A Miami Beach businessman who was a major donor to the University of Miami's sports program pleaded guilty Wednesday to running a nearly $900 million Ponzi scheme involving his grocery distribution business.
Nevin K. Shapiro, founder and president of Capitol Investments USA, Inc.,admitted in a Newark federal courtroom that he duped investors into buying a part of his business, then turned around and spent the money on himself.
According to prosecutors, Shapiro promised investors a risk-free, up to 26 percent annual return for buying into his grocery diverting business. But as business ground to a halt, Shapiro began to use new investor funds to pay back old investors.
Over 60 investors provided Shapiro with over $880 million from January 2005 through November 2009. All told, investors lost about $80 million in the scheme.
Shapiro, 41, used the investors' money to fund his own lavish lifestyle and pay for unrelated business ventures. 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.
"Nevin Shapiro made a name for himself as a big contributor to student athletics, showering his favorite players with gifts and cash, living the high life, and rubbing elbows with the pros," U.S. Attorney Paul J. Fishman said. "Today, Shapiro admitted that he built the facade of his lifestyle with money he stole from those who trusted him."
After making generous donations to UM, an athletic lounge was named after him. But just last month it was announced that Shapiro was writing a book about what he calls major NCAA violations in the Miami football program.
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Shapiro's lawyer, Maria Elena Perez, said her client was in bankruptcy but was working on giving his victims restitution.
"I think today was the first day toward closure," she said. "He's accepted responsibility and hopes to make the victims whole."
Shapiro faces up to 17 years in prison when he's sentenced on Jan. 4.
