Two New York City investment managers have been charged with defrauding investors who thought they were investing in businesses that resold tickets to popular entertainment events like the award-winning Broadway show "Hamilton," as well as popular concerts by singers such as Adele, the Securities and Exchange Commission announced Monday.
Joseph Meli and Matthew Harriton of New York City are charged with fraud for operating a Ponzi scheme that raised more than $81 million from at least 125 investors in 13 states, the SEC says.
The SEC alleges that Meli and 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.
However, the bulk of the money was used to pay earlier investors and at least $2 million of it was used 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, but no such agreement existed.
“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,” said Paul G. Levenson, director of the SEC’s Boston regional office.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York filed criminal fraud charges against Meli for the ticket scheme.