A federal grand jury finally handed down an indictment charging a South Florida man with running an $880 million Ponzi scheme. Nevin Shapiro, a resident of Miami Beach, was initially surrendered to federal law enforcement agents back on April 21, 2010. He was initially charged in federal court by complaint which is not uncommon as the government prosecutors decide how to proceed with the case. The criminal defense lawyer representing Nevin has most likely been in negotiations with the prosecutor, hence the delay in the indictment being handed down. The defendant has been in custody without bond since his initial appearance before a federal magistrate judge.
Shapiro is accused of operating his Miami Beach business, Capitol Investments USA with the intent to defraud investors. The indictment alleges that Shapiro solicited investor money for his wholesale grocery distribution business. Capitol did actively conduct business and the money taken in was used to pay older investors and to fund the defendant's lavish lifestyle. The indictment charges the defendant with securities fraud, wire fraud and money laundering. The indictment is also seeking an asset forfeiture of any money or property derived from the criminal course of conduct.
Capitol rolled along until January 2009 when investor money dried up. As with all Ponzi schemes, tough economic times make it difficult to impossible to find new investors. Once the money dries up, the house of card usually tumbles because there is no money to pay the older investors. While the scheme to defraud was operating smoothly, over 60 investors sent in excess of $880 million to be invested in Capitol. According to the indictment, the defendant misappropriated in excess of $35 million. The majority of the money was used to pay for an expensive Miami Beach home, yachts, cars, sporting events and gambling debts.
Shapiro was a long-time donor to the University of Miami athletic program. In fact, a student athlete lounge carried his name until it was removed for lack of payment in 2008. Shapiro is facing a maximum prison sentence of 55 years for his involvement in running the organized scheme to defraud. Based on th charges, Shapiro is actually facing more prison time than infamous South Florida Ponzi schemer Scott Rothstein. Ponzi schemes are notorious for coming to light at the end of economic cycle. While the number of Pozni schemes being uncovered is diminishing, the justice system is still replete with cases on the docket.
Grand Jury Indicts Nevin Shapiro, South Florida Business Journal, July 15, 2010.
