NEW YORK - BERNARD Madoff allegedly ran the mother of all pyramid schemes. Now meet the kids.
Call them mini-Madoffs - men less ambitious, perhaps, but copying the same alleged fraud and, like Madoff himself, being hauled before judges.
The latest is Long Island financier Nicholas Cosmo, arrested on Monday and told by a court Thursday that he must remain in detention while lawyers and prosecutors negotiate bail terms.
Cosmo's alleged $370 million (S$557.6 million) pyramid, or Ponzi fraud, would be peanuts compared to Madoff's alleged $50 billion scam.
But in essence, the two alleged frauds were the same and so were others emerging across the country, as investment pyramids collapse from New York to Florida and Georgia to Pennsylvania.
The Ponzi scheme, named in honour of 1920s fraudster Charles Ponzi, is one of the oldest tricks in the book.
A conman promises investors big returns, steals their money, then disguises the theft by using some funds to pay out phony profits.
When the US economy withered last year, the frauds began to come to light: investors asked for their capital back, only to find out there was none.
First came Madoff, arrested December 11 for a possibly record-breaking alleged fraud that fooled investors worldwide. Then came the mini-Madoffs.
Cosmo, 37, allegedly bilked 1,500 clients through Agape World Inc, many of them friends and associates.
He had already done prison time for fraud and undergone therapy for gambling addiction, but, like Madoff, was apparently a charming man and respected in his community.
A Long Island under-13-year-olds' soccer team that he coached 'loves him, he's a great guy', the local daily Newsday quoted the club's president as saying.
Charm was also something that Haitian immigrant George Theodule reportedly put to great effect when he told churchgoers in Florida's Haitian community he could double their money in three months.
Prosecutors accuse Theodule of operating a Ponzi scheme with thousands of victims.
The New York Times quoted one victim, a deliveryman who lost his entire savings of 35,000 dollars, remembering that Theodule looked the part.
'The offices were beautiful and I was told it was a limited liability corporation,' Mr Reggie Roseme said.
This Tuesday, the FBI in Florida arrested another alleged pyramid builder, Arthur Nadel, a 76-year-old hedge fund manager who claimed to be managing $342 million. Turned out he had just one million dollars.
Nadel went on the lam for two weeks before finally turning himself in - an attempted flight outdone only by another white collar fugitive who tried and failed earlier this month to fake his death by parachuting from a crashing airplane.
Then in mid-January, the authorities broke what they say was a 25 million dollar Ponzi scheme run by Georgia financier James Ossie. In this case investors were offered 10 percent returns in just 30 days. As many as 120 people took the bait.
And a week before that an alleged $50 million Ponzi scheme was dismantled near Philadelphia, this time with about 80 investors attracted by dizzyingly high profits of up to 38 percent.
US Attorney Benton Campbell in New York state said the best protection for investors is old-fashioned common sense.
'In these difficult economic times, it bears repeating that if an investment opportunity seems too good to be true - promising unusually high returns and virtually no risk - it is probably not on the level,' he said. -- AFP