Florida man charged in ponzi scheme

U.S. regulators charged a Miami
Beach, Florida, philanthropist with fraud for allegedly running a $900 million
Ponzi scheme, the Securities and Exchange Commission said.

Nevin Shapiro faces a maximum of 20
years in prison and $5 million fine on the securities fraud charge. He also
faces civil fraud charges filed Wednesday by the Securities and Exchange Commission.

Shapiro surrendered to authorities
earlier on Wednesday and is now in jail on a $10 million bond, according to a
spokeswoman for the U.S. attorney’s office in New Jersey.

U.S. authorities allege that the
41-year-old Shapiro sold investors securities that he claimed would fund his
Capitol Investments firm’s wholesale grocery distribution business and touted returns
as high as 26 per cent annually.

Instead, Shapiro redirected funds,
making donations to charities, funding his lavish lifestyle and running a Ponzi
scheme in which he used funds from new investors to pay the principal and
interest to earlier investors, U.S. authorities said.

According to the criminal
complaint, Shapiro used about $35 million of investor funds for his personal
use. Expenditures allegedly included a pair of diamond-studded handcuffs, more
than $400,000 for floor seats to the Miami Heat professional basketball team
and about $26,000 for monthly mortgage payments on his $5 million home in Miami
Beach.

Shapiro also allegedly used more
than $150,000 in investor funds to finance donations to the Miami University’s
athletic program. The university named a student athlete lounge after him,
according to the website of the university’s football team, the Miami
Hurricanes. The website referred to the “tremendous philanthropic support
he provides.”

To raise funds, Shapiro attracted
investors through word of mouth from friends and business associates, and
reassured investors by boasting of his wealth, the SEC alleged in its complaint.

When investors questioned Shapiro,
he showed them fabricated invoices and purchase orders for nonexistent sales,
the SEC said.

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