The cases highlight the dark underside of the largely unregulated resale business. While fans complain that tickets are scarce and expensive on popular sites like StubHub, TicketIQ and SeatGeek, the potential for investor fraud lies more on the broker side of the industry, where money is raised from investors to finance ticket purchases.
"Because of what’s happened in the last six months, if you’re a hedge fund and you’re investing in ticket brokers, shame on you," said Jesse Lawrence, founder of resale marketplace TicketIQ. "Just don’t do it, unless you can 100 percent verify how they’re getting tickets."
The Carton case and two other high-profile ticket fiascos pulled back the curtain.
A concert promoter and Hamptons socialite, Joseph Meli, allegedly cheated more than 125 investors, including billionaires Dell and Tudor Jones, in a scheme centered on tickets to “Hamilton” and popular concerts, prosecutors said.
And a former New York City math teacher, Jason Nissen, after running a well-respected broker company, was accused of falsely telling investors, including Falcon Strategic Partners and a Hutton Capital Management-affiliated firm, he’d use their money to buy tickets to sought-after events including the Super Bowl and “Hamilton.” Actually, he was repaying earlier investors, according to the government.
Meli and Nissen pleaded not guilty. Meli’s lawyer said during the arraignment that the charges weren’t true. Nissen’s lawyer declined to comment.
Ticket brokers typically buy up blocks of seats -- often employing blinking quick bots and then reselling them through their own channels, as well as on the familiar websites.
Verified Fan
Bruce Springsteen and Taylor Swift are among artists trying to beat the bots, teaming up with TicketMaster on a Verified Fan program, which limits ticket sales to fans who’ve been vetted to confirm they’re real people and not scalpers. Though demand is high, fewer than 5 percent of the Springsteen Broadway tickets have hit the resale market, according to TicketIQ. Hamilton shows, at the height of their fervor, often had upwards of 45 percent of seats sell through the secondary market.
Swift is taking it a step further. In her version of Verified Fan, she’s cashing in by giving priority to fans who spend money on her music and products. Springsteen didn’t ask fans to buy any Boss-branded gear.