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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. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.

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