Thursday, April 22, 2010

Florida Man Accused In $880 Million Ponzi Scheme Case

Nevin K. Shapiro, 41, of Miami Beach, Florida, has been charged with money laundering and securities fraud in connection with allegedly operating a Ponzi-type investment fraud scheme that bilked investors out of some $880 million. Prosecutors allege that Shapiro used a Florida-based company he operated called Capitol Investments, USA, Inc., to lure investors who thought they were buying into a wholesale grocery distribution business. According to the SEC, Shapiro promised investors risk-free annual returns as high as 26 percent by persuading them to invest in a "grocery diversion" enterprise - a practice of buying low-cost groceries in one region of the country and reselling them in higher-priced markets. Instead, Shapiro looted the investment funds to pay for an extraordinary lavish lifestyle that included a $5.3 million Miami Beach mansion, $400,000 for courtside Miami Heat basketball tickets, a $1.5 million Riviera yacht, luxury cars, and to fuel his reported gambling habit, among other things. The scheme spanned nearly a 5 year period, from January 2005 to November 2009 when the scheme imploded.

Read the story here and here.

Read the SEC complaint here.

Update (7/19/10): Shapiro was formally indicted by a federal grand jury in New Jersey last Friday on one count of securities fraud, two counts of money laundering, one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, and two counts of wire fraud.

Update (9/16/10): Shapiro pleaded guilty to the charges, admitting he defrauded investors out of as much as $880 million.

Hat tip: Reader Doug.

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