SEC Charges Prominent Miami Beach Businessman in $900 Million Ponzi Scheme

The Securities and Exchange Commission today charged a prominent Miami Beach-based businessman and philanthropist with fraud for orchestrating a $900 million offering fraud and Ponzi scheme.

The SEC alleges that Nevin K. Shapiro, the founder and president of Capitol Investments USA, Inc., sold investors securities that he claimed would fund Capitol’s grocery diverting business. Shapiro told investors that the securities were risk-free with rates of return as high as 26 percent annually. Instead, Shapiro was actually conducting a Ponzi scheme and illegally using investor money to pay for other unrelated business ventures and fund his own lavish lifestyle. When investors questioned Capitol’s business, Shapiro showed them fabricated invoices and purchase orders for nonexistent sales.

“Shapiro lured investors by falsely touting Capitol’s securities as a risk-free investment with extraordinarily high returns,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “He used his prominence and prestige to gain investors’ trust in funding Capitol’s grocery diverting business, but behind their backs he diverted their money to enrich himself.”

Grocery diverters like Capitol purchase lower-priced groceries in one region and resell them for a profit to another region where prices are higher. According to the SEC’s complaint, filed in U.S. District Court for the Southern District of Florida, Shapiro used his business relationships and word-of-mouth to solicit investors and sell them short-term promissory notes.