by Brian Mahany
Nevin Shapiro billed himself as one of the largest grocery wholesalers in the U.S. Nevin Shapiro is now spending the next 20 years in a federal prison. What what wrong? For one, Shapiro raised almost $1 billion from investors but never sold groceries.
Shapiro was the former CEO and founder of Capitol Investments USA. Prosecutors say that he raised $930 million dollars from investors for his grocery business. Unfortunately for investors, Shapiro never bought and sold groceries. Instead, he kept raising money to finance his lavish lifestyle. He also used investor money to pay off earlier investors who wanted to cash out.
Such behavior is evidence of a classic Ponzi scheme. As more and more investors go to cash out, there simply isn’t enough new money coming in to pay everyone. Ultimately the scheme collapses under its own weight. The earliest investors sometimes make out but the later investors invariably lose much or all of their money.
What is unusual about the Shapiro case is that most of the victims were incredibly sophisticated investors. This wasn’t some penny stock scam that survived from aggressive Internet advertising. Much like Bernie Madoff, Shapiro cultivated an image of privilege and power and played the ultimate con game with some incredibly wealthy people.
Shapiro used phony tax returns, phony invoices and fraudulent financial statements to show the profitability of his company and “document” tens of millions in annual sales. Investors were promised between 10% and 26% annual returns on their investments.
Where did all the money go? In addition to using some money to pay off early investors, Shapiro lived a lavish lifestyle according to prosecutors. Unfortunately for investors, Shapiro had a gambling problem and the FBI says millions was spent on illegal gambling and sports bets. Shapiro also used the money for his $27,000 per month mortgage payment, a yacht and $400,000 in floor seats for the Miami Heat.
Not being satisfied with simply stealing, he also donated money to the University of Miami in return for them naming a student lounge after him.
Shapiro was ultimately caught when he could no longer make payments to investors. In a Newark, New Jersey court room this week Shapiro was sentenced to 20 years in prison, 3 years more than requested by prosecutors. The judge compared Shapiro to a snake oil salesman and called the scheme an “extensive, massive, brazen fraud. Shapiro’s lawyer complained after sentencing that the judge was too harsh. It’s doubtful many people will agree.
If you are the victim of a fraud, seek a lawyer experienced in asset recovery immediately. In many instances, fraudsters attempt to hide or conceal assets when it becomes clear that their fraud will be discovered. Although there is no evidence of that in the Shapiro case, time is not on your side.
The fraud and asset recovery lawyers at Mahany & Ertl can help you get back your hard earned money anywhere in the U.S. and often beyond. We concentrate in multimillion dollar fraud cases and know how to pierce through phony trusts, find hidden assets and unwind fraudulent transfers of property. For a confidential assessment of your matter, contact attorney Brian Mahany at (414) 704-6731 or by email at .
Mahany & Ertl, LLC – Detroit, Michigan; Milwaukee, Wisconsin & Portland, Maine. America’s fraud recovery lawyers.