• 20
  • September
    2010

Former high-stakes investor and generous supporter of the University of Miami's athletics department, Nevin K. Shapiro stood before a federal judge this past week to enter a guilty plea and own up to an $880 million Ponzi scheme. His admission was specifically to one count of securities fraud and one count of money laundering after he had been promising investors as much as 26 percent return on investment. Shapiro could receive as many as 17 years of incarceration when his sentence is scheduled to be delivered at the beginning of 2011.

The scheme, which went on from January 2005 until November 2009, was based around the purchase and sale of wholesale grocery food stores. The situation's ugly underbelly was exposed last November during an involuntary bankruptcy petition. Those who had loaned Shapiro up to $26 million began to get suspicious once payouts ceased. These investors were led to believe the venture was highly profitable. While Shapiro was able to fool investors on paper, he was busy spending the take on high-ticket items like luxury yachts, a mansion, and a high-end Mercedes worth nearly a quarter of a million dollars.

Investors noted in federal bankruptcy filings that Shapiro had sworn to them he would be returning their money, but just needed one more loan to allow the original plan to come to fruition. In November, investors became aware Shapiro had moved away from Miami and his investment company had shut down.

Shapiro freely admitted to U.S. District Judge Susan D. Wigenton that it had all been a scam, misappropriating more than $35 million of investor funds to finance his own luxurious lifestyle. His attorney expects that investors in the scam will receive re-payment of funds invested once Shapiro's bankruptcy is complete, though U.S. Attorney Paul Fishman disagrees, noting the scope of the Ponzi scheme makes full recovery unlikely, and further sheds light on the "significance of our continued pursuit of investment fraud."

Source: NJ.com "Florida man pleads guilty in $800M Ponzi scheme" 9/15/10