A Canadian judge declined to hand down a prison sentence to a man convicted of masterminding a $2 million Ponzi scheme, instead ordering the man to a conditional house arrest that will allow him to work to pay off his defrauded victims. Jack Michael Shapira, 48, received the sentence from Judge Robert Heinrich, who decided that the best way to punish Heinrich was to let him work in order to pay back nearly $300,000 in losses as a result of his fraud. Shapira faced up to a two-year sentence after previously pleading guilty to 10 counts of fraud over $5,000.
Shapira operated Keywest Leasing ("KL"), telling prospective investors that their funds would be used to fund leases of used medical equipment that would subsequently be re-leased to medical organizations and government organizations. Shapira promised annual returns ranging from 20% - 30%, and clients were told their cash would be used to fund leases of used medical equipment that would then be leased again to medical organizations and government agencies. Shapira promised annual returns in the range of 20%-35%, and eventually collected more than $2 million from investors.
However, several of the companies named on the leases were found to have no connection to Shapira, and it was later revealed that nearly 80% of investor funds were used to fund payouts to existing investors in classic Ponzi scheme fashion. Shapira also misappropriated investor funds for his own personal use, including to pay off personal debts that included grappling with a major gambling problem. Investors suffered collective losses of nearly $300,000.
Under the sentence imposed by Judge Heinrichs, Shapira will be on a conditional house arrest that includes an absolute curfew. He must work to meet gradually-increasing restitution payments, and will also be subject to a three-year term of supervised probation.