The Ethical and Legal Implications of the University of Miami Ponzi Scheme
The University of Miami case was one of the biggest financial scandals in the past year. Former UM Football Booster, Nevin Shapiro, orchestrated a $930 million Ponzi scheme, with which numerous NCAA rules were violated. Shapiro allegedly provided cash, goods, prostitutes, assorted favors and on one occasion, an abortion to University of Miami football players. This paper will examine the various legal and ethical implications involved in this case, including an analysis of the university’s social responsibility, and an overview of the scandal in terms of three ethical theories: utilitarianism, Kant’s …show more content…
In fact, when two Boston officers went to arrest him, Ponzi actually charmed them into investing. He was finally arrested in 1929, a few weeks before the stock market crashed. Convicted, he served about 13 years in federal prison (Jackson, D., 1993).
A Ponzi scheme generally begins by word of mouth. A promoter starts with friends and relatives, then their friends and relatives. Every month the initial investors receive checks with the promised rate of return. They show the checks to others, urging them to "get in on this and make some money" (Jackson, D., 1993). Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. Many Ponzi scheme organizers focus on attracting new money to make promised payments to earlier stage investors and to use for personal expenses, instead of engaging in any legitimate activity.
Present: Nevin Shapiro
Fast forward to today. As a result of his money laundering, Shapiro has been in federal custody since his surrender to FBI and Internal Revenue Service (IRS) agents in April 2010. Shapiro used Capitol to solicit approximately $930 million between January 2005 and November 2009 from individuals who believed they were investing in Shapiro’s grocery distribution business (CEO of capitol, 2007). Shapiro admitted that Capitol had virtually no income-generating business during that time, and that he used new investor funds