Despite spending 21 months in federal prison for a 1999 mail fraud conviction, Cosmo is neither a flight risk nor a danger to the community, said U.S. Magistrate Judge E. Thomas Boyle.
However, "bail must be substantial," said Boyle, directing Cosmo's attorney to come up with a revised offer. Another hearing on the matter will then be scheduled.
Attorney Steven Feldman said in a statement that the defense "will work with the government, as the court ordered, in an attempt to identify and agree on those terms and conditions."
Cosmo surrendered to the FBI and U.S. Postal Inspection Service agents on Monday. He did not enter a plea at an initial court appearance on Tuesday, nor did the judge require him to speak at Thursday's hearing.
Federal prosecutors say Cosmo, who runs Agape World Inc. and Agape Merchant Advance in Hauppauge and Queens, took in more than $370 million from at least 1,500 investors since 2006.
Some investors made up to 80 percent a year in profits by providing the money for short-term loans to businesses paying premium interest rates. Many others are now left wondering where their money went.
"I was planning on buying a house this year," said Frank Ingrao of Williston Park, currently a sergeant in the Marine Corps Reserves. "Now, no more. I just want to see his face."
Ingrao said he invested $63,000 about two years ago after returning from duty in Iraq.
At the time, said Ingrao, it seemed that Cosmo "did everything right. At times I had my doubts, but he was pretty smart."
Fellow reservist Devon Thomas, who served with Ingrao in Iraq and also did a stint in Afghanistan, said he invested $10,000.
"I think he should do 25 to life," said Thomas. "I just want my money back."
As of last Thursday, the firms had only $746,000 in the bank, prosecutors said.
A complaint said "much of the money paid back to investors ...
was actually money provided by subsequent investors" - a Ponzi scheme similar to the one alleged in the Bernard Madoff case.
Investigators say less than $10 million in actual "bridge loans" were made to businesses. Another $55 million went to brokers who recruited new investors, and prosecutors say Cosmo lost $80 million in commodities futures trading.
He also spent investor money on jewelry, hotel rooms, limousines, payments to his wife and a private baseball league, prosecutors said.
Perhaps the most egregious spending, prosecutors said, was the $212,000 in Agape funds Cosmo used to pay restitution from the 1999 federal mail fraud conviction.
Nevertheless, the judge said the Commodities Futures Trading Commission has frozen Cosmo's assets and said Cosmo had no record of missing court dates in his prior prosecution, nor was there any indication he failed to abide by conditions of his parole. Boyle also noted that prosecutors have no evidence that any money was transferred out of the country.
"The government has failed to show that this defendant is a danger to the community," Boyle said.
Although the judge was not specific about what amount would satisfy him in a revised bail package, he said 24-hour electronic monitoring would be a requisite.
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