Legal News

Our Ponzi Nation: Florida Entrepreneur Hit With Charges

By Ashby Jones

Ah, things had been so nice and quiet on the Ponzi beat, what with Bernie Madoff and Marc Dreier in the slammer, and Scott Rothstein having decided to plead guilty.

But just as soon as we had the inkling to put our Ponzi file over in our West Manhattan storage unit, comes word of an alleged Ponzi scheme involving Nevin Shapiro, the chief executive of Capitol Investments USA.

According to a complaint unsealed Wednesday in New Jersey federal court (not yet available), Shapiro defrauded investors of at least $80 million after raising $880 million in a Ponzi scheme. Click here for the Bloomberg story.

Bloomberg reports that, according to the complaint, Shapiro, 41, raised money from investors from January 2005 to November 2009 to finance Capitol, a Miami Beach- based wholesale grocery distribution business. Capitol and Shapiro "had virtually no legitimate business during this time,” alleged the government.

"Shapiro instead used new investor money to fund principal and interest payments to existing investors, in Ponzi-scheme fashion, and misappropriated tens of millions of dollars for personal expenses," according to the Federal Bureau of Investigation complaint.

Shapiro surrendered to authorities after he was charged. Shapiro is scheduled to appear today in federal court in Newark. One of his attorneys, Kathryn Meyers, told Bloomberg his lawyers will address the charges in court.

Our favorite bit in the story: that Shapiro used much of the money to buy $400,000 in floor seats at Miami Heat games and diamond-studded handcuffs that he gave to a "prominent professional athlete," according to the complaint.

Full post as published by Law Blog - WSJ.com on April 21, 2010 (boomark / email).