What We Learned About the Rebecca Scandal on American Greed

News   What We Learned About the Rebecca Scandal in Last Night’s American Greed
Another piece of the puzzle that led to the downfall of the Broadway musical Rebecca was brought to light during CNBC’s Phantom Fraudster of Broadway segment on American Greed.
Fraud and scandal surrounded the ill-fated musical <i>Rebecca</i>. The marquee went up, the curtain did not.
Fraud and scandal surrounded the ill-fated musical Rebecca. The marquee went up, the curtain did not.

The multi-million dollar, on-again/mostly off-again Broadway musical Rebecca was the subject of the August 11 episode of the CNBC series American Greed. The real-life story of Rebecca’s road to Broadway has more twists, turns and shadowy characters than the gothic Daphne du Maurier novel on which it is based.

The focus of American Greed’s Phantom of Fraudster of Broadway episode sought to shed light on the past of Mark Hotton, the Long Island businessman whose fraudulent dealings played a part in the musical’s downfall in 2012. American Greed positions Hotton’s actions as the main reason Manderlay never arose on Broadway.

What we learned:

The majority of the program focused on Hotton’s pre-Broadway career. The documentary revealed that Hotton’s criminal activity started when he was only 24 years old, when he stole some construction trucks on Long Island by forging checks for $31,000. He was charged with grand larceny, but Hotton was able to plead that charge down to possession of stolen property. He was sentenced to three years probation.

Three years later, Hotton became a licensed investment broker; somehow his criminal past and history of forgery had been overlooked. The documentary interviewed former clients and associates who remember him boasting in 1997 of managing more than $200 million in assets, with an average personal income around $600,000 a year.

In 2000, he married Sherri Johnson, and the couple bought a luxurious waterfront home in West Islip, Long Island. Five years later, his portfolio nabbed him a position at the prestigious investment firm Oppenheimer and Company. Co-workers nicknamed him “Hollywood” on account of his opulent lifestyle.

Hotton’s next legal troubles came in 2006, when the Financial Industry Regulatory Authority (FINRA) responded to complaints that Hotton had defrauded his business partners, diverting several million dollars intended for a New Jersey storage facility to pay off investors in a separate project. Ultimately, Hotton paid two million to resolve the complaints and the investigation was dropped, but a judge still wrote a judgment that characterized Hotton’s conduct as at best “careless” and at worst “criminal.” Somehow, Hotton was able to keep these legal troubles from his clients, and he kept his job at Oppenheimer and Company.

Hotton dug deeper into fraudulent activities, investing his clients’ portfolios more aggressively, using a technique called “churning” to earn himself big commissions even while delivering negative returns. He started setting up companies, purported to be international investment firms, that essentially only existed to hide the movement of monies he stole from his clients.

But what goes up must come down. The documentary next moves on to the period when Hotton’s clients began noticing what was happening to their money. Amidst increasing complaints, Hotton lost his position with Oppenheimer and Company and moved between three other investment firms soon after. In February 2011, Hotton filed for personal bankruptcy.

Enter Broadway. The documentary characterized Hotton’s activity on Rebecca as his last resort. In 2012 producer Ben Sprecher was working on bringing Rebecca to Broadway, after financial issues delayed the production for four years. He’d raised eight million, but still needed several million more to finance the entire production. Hotton appeared and told Sprecher he could raise the rest of the budget, and all he wanted in return was $7,500 and eight percent of any funds raised in excess of $250,000. Fatefully, Sprecher agreed.

Actors Karen Mason and Nick Wyman, who were part of the 130-member cast and crew contracted for the Broadway production, were interviewed. “Mrs. Danvers was going to be the role of a lifetime for me,” Mason said. “This was gong to be a show that I’d dreamt about being part of for a very long time.” Mason also stated that the production had sold more than $1 million in tickets before rehearsals began.

The program also states that a $7,500 check Sprecher cut to Hotton was endorsed by a company called Trinity Management, a fake international investment firm that was fronted by Hotton’s wife Sherri. The address for the company was the Hotton home address on Long Island.

Sprecher’s friend and attorney Ronald G. Russo remembered Hotton attending at least one backer’s audition, which he attended along with his wife Sherri and a woman they introduced as the niece of one of Hotton’s foreign investors. Hotton submitted less than $70,000 in expense reports, including $18,000 for an African safari with a “Paul Abrams,” one of the foreign investors Hotton claimed to have on board for Rebecca.

Sprecher announced that rehearsals were on.

When Hotton returned from his African safari, however, he had bad news: Abrams had died of malaria, and his other foreign investors were pulling out as a result. Sprecher had no choice but to postpone the production yet again.

Soon thereafter, Sprecher announced he’d found a new investor willing to put up $2 million so that rehearsals can begin, but days later the New York Times published a front page story that heavily suggested Hotton’s deceased foreign investor is completely fake.

On September 29, 2012, Sprecher and Russo had a breakfast meeting with Hotton—the entire conversation is recorded by a private investigator—and Hotton repeatedly dodged questions about Abrams and the circumstances around his death. It became clear that Hotton defrauded the production.


In the meantime, the production’s publicist anonymously emailed a new “angel investor” who had committed the funds necessary to finally raise the curtain on Rebecca, warning that to invest in Rebecca was only to involve oneself in a criminal investigation. The investor withdrew. On September 30, 2012, Sprecher gathered the cast and creative team to deliver the news that Rebecca was canceled once and for all.

Hotton and his wife Sherri were arrested weeks later on charges of wire fraud and money laundering unrelated to Rebecca. In the summer of 2013, both plead guilty. Hotton was sentenced to more than 11 years in prison, which he is currently serving, but wife Sherri is still awaiting sentencing and living at the couple’s home on Long Island. According to a childhood friend interviewed in American Greed, Sherri is currently co-owner of a gym and a body builder.

The program ends hopeful that Rebecca may still find a way to Broadway one day, reporting that the sets and costumes are in storage awaiting a New York debut.

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