He never wears a fedora and there’s no bourbon in his
drawer, but that’s because Michael Kessler isn’t your
father’s private eye.
Although he’s been on his share of stakeouts, the man
credited for helping to bring down an alleged $380 million
Ponzi scheme is more likely to be following the money than
tailing actual bad guys.
A former investigations chief for the state’s Department
of Tax and Finance and former director of its Revenue Crimes
Bureau, Kessler founded Kessler International in 1988, and
assisted hundreds of corporations, governments and school
districts uncover fraud and recover millions in embezzled
funds.
Based in Port Jefferson Station, Kessler has developed
and implemented national training programs for government
investigators and is frequently sought out by the media as
an expert on white-collar crime.
What led you to uncover the alleged Ponzi
scheme called Agape World in Hauppauge?
I began investigating Agape World last year in an
effort to help a client understand his risk for a
multimillion dollar investment. As my firm specializes in
both forensic accounting and fraud investigation it was
readily apparent to our financial forensic examiners that
the business model of Agape World was highly suspect.
While the exorbitant rate of return might be enough to
make anyone question the legitimacy of Agape World, my
investigation of the founder Nicholas Cosmo and his
brokers confirmed my suspicions and revealed all the
textbook criteria of a classic Ponzi scheme. The business
model was riddled with financial irregularities. The
contractual documentation appeared to have been written by
either a poor lawyer or someone who had no knowledge of
the law.
What was the most surprising thing to you about
this case?
I’m surprised so many investors did not take the time
to do proper due diligence before making an investment. It
was obvious that the brokers had no comprehension of
finance or previous experience with an investment firm.
They were unlicensed, and our investigation also revealed
that several of them had previous criminal records,
including Cosmo, who served time in jail for a similar
offense.
Additionally, I was surprised by law enforcement’s lack
of concern as I notified the Suffolk County Police who
referred me to the Suffolk County District Attorney, who
told me they did not have jurisdiction over the matter and
referred me to the New York State Attorney General’s
office, which ignored it.
I finally referred the case to the FBI in Melville and
they, along with the U.S. Postal Inspectors, did the
tedious job of collecting the evidence needed to bring
Cosmo to justice. I applaud the postal inspectors for a
job well done.
How will the U.S. attorney general’s office and the FBI
find the money that appears to be missing?
Long and tedious tracing of bank account transactions
will have to be performed following the trail of where the
money went. By now most of it is probably gone and the
assets that are left will never make the victims whole.
What makes people vulnerable to get-rich-quick
frauds?
Typically people get involved in these schemes out of
greed or desperation. In an economy like we have today,
you can multiply those factors tenfold. The majority of
the victims of Agape World were blue-collar and
middle-class families, many of them struggling to make
ends meet or just trying to save money for their future.
Investing in Agape World seemed too good to be true, but
desperation overrode common sense.
What kinds of fraud are companies dealing with these days
and how can they try to prevent them?
We are seeing major increases in accounting fraud,
employee embezzlement and the use of the computer to steal
information. The simplest way to deal with these is by
having preventative measures in place beforehand.
