Authorities in New York have charged three men with building a Ponzi scheme around the false promise of reselling hard-to-get tickets to Broadway’s Hamilton and other popular musicals and concerts, according to a report on Bloomberg.
Steven Simmons and Joseph Meli, a concert promoter, were charged in U.S. District Court in Manhattan with securities fraud for enticing victims to invest money to buy nonexistent blocks of Hamilton tickets, which they were told would then be resold at a large profit. Although Meli reportedly did approach the producers of Hamilton, they declined to participate. Instead, the three reportedly touched off the Ponzi scheme by using $4.2 million to repay an earlier investor “whose money had been misappropriated.“ Since they had no actual tickets to to sell, Meli, Simmons, and Harriton needed to keep finding more new investors to pay off the early investors.
The U.S. Securities and Exchange Commission charged Meli and a third man, Matthew Harriton, in the same scheme.
Ultimately, the three allegedly scammed $81 million from 125 investors in 13 states. They reportedly kept $2 million in expenses, including a trip to a casino and jewelry and car purchases, while using the rest to pay off early investors in the scheme. Later investors lost millions.
A Ponzi scheme is defined by the BusinessDictionary.com as a “scam in which a gullible group is enticed with the promise of very high returns in a very short time, but is based on paying off the early 'investors' from the cash from (hopefully ever increasing number of) new ‘investors.’ The whole structure collapses when the cash outflow exceeds the cash inflow.”
Meli’s attorney, Michael Bowen, said the charges are false. Florian Miedel, who is representing Simmons, didn’t immediately return Bloomberg’s calls seeking comment. Bloomberg was unable to identify Harriton’s attorney.
Neither the Hamilton producers nor anyone else associated with the show was involved in the scam.
Playbill.com has reached out to the Hamilton producers for comment.