Wholesale Grocery Owner Gets 20-Year Sentence in $930 Million Ponzi Scam
U.S. District Judge Susan Wigenton, sentenced Shapiro in federal court in Newark, New Jersey, where he pleaded guilty on Sept. 15. Prosecutors yesterday raised their estimate of the fraud from $880 million to $930 million. The judge ordered Shapiro, of Miami Beach, Florida, to pay $82.7 million in restitution.
Shapiro, 42, admitted he defrauded more than 50 investors who lost between $50 million and $100 million in his Capitol Investments USA Inc. He said he used new investors’ money to pay earlier ones, as well as to fund a lavish lifestyle.
“Nevin Shapiro used other people’s money to live a fantasy life built on false promises to unsuspecting victims,” said U.S. Attorney Paul Fishman in a statement. “Today’s sentence reflects the scope of his deception, duping victims to invest in nearly a billion dollars.”
Capitol Investments, based in Miami Beach, was a so-called grocery diverter, which buys low-priced food in one region and sells it for a profit elsewhere, the U.S. Securities and Exchange Commission said.
Shapiro admitted to stealing $35 million to pay illegal gambling debts, make mortgage payments on a $5 million house, and buy floor seats to Miami Heat basketball games. Shapiro, who gave $150,000 to the University of Miami for an athletic lounge, said he gave cash or gifts to dozens of student-athletes.
Under a plea agreement, Shapiro’s lawyers and prosecutors agreed not to ask the judge for a sentence outside a range of 168 months to 210 months. While Shapiro’s lawyer asked for 168 months, and prosecutors sought 210 months, Wigenton imposed a sentence of 240 months.
“I think his sentence was excessive considering the plea agreement,” Maria Elena Perez, Shapiro’s attorney, said in an interview after the hearing. “Nevin accepts responsibility for what he did. Nevin has spent the last year in jail trying to make everybody whole again.”
She said Shapiro has been cooperating with prosecutors.
Shapiro, who has been in jail since his arrest in April 2010, told investors from January 2005 to November 2009 that their money would fund his grocery business, according to an indictment.
He promised returns of 10 percent to 26 percent in a company that he said had tens of millions of dollars in annual sales, when in truth, “Capitol had virtually no active wholesale grocery business,” according to court papers.
In a related civil case, the SEC estimated Shapiro raised about $900 million and said he used $769 million of incoming funds to pay returns to earlier investors.
He also paid $13 million in undisclosed commissions and fees to individuals who attracted other investors, according to the SEC.
Investors forced Capitol into involuntary bankruptcy, the Federal Bureau of Investigation has said.
The criminal case is U.S. v. Shapiro, 10-cr-00471, U.S. District Court, District of New Jersey (Newark). The SEC case is Securities and Exchange Commission v. Shapiro, 10-cv-21281, U.S. District Court, Southern District of Florida (Miami).
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