NEW YORK, Sept 15 (Reuters) - A businessman pleaded guiltyon Wednesday to swindling about $880 million from peoplethroughout the United States who believed they were investingin a grocery distribution business but were instead helping tosupport his luxury lifestyle.
Nevin Shapiro of Miami Beach, Florida, admitted in federalcourt in Newark, New Jersey, that he fraudulently touted theprofitability of his company, Capitol Investments USA Inc, whenit had virtually no income-generating business.
U.S. prosecutors said that between January 2005 andNovember 2009, Shapiro ran a typical Ponzi scheme in which newinvestor money was used to make payments to existing investorsand to support his lavish lifestyle.
The scheme is one of many that have unraveled in thefinancial crisis, the most noteworthy being themultibillion-dollar fraud perpetrated by New York financierBernard Madoff, who is serving a 150-year prison term.
Shapiro misappropriated investor funds for illegal sportsgambling debts, payments to dozens of student athletes andfloor seats to watch the Miami Heat professional basketballteam, among other things, the office of the U.S. Attorney inNewark said in a statement announcing the guilty plea.
Shapiro also spent $26,000 per month on a mortgage on a $5million Miami Beach home, $7,250 per month for payments on a$1.5 million Riviera yacht and $4,700 per month forthe lease of a Mercedes-Benz S65 AMG automobile.
"Nevin Shapiro made a name for himself as a bigcontributor to student athletics -- showering his favoriteplayers with gifts and cash, living the high life, and rubbingelbows with the pros," U.S. Attorney Paul Fishman said. "Today,Shapiro admitted that he built the facade of his lifestyle withmoney he stole from those who trusted him."
Shapiro, 41, was arrested in April on fraud charges, fivemonths after he and his Capitol company were forced intobankruptcy.
The securities fraud charge to which Shapiro pleaded guiltycarries a maximum potential penalty of 20 years in prison and a$5 million fine. Shapiro also pleaded guilty to moneylaundering, a charge that carries a sentence of up to 10years.
Sentencing is scheduled for Jan. 4.
The case is USA v Nevin Shapiro, U.S. District Court inNewark, New Jersey, No. 10-471. (Reporting by Grant McCool; Editing by Lisa Von Ahn)