Operator of 930M Ponzi scheme sentenced to 20-year prison term

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The U.S. Attorney’s office on Tuesday announced the operator of a fictional grocery distribution business admitted to running a $930 million pyramid scheme.

The U.S. Attorney’s office on Tuesday announced the operator of a fictional grocery distribution business admitted to running a $930 million pyramid scheme.

Nevin Shapiro, who operated the scheme through Capitol Investments USA Inc. and a fictional wholesale grocery distribution business, was sentenced to 20 years in prison in a Newark court, according to U.S. Attorney Paul J. Fishman.

Shapiro pled guilty to securities fraud and money laundering by overseeing the Ponzi scheme from January 2005 to November 2009.

According to Fishman, Shapiro used at least $5 million of investor money to pay off illegal sports gambling debts, purchase floor seats at Miami Heat basketball games, finance mortgage payments on his $5 million Miami Beach home, and make monthly payments for on a yacht and a sports car.

In order to convince investors to buy into Capitol Investments USA, Shapiro directed others to create bogus financial statements, tax returns, invoices and profit and loss figures for the wholesale grocery business. Shapiro admittedly bilked more than 50 investors out of between $50 million and $100 million, and was ordered by the presiding judge, Susan D. Wigenton, to repay $82.7 million in restitution.

Shapiro declared bankruptcy in November 2009 after failing to make required principal and interest payments since the beginning of the year, and surrendered to FBI and IRS agents in April 2010.