Father And Son Sentenced For $930 Million Ponzi Scheme

Sometimes the apple doesn’t fall far from the tree. When children are growing up many look up to their parents and imitate them on a daily basis. “When I grow up, I’m going to be just like daddy!” But what happens when your parent is a fraudster?

Father, Roberto Torres, former chief financial officer, and son, Alejandro Torres, former accountant with Capitol Investments have been sentenced to prison for assisting Nevin Shapiro in the operation of a $930 million Ponzi scheme linked to a fake wholesale grocery distribution business.

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Roberto has been sentenced to 48 months and his son Alejandro faces 46 months in prison.

Roberto Torres, the CFO of Capitol Investments USA, Inc. (Capitol), and Alejandro Torres, an accountant at Capitol, used the company to assist Shapiro in fraudulently obtaining approximately $930 million between January 2005 and November 2009. The Torreses admitted that Capitol had virtually no income-generating business during that time and that they assisted Shapiro in operating the Ponzi scheme by using new investor funds to make principal and interest payments to existing investors and to fund Shapiro’s lavish lifestyle.

The defendants admitted to creating, or directing others to create, fraudulent documents which falsely touted the profitability of Capitol’s fictitious grocery diversion business. The Torreses admitted that those documents included: profit and loss figures fraudulently representing that Capitol’s wholesale grocery business was generating tens of millions of dollars in annual sales; personal and business tax returns for Shapiro and Capitol also fraudulently reflecting those sales; and numerous invoices fraudulently reflecting transactions between Capitol and other companies in the wholesale grocery business.

More than 50 victim investors lost between $50 and $100 million due to this scheme. In January of 2009 payments were not being made that were required principal and interest payments to investors and Shapiro and Capitol were forced into bankruptcy in November of the same year. At that time more than $100 million was owed to victims.

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Nevin Shapiro was found guilty and sentenced to only 20 years in prison earlier this year on one count of money laundering.

Each of the Torres men will also be required to have three years of supervised release and ordered to pay $82 million jointly and severally with Shapiro – Source.

I suppose it’s all in the family.

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