NEW YORK (CNNMoney.com) -- The SEC and the U.S. Attorney's office in New Jersey on Wednesday charged a Miami Beach-based businessman with allegedly running a Ponzi scheme that sucked in close to $1 billion.
The Securities and Exchange Commission and U.S. District Attorney Paul Fishman filed fraud charges in New Jersey against Nevin K. Shapiro, founder and president of Capitol Investments USA.
Shapiro is accused of fraudulently offering risk-free annual returns as high as 26% to investors in his grocery diverting operation, a type of business where low-cost groceries are purchased in one region and sold for a higher price elsewhere.
"[Shapiro] used his prominence and prestige to gain investors' trust in funding Capitol's grocery-diverting business, but behind their backs he diverted their money to enrich himself," said Eric Bustillo, director of the SEC's Miami regional office.
Investigators from the U.S. Attorney's office said more than 60 investors, many of them in New Jersey, sent Shapiro more than $880 million, incurring losses of at least $80 million.
The SEC said that Shapiro's "lavish" lifestyle included a $5 million house in tony Miami Beach and a $1 million boat, as well as "luxury cars, expensive clothes, high-stakes gambling and season tickets to premium sporting events."
In a classic pyramid-style scheme, the Ponzi scammer uses new investments to pay off existing investors, while claiming that the stolen funds are legitimate returns.
The feds said that Shapiro claimed to make tens of millions of dollars a year through Capitol. In reality, Capitol was operating at a loss by 2004 and had "virtually no" legitimate investment activity by 2005, according to federal authorities.
Shapiro paid $13 million to contacts who could reel in fresh investors in order to keep the scam going, according to the SEC.
He is also listed as a donor on the University of Miami's Web site, which describes him as "an ardent, devoted, intense supporter of the University of Miami Athletics."
"For the tremendous philanthropic support he provides, the University of Miami is proud to name the Student-Athlete Lounge after Nevin Shapiro," the site reads.
A spokesman for the athletics club was not immediately available for comment.
Kate Meyers, one of three lawyers representing Shapiro at the Lewis Tein firm in Coconut Grove, Fla., confirmed that Shapiro "surrendered this morning to authorities in New Jersey."
New York Magazine reporter Jessica Pressler, who has been caught up in controversy this past week, will not be moving on to a new job at Bloomberg News. More
Unilever sued Hampton Creek over its egg-free mayonnaise spread Just Mayo. But the company behind Best Foods and Hellman's mayonnaise has now dropped the lawsuit. More
The income of the top 1% jumped significantly in 2012, far outpacing inflation. Not only did this group make a larger share of the country's income, their share of total taxes also jumped from 35% to 38%. More