Florida jet-setter gets 20 years for role in $930M Ponzi scheme

Florida jet-setter gets 20 years for role in $930M Ponzi scheme
By Jason Grant/The Star-Ledger The Star-Ledger

His jaw clenched and eyes often cast downward, the once high-flying Miami Beach businessman pleaded with a federal judge for mercy today, moments before he would be sentenced for orchestrating a $930 million Ponzi scheme that cost investors $82 million.

"This is a very dark day in my life," Nevin K. Shapiro, 42, said as he stood wearing handcuffs and a green prison jump suit. "I’m really devastated for my mom and dad … and my greatest remorse is for the victims who were impacted."

Then, in trying to explain why for five years he’d authorized the falsification of documents and fooled 62 investors into squandering millions on a purported wholesale grocery-distribution business, Shapiro said only that his "desperation" for money and success in business won out over the potential "humiliation" of having to admit he’d failed.

In a massive Ponzi scheme, Shapiro used his Miami-based business, Capitol Investments USA, Inc., as a criminal vehicle that netted him $35 million, prosecutors said. Some of his victims lived in New Jersey, including one who, according to a criminal complaint, invested about $5.4 million.

Shapiro spent the money lavishly, buying a $1.5 million Riviera yacht and taking up residence in a $5 million waterfront house that offered breathtaking views of Biscayne Bay and the Miami skyline. He also befriended Miami Heat basketball stars like Dwyane Wade and had floor seats at the NBA team’s home games.

But today, U.S. District Judge Susan D. Wigenton saved her mercy for his victims, calling Shapiro a skillful liar and "a snake oil salesman" who was able to fool dozens of investors and eventually ruin some of them financially.

Despite a plea bargain calling for a maximum recommended penalty of 210 months in prison, the judge departed upward, giving Shapiro 240 months. Wigenton also ordered him to pay more than $82 million in restitution.

Rebekah Carmichael, a spokeswoman for U.S. Attorney Paul J. Fishman, said the 20-year term is one of the longest sentences ever handed down for a federal white-collar crime prosecuted in New Jersey.

In pleading guilty in September to one count of securities fraud and one count of money laundering for the scheme that lasted from 2004 to 2009, Shapiro admitted Capitol — the company he owned and managed as chief executive — had virtually no income-generating business. He also conceded that Capitol simply used new investor funds to pay off older investors, in classic Ponzi scheme fashion. As part of the fraud, Shapiro purportedly promised investors up to 26 percent returns through the buying and reselling of wholesale groceries.

Arguing vehemently that Shapiro get a 210-month sentence — the maximum guideline amount under his plea agreement with the government — Assistant U.S. Attorney Jacob T. Elberg read from a former Capitol investor’s painful letter.

"Shapiro was impossible to contact, and even when I could, it was one lie after another. … Shapiro is a very good liar," Elberg quoted from the man’s letter.

"We have lost everything we had, and the dreams of a young girl are shattered," Elberg continued. "All I could afford to buy my 13-year-old daughter for Christmas in 2010 was face wash."

Elberg said "perhaps the most telling thing about Mr. Shapiro … is that at no point did he even slow down his spending" of the $35 million.

Shapiro’s lawyer, Maria Elena Perez from Coral Gables, Fla., said her client’s gambling addiction led in part to his criminal actions. She asked that mandatory gambling counseling be part of his sentence.

Wigenton rejected gambling addiction as an excuse. She said he can seek counseling in prison on his own.

Perez said Shapiro owes some $9 million to bookies and has faced death threats from at least one of them.

But Wigenton was having none of it.

"The fact remains that Mr. Shapiro thought it was okay and acceptable … to basically dupe, steal and defraud individuals out of significant money," she said, before adding "there was a pathological component to it,and it hurt a lot of people.”

The judge also rejected a defense argument that Roberto Torres, 76, and his son, Alejandro Torres, 39, played a bigger part in swaying Shapiro into the scheme than has previously been disclosed. The Torreses, two former employees of Shapiro’s, pleaded guilty to the scheme in April.