolationsofSection17(a)oftheSecuritiesAct
(AgainstBryanArias,HugoArias,AnthonyCiccone,SalvatoreCiccone,Kaylor,Jason
Keryc,Massaro,Dunne,Hartmann,MichaelKeryc,andTordy)
106. TheCommissionre-allegesandincorporatesparagraphs 1through105 asiffully
setforthherein.
107. DefendantsBryanArias,HugoArias,AnthonyCiccone,SalvatoreCiccorte,
Kaylor,JasonKeryc,Massaro,Dunne,Hartmann,MichaelKeryc,Tordy,andeachof them,
directlyorindirectly,singlyorinconcert,intheofferorsaleofsecurities,byuseofthemeansor
instrumentsof transportationorcommunicationininterstatecommerce,orof themails,have:
(a)employeddevices, schemes,orartificestodefraud,(b)madeuntruestatementsof material
fact, orhaveomittedtostatematerialfactsnecessaryinordertomakestatementsmade,inlight
of thecircumstancesunderwhichtheyweremade,notmisleading;and/or(c)engagedin
transactions,practices,orcoursesof businesswhichoperatedasafraudordeceituponthe
purchasersofsecurities.
108. Byreasonoftheforegoing, DefendantsBryanArias,HugoArias,Anthony
Ciccone,SalvatoreCiccone,Kaylor,JasonKeryc,Massaro,Dunne,Hartmann,MichaelKeryc,
Tordy,andeachofthem,directlyorindirectly,singlyorinconcert,haveviolatedandunless
enjoinedwillagainviolateSection17(a)of theSecuritiesAct[15 U.S.C. 77q(a)].
SECONDCLAIMFORRELIEF
ViolationsofSection10(b)oftheExchangeActandRule10b-5
(AgainstBryanArias,HugoArias,AnthonyCiccone,SalvatoreCiccone,Kaylor,Jason
Keryc,Massaro,Dunne,Hartmann,MichaelKeryc,andTordy)
109. TheCommissionre-allegesandincorporatesparagraphs1through105 asiffully
setforthherein.
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110. DefendantsBryanArias,HugoArias,AnthonyCiccone,SalvatoreCiccone,
Kaylor,JasonKeryc,Massaro,Dunne,Hartmann,MichaelKeryc,Tordy,andeachofthem,
directlyorindirectly,singlyorinconcert,inconnectionwiththepurchaseorsaleofsecurities,
byuseofthemeansorinstrumentsoftransportationorcommunicationininterstatecommerce,
orofthemails,orofthefacilitiesofanationalsecuritiesexchange,have: (a)employeddevices,
schemes,orartificesto defraud; (b)madeuntruestatementsofmaterialfact, orhaveomittedto
statematerialfactsnecessaryinordertomakestatementsmade,inlightofthecircumstances
underwhichtheyweremade,notmisleading;and/or(c)engagedinacts,practices,orcoursesof
businesswhichoperatedas afraudordeceituponotherpersons.
111. Byreasonoftheforegoing, DefendantsBryanArias,HugoArias,Anthony
Ciccone,SalvatoreCiccone,Kaylor,JasonKeryc,Massaro,Dunne,Hartmann,MichaelKeryc,
Tordy,andeachofthem,directlyorindirectly,singlyorinconcert,haveviolatedandunless
enjoinedwillagainviolateSection10(b)oftheExchangeAct[15 U.S.C. 78j(b)] andRule 10b-
5[17C.F.R. 240.10b-5].
THIRDCLAIMFORRELIEF
ViolationsofSection15(a)oftheExchangeAct
(AgainstAllDefendants)
112. TheCommissionre-allegesandincorporatesparagraphs1through105 asiffully
setforthherein.
113. TheconductoftheDefendantsasallegedhereinmeetsthedefinitionoftheterm
"broker"asdefinedbySection3(a)(1)oftheExchangeAct[15 U.S.c.78c(a)(1)].
114. TheDefendants,directlyorindirectly,singlyorinconcert,havemadeuseofthe
meansorinstrumentsof transportationorcommunicationininterstatecommerce,orthemails.to
effecttransactionsin, orto induceorattempttoinducethepurchaseorsaleof,securities,when
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notregisteredwiththeCommissionasabrokerordealer,orassociatedwitharegisteredbroker
ordealer.
115. Byreasonof theforegoing,theDefendantshaveviolatedandunlessenjoinedwill
continuetoviolateSection15(a)oftheExchangeAct[15 U.S.C. 78o(a)].
FOURTHCLAIMFORRELIEF
ViolationsofSections5(a)and5(c)oftheSecuritiesAct
(AgainstAllDefendants)
116. TheCommissionre-allegesandincorporatesparagraphs 1through105 asiffully
setforthherein.
117. TheAgapeSecuritiesthattheDefendantsofferedandsoldtotheinvestingpublic
asallegedhereinconstitute"securities"asdefinedbySection2( a)(1)of theSecuritiesAct[15
U.S.C. 77b(a)(1)] andSection3(a)(11)of theExchangeAct[15 U.S.c. 78c(a)(11)].
118. TheDefendants,directlyorindirectly,singlyorinconcert,havemadeuseofthe
meansorinstrumentsof transportationorcommunicationininterstatecommerce,orthemails.to
offerandsellsecuritieswhennoregistrationstatementhasbeenfiledorwasineffectastosuch
securitiesandwhennoexemptionfromregistrationwasavailable.
119. Byreasonof theforegoing,theDefendantshaveviolatedandunlessenjoinedwill
continuetoviolateSections5(a)and5(c)of theSecuritiesAct[15 U.S.C. 77e(a)and77e(c)].
PRAYERFORRELIEF
WHEREFORE,theCommissionrespectfullyrequeststhatthisCourtenteraFinal
Judgment:
I.
Findinginfavorof theCommissionthattheDefendantseachviolatedthesecuritieslaws
as allegedherein.
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II.
PennanentlyrestrainingandenjoiningDefendantsBryanArias,HugoArias,Anthony
Ciccone,SalvatoreCiccone,Kaylor,JasonKeryc,Massaro,Dunne,Hartmann,MichaelKeryc,
Tordy,theirattorneys,agents,servants,employees,andallotherpersonsinactiveconcertor
participationwiththem,whoreceiveactualnoticeof theFinalJudgment,bypersonalserviceor
otherwise,fromfutureviolationsofSection17(a)of theSecuritiesAct[15 U.S.C. 77q(a)],
SectionlOeb) of theExchangeAct[15 U.S.C. 78j(b)] andRule 10b-5 [17 C.F.R. 240.10b-5].
III.
PennanentlyrestrainingandenjoiningtheDefendants,theirattorneys,agents,servants,
employees,andallotherpersonsinactiveconcertorparticipationwiththem,whoreceiveactual
noticeof theFinalJudgment,bypersonalserviceorotherwise,fromfutureviolationsofSections
5(a)and5(c)oftheSecuritiesAct[15 U.S.C. 77e(a)and77e(c)],andSection15(a)of the
ExchangeAct[15 U.S.C. 78o(a)].
IV.
OrderingtheDefendantstodisgorgetheirill-gottengainsreceivedasaresultoftheir
violationsof thefederalsecuritieslawsandtopayprejudgmentinterestthereon.
V.
OrderingtheDefendantstopaycivilmoneypenaltiespursuantto Section20(d)ofthe
SecuritiesAct[15 U.S.C. 77t(d)] andSection21(d)(3)of theExchangeAct[15 U.S.C.
78u(d)(3)].
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VI.
Grantingsuchotherandfurtherreliefasto the Courtmay seemjustandproper.
Dated: NewYork,NY
June12,2012

AnreWMcaial11ar(AC-4864)
AttorneyforPlaintiff
SECURITIESANDEXCHANGECOMMISSION
NewYorkRegionalOffice
3WorldFinancialCenter,Suite400
NewYork,NY 10281-1022
(212)336-0542(Moustakis)
calamaria@sec.gov
OfCounsel:
CelesteA. Chase
PaulG. Gizzi
PhilipMoustakis
.]
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