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Tag: Nevin Shapiro

  • BULLETIN: 77-Year-Old Ponzi Enabler And His 40-Year-Old Son Who Helped Confuse Investors In Nevin Shapiro’s $930 Million ‘Grocery’ Ponzi Sentenced To Federal Prison; Roberto And Alejandro Torres Also Hit With $82 Million Restitution Order

    BULLETIN: Yesterday a federal judge in Michigan sentenced 75-year-old Ponzi schemer Edward May to 16 years in federal prison for pulling off a $350 million fraud.

    Today in New Jersey — in a separate case — a 77-year-old Ponzi enabler and his Ponzi-enabling, 40-year-old son were sentenced to combined prison terms of just shy of eight years for helping make Nevin Shapiro’s $930 million swindle possible.

    It could have been worse, but the pair later helped unmask the caper they once enabled.

    U.S. District Judge Susan D. Wigenton imposed a 48-month sentence on Roberto Torres, who will not leave prison until he is at least 81. Torres’ son, Alejandro Torres, was imposed a slightly lower sentence: 46 months. Both father and son also were hit with an $82 million restitution order. The elder Torres once resided in Lighthouse Point, Fla., but now lives in New York. His son lives in Boca Raton, Fla.

    When the Torreses will begin serving their terms was not immediately clear.

    Shapiro, 42, formerly of Miami Beach,  is serving a 20-year-term and is liable with Roberto and Alejandro Torres in the restitution order. Both father and son pleaded guilty to a single count of securities fraud. Shapiro pleaded guilty last year to one count of securities fraud and one count of money laundering.

    Roberto Torres was the chief financial officer of  Capitol Investments USA Inc., Shapiro’s phony “grocery” arbitrage business. Alejandro Torres was an accountant at the firm, which hatched a four-year-long scheme beginning in 2005 to siphon money from investors by cooking the books.

    Father and son “admitted to creating, or directing others to create, fraudulent documents which falsely touted the profitability of Capitol’s fictitious grocery diversion business,” the office of U.S. Attorney Paul J. Fishman of the District of New Jersey said today. “The Torreses admitted that those documents included: profit and loss figures fraudulently representing that Capitol’s wholesale grocery business was generating tens of millions of dollars in annual sales; personal and business tax returns for Shapiro and Capitol also fraudulently reflecting those sales; and numerous invoices fraudulently reflecting transactions between Capitol and other companies in the wholesale grocery business.”

    The Shapiro Ponzi, which was based in South Florida, toppled in January 2009, prosecutors said.

    Sydney Jack Williams, 63, of Naples, Fla., faces sentencing in January on charges he was Shapiro’s top recruiter and did not report $12 million in commissions.

  • BULLETIN: Nevin Shapiro, Operator Of $930 Million ‘Grocery’ Ponzi Scheme, Sentenced To 20 Years In Federal Prison; Fraudster ‘Used Other People’s Money To Live A Fantasy Life,’ U.S. Attorney Says

    BULLETIN: Nevin Shapiro, the Florida-based operator of a bizarre “grocery” Ponzi scheme that gathered nearly $1 billion and caused losses approaching $100 million, has been sentenced to 20 years in federal prison.

    Shapiro, 42, was charged by federal prosecutors in New Jersey last year after investigations by the FBI and the IRS. He pleaded guilty in September to one count of securities fraud and one count of money-laundering. All in all, the scheme brought in $930 million, prosecutors said.

    The SEC also sued Shapiro.

    “Nevin Shapiro used other people’s money to live a fantasy life built on false promises to unsuspecting victims,” said U.S. Attorney Paul J. Fishman.

    Elements of the case were brought by the interagency Financial Fraud Enforcement Task Force established by President Obama in November 2009.

    Shapiro operated a company known as Capitol Investments USA Inc., which purported to be in the wholesale grocery business.

    In reality, prosecutors said, Capitol “had virtually no income-generating business” between January 2005 and November 2009 — and Shapiro was running a colossal Ponzi scheme to fund his extravagant personal spending and penchant for gambling.

    At least $5 million evaporated when Shapiro stole from investors to pay illegal sports bets. He stole $26,000 a month to pay the mortgage on his Miami Beach home, which has been appraised at $5 million. Meanwhile, he stole $400,000 to pay for floor seats to watch the Miami Heat play basketball, while stealing $7,250 a month to make payments on his yacht and $4,700 a month to make payments on a leased Mercedes.

    Shapiro also lavished celebrities and sports figures, including college athletes, with gifts, prosecutors said.

    By the time the scheme collapsed and investor losses were totaled, Shapiro had stolen more than $82 million. He was ordered by U.S. District Judge Susan D. Wigenton to make restitution in the amount of $82.6 million.

    Prior to his arrest, he told investors one of the reasons they weren’t getting their payments was that his accountant was “on vacation,” prosecutors said.

  • THIS AFTERNOON: 9 Visitors From 6 Countries Arrive At PP Blog Within 5 Minutes; All Pull Exact Same September 2010 Story About MPB Today Multilevel Marketing Program, Then Vanish

    In a highly unusual — and statistically improbable occurrence — nine visitors from six countries arrived on the PP Blog within five minutes today and sought unsuccessfully to pull the exact same story on the MPB Today multilevel marketing program. With the apparent aid of a script, all of the visitors also attempted unsuccessfully to pull a story about an alleged Ponzi caper in New Jersey.

    The MPB Today story was nearly six months old, and the New Jersey story was nearly seven months old. The visitors left as quickly as they came, and appear not to have sought to pull any other stories.  Although it is common for individual visitors to pull “old” stories, it is decidedly uncommon for multiple visitors to attempt to pull the same “old” stories from the Blog’s archives of nearly 1,100 stories virtually simultaneously.

    Because the pattern suddenly ceased and no other individual reader outside the subset of “sudden” visitors sought to pull the same stories, it does not appear likely that the URLs for the stories appeared on a common website today through which visitors all sought to load the same pages virtually simultaneously.

    Readers routinely post links to the PP Blog on forums. But as the forum posts age and are buried by new posts, the Blog receives fewer and fewer visits from the older links.

    MPB Today is based in Florida. It purportedly operates a “grocery” program, and the U.S. Department of Agriculture said last year that it was investigating certain claims made about the firm.

    The circumstances and motives surrounding the visits were not immediately clear. The Blog recorded visits from IPs in the United States, Russia, Brazil, Spain, Thailand and South Korea. Logs suggest a script of some sort was used, and that the visitors sought to pull an MPB Today story that was published Sept. 25.

    Logs also suggest that the same visitors sought to pull  a story that appeared Aug. 12 about Eli Weinstein. Weinstein was charged in an alleged Ponzi caper that may involve $200 million or more.

    The PP Blog’s Weinstein story included a reference to Nevin Shapiro, who was arrested in New Jersey in April 2010 on charges of running an $880 million Ponzi scheme involving a bogus wholesale grocery business.

    In October and November, the PP Blog experienced sustained DDoS attacks. During one three-hour window, the Blog received more than 6 million “hits.” The attacks were reported to law enforcement, and coincided with the Blog’s reporting on MPB Today and Ponzi scheme and criminals’ forums.

    The PP Blog also has been subjected to email spoofing, virtually relentless spamming, YouTube attacks, threats of “war” and threats to start “fires” because of its reporting about the alleged ASD Ponzi scheme, and a false registration to a “program” in which the Blog was referred to as “Rat Bastard.” The “Rat Bastard” reference appears to have been associated with a cash-gifting program.

  • PROMISSORY NOTES SCAM: Feds Bust Another Alleged ‘Wholesale’ Business; Jenifer Devine Faces Wire Fraud Charge In Ponzi Case Brought By Obama Task Force; ‘Wholesale Business Was Wholesale Fraud,’ U.S. Attorney Says

    The FBI has arrested Jenifer Devine, saying the Fair Lawn, N.J., woman was operating a promissory notes Ponzi  scheme through a purported wholesale business that claimed to sell clothing and electronics.

    Similar charges were brought earlier this year in New Jersey against Nevin Shapiro. Prosecutors said Shapiro, who has pleaded guilty, was running an $880 Ponzi scheme in Florida that purported to sell groceries wholesale.

    Like the case against Shapiro, the case against Devine, 39, was brought by President Obama’s interagency Financial Fraud Enforcement Task Force.

    “As alleged in the complaint, Devine’s wholesale business was wholesale fraud,” said U.S. Attorney Paul Fishman, whose office also prosecuted Shapiro. “Victims who were promised huge returns paid the tab for [Devine’s] vacation and designer goods. This case reminds investors: always be wary of a sure thing.”

    More than 15 investors plowed more than $8 million into Devine’s scheme, operated through a company known as Devine Wholesale of Carlstadt, N.J. Investors were told they were helping Devine finance the business and would receive a speedy return of 25 percent. Some investors were shown bogus lists of inventory Devine said she sold, prosecutors said.

    “In reality,” prosecutors said, “Devine Wholesale had no active wholesale clothing or electronics business during the relevant time period, and had virtually no business sales.”

    In classic Ponzi fashion, “Devine instead used new investor funds to make principal and interest payments to existing investors, as well as to fund her own lifestyle. Devine stole tens of thousands of dollars to pay for personal expenses, including a Royal Caribbean cruise and purchases at luxury retailers such as Burberry, Gucci and Coach. Devine also transferred over $26,000 to her mother, who had no role with Devine Wholesale,” prosecutors said.

    Investors losses were estimated at $2 million, but may be higher, prosecutors said. If convicted, Devine faces up to 20 years in federal prison and a fine of up to $1 million.

    Read the criminal complaint against Devine.

    “It is a difficult thing to convince people to be prudent and cautious with their financial
    investments when people like Ms. Devine make grandiose promises,” said David Velazquez, assistant special agent in charge of the FBI’s office in Newark.

    “Criminals know how easily greed can override good judgment and they use that basic human flaw to victimize other people,” Velazquez said about the promissory-notes scheme that promised 25 percent interest. “We hope this matter will serve the public as an educational tool in preventing investment fraud as the disruption and dismantling of these schemes remains an important part of our work at the FBI and with our partners.”

    Separately, Paul J. LoPapa, 64, of Livingston, N.J., pleaded guilty today in federal court in New Jersey to duping investors investors in a scheme involving fictitious overseas investments sold though a company known as Skyline Equities Inc.

    LoPapa also pleaded guilty of defrauding the Social Security Administration of $145,000 in disability payments beginning in 2001, claiming he had not worked since 1990.

    Skyline Equities’ referred to its investment program as the “Bank Guarantee Program,” which was billed as a “sophisticated international financial instrument facilitated through well-known financial institutions,” prosecutors said.

    Investors dumped about $815,000 into the scam, prosecutors said.

    The money was used to pay for “five high-end Mercedes-Benz automobiles” and other personal purchases, prosecutors said.

    LoPapa potentially faces decades in prison.

  • Nevin Shapiro, Florida Man Who Ran ‘Grocery’ Ponzi Scheme, Pleads Guilty; Feds Say Con Gathered At Least $880 Million While Fraudster Leased Mercedes For $4,700 A Month

    When Nevin Shapiro was arrested in New Jersey for running a wholesale grocery scam in Florida, the FBI described the scheme as a “perfect example of greed run amok.”

    Shapiro, who was charged both criminally and civilly earlier this year after investigators uncovered his long-running Ponzi scheme, now has pleaded guilty to securities fraud and money-laundering.

    Shapiro, 41, once was a prominent Miami Beach businessman. His Ponzi scheme began in 2005 and eventually mushroomed to nearly the size of convicted Fort Lauderdale Ponzi schemer Scott Rothstein’s $1.2 billion fraud.

    Florida has been plagued by Ponzi schemes.

    Rothstein, a disbarred attorney, was sentenced earlier this year to 50 years in federal prison. Shapiro faces up to 30 years in prison when sentenced in January. His scheme netted at least $880 million.

    Shapiro spent about $26,000 per month on mortgage payments on his $5.3 million residence in Miami Beach, while directing about $7,250 per month for payments on a $1.5 million dollar Riviera yacht and roughly $4,700 per month for the lease of a Mercedes-Benz, prosecutors said

    Viewed on a yearly basis, the payments on the residence, yacht and car alone consumed more than $450,000 — and yet Shapiro’s purported business produced no sales.

    Earlier this year, a veteran FBI agent said the Shapiro case was about naked greed that preyed on “unsuspecting investors.”

    “This case is a perfect example of greed run amok,” said FBI Special Agent in Charge Michael B. Ward.

    Although purportedly in the business of buying groceries in a lower-priced market and selling them wholesale in markets in which they would fetch higher prices, Shapiro’s company largely was a mirage that conducted virtually no legitimate business after 2004 and sustained itself by paying investors with the money of other investors, prosecutors said.

    The case was brought by elements of President Obama’s Financial Fraud Enforcement Task Force.

  • BULLETIN: $200 Million Ponzi And Affinty-Fraud Scheme Alleged By Feds In New Jersey; Eli Weinstein Arrested By FBI

    UPDATED 2:40 P.M. EDT (U.S.A) The Newark Star-Ledger and the Asbury Park Press are reporting that New Jersey real-estate developer Eli Weinstein has been arrested by the FBI in a Ponzi and affinity-fraud case that may involve $200 million or more.

    Both newspapers had photographers on the scene as the arrest was made this morning.

    2:40 P.M. UPDATE: Weinstein is 35. He lives in Lakewood, N.J. Federal prosecutors, led by U.S. Attorney Paul J. Fishman, have issued a statement that describes the case as a Ponzi and affinity-fraud scheme targeting orthodox believers of the Jewish faith.

    “Weinstein is charged with offering an array of lucrative investment opportunities that served the single purpose of fattening his wallet,” Fishman said. “It is always offensive when someone steals from others to finance his own luxurious lifestyle, but it is especially galling to exploit a community with whom one shares an inherent trust.”

    A veteran FBI agent said the scheme was contemptible.

    “Based on the allegations in the criminal complaint – lies, threats, deliberate misrepresentations, and even counterfeit checks, it is clear to us that the defendants in this matter exploited the close community ties of the Orthodox Jewish Community for one goal: to steal money through an elaborate real estate and Ponzi scheme,” said Michael B. Ward, special agent in charge of the Newark division.

    “This investigation highlights the need for consumers to do their own homework before entering into any business arrangements and not simply take the word of the other partners,” Ward continued. “If something seems too good to be true, it almost always is.”

    Ward credited the IRS for assisting in the probe, saying its role was important in unmasking the scheme.

    “At its most basic level, this is a case about greed and the abuse of trust,” Ward said. “The subjects in this case did not utilize overly sophisticated fraud schemes, but rather took advantage of trusted relationships to persuade victims to invest in their staged real estate ventures, which were often supported by false and forged documents.”

    Also charged in the case was Vladimir Siforov, 43, of Manalapan, N.J. He “remains at large,” prosecutors said.

    Read the breaking-news coverage at the Star-Ledger site at NJ.com.

    Read the Asbury Park Press coverage at APP.com.

    Weinstein’s New Jersey Ponzi arrest was the second in the state in recent months to allegedly involve a spectacular sum of money.

    Nevin J. Shapiro, 41, of Miami Beach, Fla., was arrested in New Jersey in April on charges of running an $880 million Ponzi scheme involving a bogus wholesale grocery business.

    The alleged Weinstein and Shapiro schemes combined may involve more than $1 billion.

  • 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.

  • NEWS/UPDATES: Feds Say $900 Million Nevin Shapiro Ponzi ‘Perfect Example Of Greed Run Amok’; Colorado Charges Bela Geczy, Michael Kass With Racketeering In Fraud Case

    The acts of Nevin Shapiro — a Florida man arrested in New Jersey yesterday on charges of orchestrating a $900 million Ponzi scheme — represent a “perfect example of greed run amok,” an FBI agent said.

    Separately, a grand jury in Colorado has charged two men under the state’s organized-crime statute with operating an $18 million securities-fraud scheme that affected at least 270 investors.

    Arrested in Colorado were Bela Geczy, 57, of Longmont, and Michael Brian Kass, 48, of Boulder. Authorities said they orchestrated a massive Ponzi scheme involving domestic and offshore business opportunities.

    The court docket in the cases against Geczy and Kass shows two dozen felony counts, including violations of the Colorado Organized Crime Control Act, conspiracy to commit securities fraud, securities fraud by fraud or deceit and securities fraud by untrue statement or omission.

    Like Florida, Minnesota, Washington, New York, South Carolina, California, Michigan and other states, Colorado has been plagued by Ponzi and fraud schemes. No fewer than five major Ponzi or financial fraud probes are under way in Colorado. Records suggest the highly complex frauds involved more than $100 million.

    In New York alone this week, two major financial-fraud cases were filed. The schemes involved in the neighborhood of $101.5 million, according to court filings. Meanwhile, U.S. Attorney Jenny A. Durkan of the Western District of Washington outlined five major Ponzi probes in various states of completion in the Greater Seattle area. These cases involve tens of millions of dollars, according to records.

    At the same time, the main page of the website of U.S. Attorney B. Todd Jones of the District of Minnesota features links to three major Ponzi cases in various stages of investigation. One of the cases is the Tom Petters’ Ponzi case. Petters was sentenced this month to 50 years in federal prison for presiding over a $3.65 billion fraud.

    Jones’ website also includes information on a Ponzi case involving at least $190 million. Trevor Cook pleaded guilty to mail fraud and tax evasion in the fraud earlier this month, and is awaiting sentencing. The website also includes information on the investigation into the business practices of Steve Renner in an alleged autosurf Ponzi scheme case involving tens of millions of dollars.

    Florida/New Jersey Cases Against Nevin Shapiro

    Shapiro, 41, was a prominent Miami Beach businessman. Authorities now say he was operating a Ponzi scheme since 2005 that rivaled the $1.2 billion Scott Rothstein scheme in dollar volume. Rothstein pleaded guilty in his massive fraud case earlier this year.

    Like Rothstein, Shapiro liked to chum around with sports figures and live large, according to records.

    Shapiro used “stolen funds to purchase a pair of diamond-studded handcuffs, which he gave as a gift to a prominent professional athlete,” prosecutors said. He also spent more than $400,000 for floor seats to watch the Miami Heat, a team in the NBA.

    At the same time, prosecutors said, he spent about $26,000 per month on mortgage payments on his $5.3 million residence in Miami Beach, while directing about $7,250 per month for payments on a $1.5 million dollar Riviera yacht and roughly $4,700 per month for the lease of a Mercedes-Benz.

    Viewed on a yearly basis, the payments on the residence, yacht and car alone consumed more than $450,000 — and yet Shapiro’s purported business produced no sales.

    A veteran FBI agent said the case was about naked greed.

    “This case is a perfect example of greed run amok,” said FBI Special Agent in Charge Michael B. Ward. “In pursuit of wealth and a lifestyle he was otherwise unable to attain, Mr. Shapiro allegedly preyed upon unsuspecting investors looking to secure a safe place to maximize their investments.  Instead, their futures have been irrevocably damaged.”

    Although purportedly in the business of buying groceries in a lower-priced market and selling them wholesale in markets in which they would fetch higher prices, Shapiro’s company largely was a mirage that conducted virtually no legitimate business after 2004 and sustained itself by paying investors with the money of other investors, prosecutors said.

    “Nevin Shapiro is charged with tricking investors with false documents and false promises,” said U.S. Attorney Paul J. Fishman of the District of New Jersey. “He spent tens of millions of their money on gambling debts, lavish gifts and a luxury lifestyle built on a house of cards.”

    Authorities gave credit for the Shapiro criminal collar and an accompanying civil action by the SEC to the combined investigative efforts of the Financial Fraud Enforcement Task Force. President Obama formed the Task Force in November 2009.

    Shapiro, prosecutors said, diverted at least $38 million in investors’ funds for his own use, and investors now are out tens of millions of dollars.

    A girlfriend received goods totaling $116,000 from a charge card, which Shapiro used to rack up $640,000 in personal purchases, according to court records.

    The IRS is part of the investigative team in the Shapiro case.

    “Scammers, con artists and swindlers will do and say anything to get you to buy into their scheme,” stated William P. Offord, Special Agent in Charge, IRS-Criminal Investigation.

    Like his investigative colleagues in other Ponzi cases, Offord reuttered the age-old adage:

    “Remember the old cliche,” he said.  “If it’s too good to be true, it probably is.’”