Capital Investments – A $1 Billion Ponzi Scheme

Nevin Shapiro, the former owner of Capital Investments USA, Incorporated, was sentenced in Miami Beach, FL to 20 years in prison for operating almost a $1 billion Ponzi scheme, as reported by Bloomberg. The prosecutors in the case estimated the fraud to be around $930 million or so and ordered Mr. Shapiro to pay restitution of $82.7 million. According to the article, Shapiro solicited investors to buy into Capital Investments, a bogus wholesale grocery distribution company, promising them 10% to 26% of the company with alleged sales of tens of millions of dollars, when in fact the company had no real business. He admitted that he used new investors’ money to pay earlier ones and to support his lavish lifestyle, which is rather typical.

Matthew Beck, the Assistant U.S. Attorney on the case, said that Shapiro was like a “snake oil salesman” and the judge called the scheme “an extensive, massive, brazen fraud.” Mr. Shapiro admitted to stealing $35 million to pay gambling debts, purchase floor seats to the Miami Heat basketball games, purchase a $5 million house and gifting $150,000 to the University of Miami for an athletic lounge. He also paid $13 million to various individuals for sending investors to him.

In a related civil matter, Shapiro generated $900 million and used $769 million to pay returns to earlier investors, according to the SEC. The FBI stated that investors forced Capital Investments into involuntary bankruptcy.

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