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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. Apologies for the wall of text. I promise I had this nicely formatted in paragraphs in Notepad before pasting here.

  2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

  3. Clearly, there is a lack of a basic understanding of economics. It is not up to the company to decide what to pay its workers. If companies were able to decide how much to pay their workers then why wouldn't they pay everyone minimum wage? Why choose to pay $10 or $14 when they could pay $7? The answer is that companies DO NOT decide how much to pay workers. It is the market that dictates what a worker is worth and how much they should get paid. If Lowe's chooses to pay a call center worker $7 an hour it will not be able to hire anyone for the job, because all those people will work for someone else paying the market rate of $10-$14 an hour. This forces Lowes to pay its workers that much. Not because it wants to pay them that much out of the goodness of their heart, but because it has to pay them that much in order to stay competitive and attract good workers.

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  5. It is sad to see these races not have a full attendance. The Indy Car races are so much more exciting than Nascar. It seems to me the commenters here are still a little upset with Tony George from a move he made 20 years ago. It was his decision to make, not yours. He lost his position over it. But I believe the problem in all pro sports is the escalating price of admission. In todays economy, people have to pay much more for food and gas. The average fan cannot attend many events anymore. It's gotten priced out of most peoples budgets.

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