BULLETIN: Charges Upgraded Against Nevin Shapiro In Alleged $880 Million Ponzi Scheme; Prosecutors Say He Used Investors’ Money To Make Illegal Sports Bets And Enjoy Lavish Lifestyle

Charges against a Florida man accused of running a Ponzi scheme through a bogus wholesale grocery business known as Capitol Investments USA Inc. have been upgraded, U.S. Attorney Paul J. Fishman of the District of New Jersey said.

Nevin J. Shapiro, 41, of Miami Beach, originally was charged via criminal complaint in April with one count of securities fraud and one count of money-laundering. A grand jury now has returned an indictment charging Shapiro with one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, two counts of wire fraud and two counts of money-laundering.

Three unindicted co-conspirators are identified in the indictment by numbers, as opposed to names. “UC 1” was described as Capitol’s chief financial officer; “UC 2” was described as a Capitol “accountant”; and “UC 3” was described as a Capitol “bookkeeper.”

Unnamed “others” also are referenced in the indictment, which also seeks forfeiture of criminal proceeds.

When the Ponzi was collapsing in 2009, Shapiro offered a series of explanations about why payments to investors were delayed, prosecutors said.

“Shapiro told investors, among other things, that the payments were not being made because Capitol’s vendors were late in making payments, Capitol was suffering from cash flow problems, and that Shapiro’s accountant was on vacation,” prosecutors said.

In reality, prosecutors said, “Shapiro misappropriated approximately $35 million in investor funds for his personal use, including paying millions of dollars in debts resulting from illegal gambling on sporting events.

“Using investor money, he also spent, at various times, more than $400,000 for floor seats
to watch the Miami Heat professional basketball team; approximately $26,000 per month for mortgage payments on his residence in Miami Beach, recently appraised at approximately $5.3 million; approximately $7,250 per month for payments on a $1.5 million dollar Riviera yacht; and approximately $4,700 per month for the lease of a Mercedes-Benz automobile.”

And, prosecutors charged, “Shapiro also used stolen funds to purchase a pair of diamond-studded handcuffs, which he gave as a gift to a prominent professional athlete, as well as to make $150,000 in donations to the athletic program of a local university in the Miami area. As a result of a 10-year gift to the university, the Nevin Shapiro Student-Athlete Lounge at the university was named for the defendant. Shapiro and Capitol were forced into bankruptcy in November 2009. At that time, they owed more than $100 million to victim investors.”

Shapiro has been jailed since his arrest in April. He potentially faces decades in prison and millions of dollars in fines if convicted on all counts.

Court filings suggest the scheme gathered as much as $900 million.

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2 Responses to “BULLETIN: Charges Upgraded Against Nevin Shapiro In Alleged $880 Million Ponzi Scheme; Prosecutors Say He Used Investors’ Money To Make Illegal Sports Bets And Enjoy Lavish Lifestyle”

  1. There’s another ponzi story here that I think is interesting:
    http://www.newstatesman.com/banking-and-insurance/2010/07/executives-acquitted

    Two businessmen accused of running a £150m Ponzi investment scheme, which defrauded thousands of wealthy investors, have been acquitted after the jury failed to reach a verdict at Blackfriars Crown Court.

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  2. Shapiro lost millions of dollars of his investors’ money in illegal gambling and sports betting. Asset recovery professionals can often clawback much of the money lost by fraudsters but money spent on drugs or gambling is gone for ever. How much Shapiro has saved up for his eventual release we may never know. He will be 59 when released.

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