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Defendant pleads guilty in $880M fraud case

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A Florida man known for his sports-related philanthropy pleaded guilty Wednesday to running a multistate Ponzi scheme that prosecutors say left investors, including some in Indiana, with up to $100 million in losses.

Nevin Shapiro pleaded guilty in New Jersey federal court to one count of securities fraud and one count of money laundering as part of an agreement that still has him facing up to 17 years in prison at his Jan. 4 sentencing.

Prosecutors say 41-year-old Shapiro of Miami Beach used a Florida-based company called Capitol Investments USA Inc. to raise nearly $900 million from investors who thought they were buying into a wholesale grocery distribution business.

Sydney “Jack” Williams, who founded Indianapolis-based Williams Realty Group, has been accused of persuading more than a dozen Indiana investors from 2003 to 2009 to lend millions of dollars at high interest rates to Capitol Investments USA.

Charges filed by the Securities and Exchange Commission claim Shapiro promised investors risk-free annual returns as high as 26 percent by persuading them to invest in a "grocery diversion" enterprise—a practice of buying low-cost groceries in one region of the country and reselling them in higher-priced markets.

Shapiro allegedly siphoned at least $35 million of the proceeds for personal use, including $23 million for salaries and commissions for himself, $5 million for a Miami Beach mansion and $400,000 for courtside Miami Heat basketball tickets. He also spent lavishly on luxury cars, a high-stakes gambling habit, and a pair of diamond-studded handcuffs given to an unnamed prominent athlete, according to court documents.

Shapiro also was generous with what prosecutors say was his investors' money, donating to athletic groups and charities and getting a student athlete lounge named after him at the University of Miami by donating $150,000. Shapiro's name was removed from the lounge in 2008 after the school said he did not continue following his pledged donation-payment plan.

Shapiro left more than 50 investors in Florida, Indiana and New Jersey with total losses of between $50 million and $100 million, according to U.S. Attorney Paul J. Fishman.

"Nevin Shapiro made a name for himself as a big contributor to student athletics, showering his favorite players with gifts and cash, living the high life, and rubbing elbows with the pros," Fishman said. "Today, Shapiro admitted that he built the facade of his lifestyle with money he stole from those who trusted him."

Shapiro's lawyer, Maria Elena Perez, said her client was in bankruptcy but was working on giving his victims restitution.

"I think today was the first day toward closure," she said. "He's accepted responsibility and hopes to make the victims whole."

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  1. With Pence running the ship good luck with a new government building on the site. He does everything on the cheap except unnecessary roads line a new beltway( like we need that). Things like state of the art office buildings and light rail will never be seen as an asset to these types. They don't get that these are the things that help a city prosper.

  2. Does the $100,000,000,000 include salaries for members of Congress?

  3. "But that doesn't change how the piece plays to most of the people who will see it." If it stands out so little during the day as you seem to suggest maybe most of the people who actually see it will be those present when it is dark enough to experience its full effects.

  4. That's the mentality of most retail marketers. In this case Leo was asked to build the brand. HHG then had a bad sales quarter and rather than stay the course, now want to go back to the schlock that Zimmerman provides (at a considerable cut in price.) And while HHG salesmen are, by far, the pushiest salesmen I have ever experienced, I believe they are NOT paid on commission. But that doesn't mean they aren't trained to be aggressive.

  5. The reason HHG's sales team hits you from the moment you walk through the door is the same reason car salesmen do the same thing: Commission. HHG's folks are paid by commission they and need to hit sales targets or get cut, while BB does not. The sales figures are aggressive, so turnover rate is high. Electronics are the largest commission earners along with non-needed warranties, service plans etc, known in the industry as 'cheese'. The wholesale base price is listed on the cryptic price tag in the string of numbers near the bar code. Know how to decipher it and you get things at cost, with little to no commission to the sales persons. Whether or not this is fair, is more of a moral question than a financial one.

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