WASHINGTON — A Miami Beach, Fla.-based grocery reseller surrendered to federal authorities on Wednesday amid charges that his business, Capitol Investments USA, was a Ponzi scheme used to enrich himself and unrelated business ventures.
Nevin K. Shapiro, founder and president of Capitol, ran a grocery diverting business which purchased low-priced groceries in one region and resold them in another where prices were higher. According to the Securities and Exchange Commission, Shapiro violated antifraud provisions by promising investors returns as high as 26% annually, even though the company operated at a loss. Shapiro used funds from new investors to pay principal and interest to older investors, the SEC added.
When questioned by investors, Shapiro showed them fabricated invoices and purchase orders for nonexistent sales. The SEC said Sharpiro used at least $38 million of investor money to fund a lavish lifestyle, including a $5 million home and $1 million boat.
The complaint seeks a permanent injunction, sworn accounting, disgorgement of ill-gotten gains and financial penalties. Shapiro also faces criminal charges from the U.S. Attrorney’s office in New Jersey.
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