Miami grocery wholesaler charged with investment Ponzi scheme

1 Miami Beach businessman is facing federal charges in New Jersey, alleging that he operated his grocery business as a Ponzi scheme, the Wall Street Journal reported.

Our Miami Criminal Defense Lawyers continue to report about the large number of Ponzi schemes being uncovered in the wake of the economic downturn. Such schemes are uncovered when new investors can’t be found or when floundering investments–such as those made in the collapsing real estate market– dry up capital.

However, many legitimate business owners and investment managers have been devastated by the recession, and charging them with a crime only results in further injustice. A Miami defense lawyer should always be called at the first signs that a criminal investigation could be underway.

Likewise, investors have been hurt by legitimate investments and by scam artists. Knowing the difference typically requires a law firm with the knowledge and experience to protect the rights of investors who have been victimized by scams.

In this case, authorities say the 41 year old founder of Capitol Investments USA sold what he called risk-free securities paying up to 26 percent from Capitol’s grocery diverting business. The Southwest Florida Business Journal reports that the business purchased lower priced groceries in one region and sold them for a profit in another region.

The defendant was first charged with securities fraud and money laundering in April. He was indicted in federal court in New Jersey this month. The Securities and Exchange Commission has also filed civil charges against him, alleging that he violated federal securities laws and claiming the fraud was as much as $900 million.

The indictment also charges him with conspiracy to commit securities and wire fraud, two counts of wire fraud and one count of money laundering. It also seeks to force him to forfeit any property identified as coming from proceeds of the offenses.

If convicted, he faces up to 20 years in prison and $5 million in fines. The conspiracy, wire fraud and money laundering charges could result in fines of twice the amount of the alleged gains. Prosecutors allege he used at least $35 million for his own personal use, including $26,000 a month mortgage on his $5.3 million Miami Beach home and floor seats to Miami Heat basketball games.