January 11, 2012 / 12:05 AM / in 7 years

Sydney Williams sentenced for false tax return

NEW YORK (Reuters) - The man who recruited the largest number of investors to participate in a $930 million Ponzi scheme was sentenced on Tuesday in New Jersey federal court to a year and a day in prison for failing to report more than $12 million in related commissions to the IRS, officials said.

Sydney Jack Williams, 63, of Naples, Florida, previously pleaded guilty before U.S. District Judge Susan Wigenton to one count of subscribing to a false tax return. During Tuesday’s appearance in Newark, the judge noted that Williams was not part of the scam behind Capitol Investments USA, his defense lawyers said during phone interviews after court.

Nevin Shapiro, who was sentenced in June to 20 years in federal prison, was the mastermind behind the scam, U.S. Attorney Paul Fishman has said.

Williams was an investor in Capitol, which Shapiro used to solicit approximately $930 million between January 2005 and November 2009, Fishman said in a press release on Tuesday. The individuals believed they were investing in Shapiro’s grocery distribution business, which had virtually no income-generating business at the time, Fishman said. Shapiro used the money to make interest payments to existing investors and to fund his own lavish lifestyle, including payments and gifts to student and professional athletes, the release said.

The government did not allege that Williams was aware that Shapiro or Capital was engaged in fraud, the release said. He recruited more than 60 individuals to invest in Capitol and invested more than $100 million of his own funds, Fishman said. The victims included New Jersey residents, the U.S. Attorney’s Office said.

While Williams received more than $7 million in interest payments, he suffered a $3 million loss when the scheme collapsed, the government said in the release. In return for bringing in new investors, he received more than $12 million.

In phone interviews after court, Williams’ lawyers Martin Raskin and Yale Freeman stressed that the judge noted he, too, was a victim.

“The judge specifically said, look, you weren’t part of the Ponzi scheme and you were duped like everybody else, but you still should have paid your taxes,” Freeman said.

Raskin said their client expressed remorse. “This is a guy who has been in the business world for decades and this was completely out of character for him, and the judge recognized that.”

Investors who lost money wrote letters on his behalf and traveled from around the country to Newark to lend their support, Freeman said.

Father and son Roberto Torres and Alejandro Torres, the former chief financial officer and accountant with Capitol, respectively, were sentenced in October. The father received four years and the son was sentenced to three years and 10 months for helping Shapiro orchestrate the scheme.

Reporting by Jennifer Golson; Editing by Phil Berlowitz

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