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Screenshot of a breaking news alert e-mail from Q2 2017
The U.S. Securities and Exchange Commission has announced fraud charges against two New York City men accused of running a Ponzi scheme with money raised from investors to fund businesses purportedly created to purchase and resell tickets to such high-demand shows as Adele concerts and the Broadway musical Hamilton.
The SEC alleges that Joseph Meli and Matthew Harriton misrepresented to investors that all of their money would be pooled to buy large blocks of tickets that would be resold at a profit to produce high returns for investors. The bulk of investor funds were allegedly used for other undisclosed purposes, namely making ‘Ponzi’ payments to prior investors using money from new investors. Meli and Harriton allegedly diverted almost $2 million for such personal expenses as jewelry purchases, private school and camp tuition, and casino payments.
According to the SEC’s complaint, the scheme went so far as to misrepresent that an agreement was in place with the producer of Hamilton to purchase 35,000 tickets to the musical. Investor money was supposedly paying part of that cost with the return on investment promised within eight months. The SEC alleges no such agreement or purchase ever happened.
Meli and Harriton allegedly raised more than $81 million from at least 125 investors in 13 states.
According to Paul G. Levenson, Director of the SEC’s Boston Regional Office,
As alleged in our complaint, Meli and Harriton raised millions from investors by promising big profits from reselling tickets to A-list events when in reality they were moving investor money in a circle and creating a mirage of profitability.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Meli.
The SEC’s complaint, filed in U.S. District Court for the Southern District of New York, charges Meli and Harriton along with their four purported ticket reselling businesses named Advance Entertainment, Advance Entertainment II, 875 Holdings, and 127 Holdings. The complaint seeks disgorgement of ill-gotten monetary gains plus interest and penalties. Meli’s wife and another company are named as relief defendants in the complaint for the purposes of recovering investor funds allegedly in their possession.