A Miami Beach businessman was busted for fraud after running a $900 million Ponzi scheme involving grocery stores, the SEC said Wednesday.
Nevin K. Shapiro, founder and president of Capitol Investments USA, Inc., promised investors a risk-free, up to 26 percent annual return for buying into his grocery diverting business, the SEC alleges.
The 41-year-old Shapiro surrendered to authorities in Newark, N.J., this morning. He faces securities fraud and money laundering charges.
Shapiro used the investors' money to "fund his own lavish lifestyle" -- where have we heard that before? -- and pay for unrelated business ventures, the SEC claims. Over 60 investors lost at least $80 million in the scheme, the SEC said.
“Shapiro lured investors by falsely touting Capitol’s securities as a risk-free investment with extraordinarily high returns,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office, in a statement. “He used his prominence and prestige to gain investors’ trust in funding Capitol’s grocery diverting business, but behind their backs he diverted their money to enrich himself.”
Among those lavish expenses were his $5 million Miami Beach home, his $1 million boat, expensive cars and clothes, high-stakes gambling and season tickets to the Miami Heat and other sporting events.
Shapiro even used some of the stolen funds to "purchase a pair of diamond-studded handcuffs, which he gave as a gift to a prominent professional athlete," according to the U.S. Attorney's Office in New Jersey.
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According to the SEC, Shapiro's scheme imploded when Capitol started operating at a loss in 2004 and he began paying old investors with new investors' money.
Shapiro, a major donor to the University of Miami's sports program, will be in court for a bail hearing later today. He4 faces a max of 30 years in prison and fines of over $5 million
