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Florida Grocery Arbitrageur Busted in $900M Ponzi Scheme

Only in South Florida can a guy dupe investors out of $900 million by promising guaranteed annual returns of 10-26 percent from profits on arbitraging groceries.

Reminds you of the Seinfeld episode when Kramer and Newman decided to collect empty bottles in New York and drive them to Michigan to get the extra deposit money. But, that’s exactly what Nevin Shapiro, a 41-year-old Miami Beach businessman, did from 2004 until the feds caught up with him.

Shapiro turned himself in to authorities in New Jersey (we're not sure what he was doing in Newark) this morning and has been charged with civil fraud by the Securities and Exchange Commission. (read the SEC complaint.) Under the name, Capital Investments USA Inc., Shapiro ran a classic Ponzi scheme, collecting cash from hundreds of Floridians with new investors going to pay off old ones.

He lured the unsuspecting folks by promising to return their initial investment within 30 days and guaranteed 10 percent to 26 percent annual returns. The stellar returns would come from being a so-called grocery diverter - buying groceries in one region and selling them in another where prices were higher. Problem is, Shapiro never bought any groceries.

Instead of using his investors cash to buy cereal and milk, Shapiro took $38 million to fund other businesses and buy a $5 million house, a big boat, $400,000 floor seats for the Miami Heat and a $4,700-a-month Mercedes-Benz.

SEC officials said Shapiro charged over $640,000 of personal expenses to his American Express Black Card, including $116,000 of charges incurred by his girlfriend. Being a big Miami Hurricanes fan, he donated donated more than $150,000 of investor money to the University of Miami, which named a student-athlete lounge in his honor.

In the university’s announcement of the Shapiro lounge, it said he “has always bled green and orange.” If the charges are true, he’ll be wearing a nice orange jumpsuit soon.

Here's the Nevin Shapiro Student Athlete Lounge


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