Agape World's president Nicholas Cosmo was under federal investigation, but officials were not revealing specifics of the probe. Cosmos surrendered to postal inspectors in Hicksville on Monday night. He was expected to be arraigned on Tuesday.
The investigation was sparked, investors said, when payouts from their investments suddenly stopped.
Investors, some putting in hundreds of thousands of dollars, were offered between 12 and 15 percent return, they said, for funding in what they described as "bridge loan contracts," but payouts stopped last September. Some fear their money is lost.
On Friday, police were called after the investors refused to leave the offices.
Cosmo told more than 150 investors on a Friday afternoon conference call that three borrowers had defaulted on loans, forcing the halt in payments.
He said he hired a law firm to foreclose on the projects and recoup investments, but that the process could take as long as one year.
Although the Suffolk County District Attorney's office received numerous calls from nervous investors, the U.S. Postal Police has been the lead investigative agency.
With the office to Agape World locked, the only explanation was a letter in which Nicholas Cosmo claims:
"Due to the financial banking crisis we have been hit with numerous defaults and extensions, which have led to decreased liquidity of our loans."
He claimed he is not taking new investments. After he said he was attacked by an angry investor, he added, "for safety and operations concerns I will not be seeing clients."
The company was listed as No. 73 last year on Entrepreneur Magazine's fastest-growing businesses in the country.
Cosmo was convicted of a federal charge of felony fraud and swindle in 1999 and sentenced to 21 months in prison. He founded Agape World soon after his release from prison in August 2000 with money from family and friends.
MORE NEW YORK AND TRI-STATE AREA NEWS
SEND TIP OR PHOTO || REPORT TYPO || GET WIDGET
EYEWITNESS TWITTER || FIND US ON FACEBOOK