Alleged Ponzi scheme leads to criminal charges

On Behalf of | Feb 16, 2017 | Securities |

Charges were filed against two New York businessmen by the Securities and Exchange Commission on Jan. 27, 2017. It is alleged that they were responsible for running a complex Ponzi scheme that duped investors out of more than $81 million dollars.

Their scheme involved the alleged bulk purchasing and reselling of tickets to high-profile events including to the hit Broadway show “Hamilton” as well as concert tickets to see the singer Adele. The pair is said to have taken advantage of more than 125 investors from across 13 different states.

In justifying why it was that the men could get their hands on reduced-rate tickets en masse, the men touted their prized relationship with high-profile event producers. In exchange for their investment to pay the initial cost of the tickets, the scamming businessmen promised their benefactors huge profits in return.

In the SEC filing made in New York’s Southern District Federal Court, it alleges that the men even went as far as to provide investors with written contracts. They not only spelled out how investors would be fully repaid the entire amount they put in, but their entitlement to a 10 percent residual annualized profit as well.

The contract in question also spelled out other promises made by the men to their investors. As for one of those, it guaranteed investors a 50 percent cut of any proceeds remaining following the receipt of their initial investment.

The SEC’s Boston office in charge of the investigation found that the men relied upon the use of a legitimate-sounding investment opportunity only to secure funding then divert it to their own personal endeavors. The pair is alleged to have spent at least $2 million on jewelry, private schooling, camp costs and casino debts.

In announcing the lawsuit, investigators cited how the men were responsible for “moving investor money in a circle and creating a mirage of profitability”. It’s this oversight that ultimately led authorities to move forward in pressing charges against the two for conspiracy as well as wire and securities fraud.

If you or someone you know has been involved has been implicated in a securities-related offense, an attorney experienced in handling federal, white colllar cases can provide advice and guidance in your legal matter.

Source: USA Today, “Two charged in Hamilton ticket resale Ponzi scheme,” Kevin McCoy, Jan. 30, 2017

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