Before his 40th birthday, developer Eric Sheppard was already a budding real-estate rock star. He brought the swish Canyon Ranch resort to Miami Beach’s Carillon Hotel and built a reputation as a deep-pocketed and dependable philanthropist.

But there’s one move from Sheppard’s remarkable younger days that has caused him little but grief: befriending Nevin Shapiro.

Sheppard’s close relationship with one of Florida’s most notorious con artists has cost the developer roughly $2 million — $1.3 million in investment losses when Shapiro’s $930 million Ponzi scheme imploded, and the rest to the bankruptcy trustee charged with recouping funds for victims of Shapiro’s far-reaching criminal enterprise.

Late Wednesday, Sheppard agreed to pay the trustee, Joel Tabas, a $700,000 settlement to resolve a federal lawsuit that alleged Sheppard was not duped by Shapiro’s elaborate scam, but rather an active participant in it.

The suit claimed Sheppard used his real-estate company, WSG Development, as a personal piggy-bank, diverting nearly $40 million into Shapiro’s Capitol Investments USA — which purportedly was in the wholesale grocery distribution business, but in reality was just a front for Shapiro’s fraudulent acts.

Sheppard allegedly used WSG Development funds to make loans to Capitol without any formal documentation, and WSG never received any actual interest payments from Capitol. Instead, Shapiro would repay Sheppard directly, resulting in hundreds of thousands of dollars in criminally usurious interest rates, the lawsuit states.

But Sheppard’s attorney, Peter Russin, said Thursday the charges were all bogus, as evidenced by the relatively small settlement, compared to what Tabas had originally sought. Furthermore, Sheppard is not and never has been in danger of facing criminal charges, Russin said. A spokeswoman for the Securities and Exchange Commission declined to comment Thursday.

“Our view from the get-go was that Eric was a victim in this Ponzi scheme, based on a long and trusting friendship,” Russin said. “But with all litigation, it’s extremely expensive. He essentially paid what it would have cost to defend the litigation to make it go away.”

In a statement released by Tabas’ attorney, Gary Freedman, the bankruptcy trustee declined to discuss the merits of the case but did acknowledge that “certain of the Sheppard parties” did lose money in the scheme, although he did not specify who lost what.

“Prior to digging into the litigation, we saw an opportunity to quickly bring funds into the estate which would benefit Capitol’s creditors rather than waiting two years to roll the dice on litigation,” Freedman said.

In September 2010, Shapiro pleaded guilty to securities fraud and money laundering. He was handed a 20-year prison sentence and ordered to pay $82.7 million in restitution to those who lost out.

The University of Miami athletics booster has since gone public with wild and potentially damning stories of improper gifts to Miami players, resulting in a still-ongoing NCAA probe. Shapiro has also been an active participant in the bankruptcy proceeding, and his cooperation likely led to Sheppard being targeted by the trustee.

Shapiro and Sheppard, both 43, met as grade-schoolers growing up in Miami Beach, and became fast friends. As adults, they played on the same rec basketball team, vacationed together, split Heat floor tickets, and even shared office space, the suit says.