Capitol Investments USA and Nevin Shapiro
A Wholesale Grocery Ponzi Scheme
Between January 2005 and November 2009, Florida businessman Nevin Shapiro defrauded dozens of victims in a multi-million dollar Ponzi Scheme—a fraud in which he used new investors’ money to fund payments to existing investors. His victims thought they were investing in a wholesale grocery distribution business. Shapiro promised his investors returns of up to 26 percent—far higher than the returns investors would expect to earn in the stock market.
In reality, there was no grocery distribution business. Instead, investors were funding Shapiro’s extravagant lifestyle—a mansion in Miami Beach, a yacht and luxury car, attendance at high-profile sporting events and payment for gambling debts. He collected more than $930 million before the scheme eventually collapsed. In April 2010, federal prosecutors and the Securities and Exchange Commission (SEC) charged Shapiro with fraud. In June 2011, Shapiro was sentenced to 20 years in federal prison.
How did Shapiro con these investors? He used a persuasion tactic known as “phantom riches”—playing off investors’ desires to make money fast and guaranteeing the prospect of wealth. He promised investors risk-free securities. He showed investors fake documents that highlighted the company’s exaggerated profitability and projected growth. Shapiro also reassured investors by boasting of his own wealth and showing off his extravagant lifestyle.
Shapiro is just one of many recent examples of fraudsters who have taken billions of dollars from investors. Read about the barrage of influence tactics fraudsters use to con their targets.
See more stories of investment fraud.