SEC Charges Prominent Miami Beach Businessman in $900 Million Ponzi Scheme
Nevin K. Shapiro, a Miami Beach businessman, orchestrated a $900 million Ponzi scheme through Capitol Investments USA by falsely promising risk-free 26% annual returns on grocery-diverting investments, using new investor funds to pay earlier investors and lavishly spending $51 million on personal luxuries and undisclosed commissions, leading to SEC civil charges and criminal prosecution after he surrendered to authorities.
The SEC charged Nevin K. Shapiro with fraud for running a $900 million Ponzi scheme through Capitol Investments USA, claiming investor funds would finance a profitable grocery-diverting business with 26% annual returns. In reality, Shapiro misappropriated at least $38 million for personal luxuries—including a $5 million home, luxury cars, and gambling—and paid $13 million in undisclosed commissions to recruiters, while fabricating invoices and financial records to conceal that the business had been unprofitable since 2004 and largely inactive by 2005. The SEC sought permanent injunctions, disgorgement, and penalties, while the U.S. Attorney’s Office for the District of New Jersey simultaneously filed criminal charges, prompting Shapiro’s surrender to authorities.
Nevin K. Shapiro, a prominent Miami Beach businessman and philanthropist, orchestrated a $900 million Ponzi scheme through his company, Capitol Investments USA, Inc., falsely claiming that investor funds would finance a profitable grocery-diverting business with risk-free, 26% annual returns. In truth, Capitol had been operating at a loss since late 2004 and had virtually no operations by 2005, yet Shapiro continued to lure new investors by fabricating invoices, purchase orders, and financial statements to simulate legitimacy. He diverted at least $38 million of investor money to fund his extravagant lifestyle, including a $5 million Miami Beach home, a $1 million boat, luxury vehicles, high-stakes gambling, and premium sports tickets, while also paying $13 million in undisclosed commissions to individuals who recruited new investors. Shapiro misled investors by assuring them their principal was secure because Capitol only sold goods after securing purchase orders—a claim that was entirely false. The SEC filed civil charges seeking permanent injunctions, disgorgement of ill-gotten gains, and financial penalties, while the U.S. Attorney’s Office for the District of New Jersey unsealed parallel criminal charges on the same day, leading Shapiro to surrender to authorities. The investigation, conducted in coordination with the FBI and IRS, remains ongoing, and Shapiro’s actions have been described as a classic Ponzi scheme exploiting his public prestige and fabricated business credibility to deceive hundreds of investors.
Extracted insights
- $900.00M $900 Million $100M–$1B
- $900.00M $900 million $100M–$1B
- $38.00M $38 million $10M–$100M
- $13.00M $13 million $10M–$100M
- $5.00M $5 million $1M–$10M
- $1.00M $1 million $1M–$10M
- company capitol investments usa, inc.
- scheme_term fraud for orchestrating a $900 million offering fraud and ponzi scheme
- person nevin k. shapiro
- agency Securities and Exchange Commission
- agency U.S. Attorney's Office for the District of New Jersey
- Nevin K. Shapiro charged with fraud for orchestrating a $900 million offering fraud and Ponzi scheme
- Nevin K. Shapiro is founder and president of Capitol Investments USA, Inc.
- Nevin K. Shapiro sold investors securities claiming to fund Capitol's grocery diverting business
- Nevin K. Shapiro claimed securities offered rates of return as high as 26 percent annually
- Nevin K. Shapiro conducted Ponzi scheme using investor money for unrelated business ventures and lavish lifestyle
- Nevin K. Shapiro showed investors fabricated invoices and purchase orders for nonexistent sales
- SEC charged Nevin K. Shapiro with violating antifraud provisions of federal securities laws
- Nevin K. Shapiro misappropriated at least $38 million of investor funds
- Nevin K. Shapiro owns $5 million home in Miami Beach
- Nevin K. Shapiro owns $1 million boat
- Nevin K. Shapiro tapped approximately $13 million of investor funds for undisclosed commissions
- Capitol Investments USA, Inc. was operating at a loss by late 2004
- Capitol Investments USA, Inc. had virtually no operations by 2005
- SEC seeks against Shapiro permanent injunction, disgorgement of ill-gotten gains, and financial penalties
- U.S. Attorney's Office for the District of New Jersey unsealed criminal charges against Nevin K. Shapiro
- Nevin K. Shapiro surrendered to authorities on April 21, 2010
SEC Charges Prominent Miami Beach Businessman in $900 Million Ponzi Scheme FOR IMMEDIATE RELEASE 2010-63 Washington, D.C., April 21, 2010 — The Securities and Exchange Commission today charged a prominent Miami Beach-based businessman and philanthropist with fraud for orchestrating a $900 million offering fraud and Ponzi scheme. Additional Materials Litigation Release No. 21495 SEC Complaint The SEC alleges that Nevin K. Shapiro, the founder and president of Capitol Investments USA, Inc., sold investors securities that he claimed would fund Capitol’s grocery diverting business. Shapiro told investors that the securities were risk-free with rates of return as high as 26 percent annually. Instead, Shapiro was actually conducting a Ponzi scheme and illegally using investor money to pay for other unrelated business ventures and fund his own lavish lifestyle. When investors questioned Capitol’s business, Shapiro showed them fabricated invoices and purchase orders for nonexistent sales. “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. “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.” Grocery diverters like Capitol purchase lower-priced groceries in one region and resell them for a profit to another region where prices are higher. According to the SEC’s complaint, filed in U.S. District Court for the Southern District of Florida, Shapiro used his business relationships and word-of-mouth to solicit investors and sell them short-term promissory notes. According to the SEC’s complaint, Capitol was operating at a loss by late 2004 and had virtually no operations by 2005 when, in a classic Ponzi scheme manner, Shapiro began using funds from new investors to pay principal and interest to earlier investors. Among the alleged misrepresentations that Shapiro made to investors: He falsely told investors their funds would be used as short-term financing to purchase and resell groceries for Capitol’s business. He falsely touted Capitol’s financial success as well as his own. He falsely assured investors that their principal was secure because Capitol would not broker the sale of the goods without first obtaining a purchase order from a buyer. He falsely told investors that Capitol would pay the principal and interest from the profits it received when it resold the goods. The SEC’s complaint further alleges that Shapiro misappropriated at least $38 million of investor funds to enrich himself and finance outside business activities unrelated to the grocery business, including a sport representation business and real estate ventures. His lavish lifestyle includes a $5 million home in Miami Beach, a $1 million boat, luxury cars, expensive clothes, high-stakes gambling, and season tickets to premium sporting events. Shapiro additionally tapped approximately $13 million of investor funds to pay large undisclosed commissions to individuals who attracted other investors. The SEC’s complaint charges Shapiro with violating the antifraud provisions of the federal securities laws. The complaint seeks a permanent injunction, sworn accounting, disgorgement of ill-gotten gains, and financial penalties against Shapiro. The SEC coordinated the filing of these civil charges with the U.S. Attorney's Office for the District of New Jersey, which today unsealed criminal charges against Shapiro, who surrendered to authorities this morning. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of New Jersey, the Federal Bureau of Investigation, and the Internal Revenue Service. The SEC's investigation is continuing. # # # For more information about this enforcement action, contact: Teresa J. Verges Assistant Director, SEC’s Miami Regional Office 305-982-6300 Amie Riggle Berlin Senior Trial Counsel 305-982-6300 http://www.sec.gov/news/press/2010/2010-63.htm Home | Previous Page Modified: 05/21/2010
SEC Charges Prominent Miami Beach Businessman in $900 Million Ponzi Scheme FOR IMMEDIATE RELEASE 2010-63 Washington, D.C., April 21, 2010 — The Securities and Exchange Commission today charged a prominent Miami Beach-based businessman and philanthropist with fraud for orchestrating a $900 million offering fraud and Ponzi scheme. Additional Materials Litigation Release No. 21495 SEC Complaint The SEC alleges that Nevin K. Shapiro, the founder and president of Capitol Investments USA, Inc., sold investors securities that he claimed would fund Capitol’s grocery diverting business. Shapiro told investors that the securities were risk-free with rates of return as high as 26 percent annually. Instead, Shapiro was actually conducting a Ponzi scheme and illegally using investor money to pay for other unrelated business ventures and fund his own lavish lifestyle. When investors questioned Capitol’s business, Shapiro showed them fabricated invoices and purchase orders for nonexistent sales. “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. “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.” Grocery diverters like Capitol purchase lower-priced groceries in one region and resell them for a profit to another region where prices are higher. According to the SEC’s complaint, filed in U.S. District Court for the Southern District of Florida, Shapiro used his business relationships and word-of-mouth to solicit investors and sell them short-term promissory notes. According to the SEC’s complaint, Capitol was operating at a loss by late 2004 and had virtually no operations by 2005 when, in a classic Ponzi scheme manner, Shapiro began using funds from new investors to pay principal and interest to earlier investors. Among the alleged misrepresentations that Shapiro made to investors: He falsely told investors their funds would be used as short-term financing to purchase and resell groceries for Capitol’s business. He falsely touted Capitol’s financial success as well as his own. He falsely assured investors that their principal was secure because Capitol would not broker the sale of the goods without first obtaining a purchase order from a buyer. He falsely told investors that Capitol would pay the principal and interest from the profits it received when it resold the goods. The SEC’s complaint further alleges that Shapiro misappropriated at least $38 million of investor funds to enrich himself and finance outside business activities unrelated to the grocery business, including a sport representation business and real estate ventures. His lavish lifestyle includes a $5 million home in Miami Beach, a $1 million boat, luxury cars, expensive clothes, high-stakes gambling, and season tickets to premium sporting events. Shapiro additionally tapped approximately $13 million of investor funds to pay large undisclosed commissions to individuals who attracted other investors. The SEC’s complaint charges Shapiro with violating the antifraud provisions of the federal securities laws. The complaint seeks a permanent injunction, sworn accounting, disgorgement of ill-gotten gains, and financial penalties against Shapiro. The SEC coordinated the filing of these civil charges with the U.S. Attorney's Office for the District of New Jersey, which today unsealed criminal charges against Shapiro, who surrendered to authorities this morning. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of New Jersey, the Federal Bureau of Investigation, and the Internal Revenue Service. The SEC's investigation is continuing. # # # For more information about this enforcement action, contact: Teresa J. Verges Assistant Director, SEC’s Miami Regional Office 305-982-6300 Amie Riggle Berlin Senior Trial Counsel 305-982-6300 http://www.sec.gov/news/press/2010/2010-63.htm Home | Previous Page Modified: 05/21/2010