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Williams Realty founder pleads the Fifth in Ponzi case

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A former Indianapolis developer accused of luring more than a dozen Hoosiers into a $900 million Ponzi scheme invoked the Fifth Amendment more than 850 times when questioned under oath in Florida.

Sydney “Jack” Williams, who founded locally based Williams Realty Group, cited his Fifth Amendment right not to incriminate himself in response to most questions during a five-hour deposition in July. The 225-page transcript became public last month.

A bankruptcy-court-appointed trustee is going after Williams to recover more than $100 million the trustee describes as Williams’ ill-gotten profits from a Ponzi scheme conducted by Nevin K. Shapiro of Miami.

The trustee says Williams earned huge commissions by persuading dozens of investors, many with Indiana ties, to lend millions of dollars at high interest rates to Shapiro’s Capitol Investments USA Inc. in Miami Beach, Fla.

The firm billed itself as a grocery middleman but actually had no operations in recent years, federal prosecutors allege. In bankruptcy records, it lists just $500 in assets against $132 million in liabilities.

Court records say Williams isn’t a target of a criminal investigation. But Williams’ move to invoke the Fifth Amendment suggests his attorneys fear he might become one. Shapiro, the only person charged so far, is being held in a New Jersey prison.

The court-appointed trustee, Miami attorney Joel Tabas, filed his asset-recovery lawsuit against Williams in July. Any money it yields would go toward repaying other Capitol investors. The trustee already has secured the return of $130,000 in contributions Shapiro made to the University of Miami.

Williams wanted to testify but opted against it given the “unfounded, yet serious” allegations, said Martin Raskin, a Miami attorney who represents Williams.

“It is our hope and expectation that Jack will be able to fully testify about this matter in the not too distant future,” Raskin wrote in an e-mail. “Please do not assume that Jack’s invocation of his Fifth Amendment privilege is any sort of admission of culpability on his part. It is not.”

More questions

Attorney Gary M. Freedman, who conducted the deposition on the trustee’s behalf, said Williams has agreed to sit down for more questions. But he expects more of the same. The parties earlier had scheduled settlement talks but have made no progress.

Williams, 62, acknowledged during the July 22 deposition that he graduated from Ball State University in 1972, was a Sigma Chi fraternity member, and that his pledge trainer was David Letterman (not an investor in the scheme). He acknowledged he’s being sued in Florida courts by three investors in Capitol.

He didn’t say much else. Williams invoked the Fifth Amendment even on questions with answers that are publicly available, such as the name of the company he founded in Indianapolis in 1980, Williams Realty Group. He sold his interest in the company and moved to Naples several years ago, though it wasn’t clear from court files when he moved.

Williams also took the Fifth when asked whether he is currently employed, whether he is a principal in Naples, Fla.-based National Equity Trust (he’s listed as one on the company’s website), whether his bio on the website is accurate, and whether a photo next to his bio on the company’s website actually depicts him.

“I just can’t believe I’m even sitting here, quite frankly,” Williams said early in the interview. And later, he added: “I’ve got nothing to hide.”

The questions from Freedman, a partner with Miami-based Tabas Freedman Soloff Miller & Brown PA, provided some insight into the trustee’s investigation.

Freedman pushed Williams on where he got the money to pay off a $1.25 million second mortgage on his home in Naples in April, why he threw away a computer he had used for years in January, and why he was listed as the beneficiary of a life insurance policy taken out on Shapiro, the alleged Ponzi architect. Williams took the Fifth on each question.

Freedman also asked Williams about his social relationship with Shapiro, including trips to sit in the front row at football and basketball games, and whether he ever questioned the legitimacy of Shapiro’s business.

Another issue: Williams’ use of e-mails to communicate with Shapiro and others at Capitol. His attorney initially had claimed Williams did not communicate via e-mail, but Williams said during the deposition that the claim was a mistake.

He did not produce any e-mails for the trustee, saying AOL automatically deletes e-mails in his account after 120 days, and he does not save printouts.

“I’m not a big record guy, not a big detail guy,” he said, in a rare response in which he did not invoke the Fifth.

Locals invested

Some of the investors Williams recruited have continued to support him, convinced Williams also was a victim. His attorneys point to the roughly $10 million Williams allegedly lost in the scheme, loans the trustee is seeking to void as fraudulent.

Among the investors are Charles W. Brown, a principal in Indianapolis-based Southern Bells Inc., one of the nation’s largest Taco Bell franchisees, and prominent local attorney James R. Fisher, a former Ice Miller partner and principal in Indianapolis-based Miller & Fisher LLC. Another is Barry Alvarez, athletic director at the University of Wisconsin who for years was head football coach.

Tabas charges in his lawsuit that Williams “knew or should have known” Capitol was a fraud but was motivated to perpetuate it to enrich himself. According to court papers, Williams earned a 10-percent commission on hundreds of loans, many of which came from friends he met as a Ball State Sigma Chi.

“Williams, who had a seven-year relationship with the debtors, is believed by the trustee to have detailed knowledge of the business affairs of Capitol,” the trustee wrote in an Aug. 12 filing. “Williams was single-handedly involved in soliciting over 50 investors who ‘invested’ millions of dollars in Capitol’s Ponzi scheme.”

Capitol actually conducted no business operations from 2005 to 2009, federal authorities allege. Instead, the company paid previous investors—along with enormous commissions to Williams—with the new money coming in.

Fearing Shapiro was hiding assets, a major investor filed involuntary Chapter 7 bankruptcy for both Shapiro and Capitol Investments in November 2009.

The bankruptcy judge appointed a trustee in December 2009, and federal prosecutors filed securities fraud and money-laundering charges against Shapiro in April.•

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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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