Update: 1/28/17 1:21 PST:
An entrepreneur and ticket reseller charged with perpetrating an $81 million Ponzi scheme has connections to DTI and possibly helped the resale giant raise tens of millions of dollars.
On Friday, federal officials charged Joe Meli, age 42, with bilking investors as part of a scheme to buy and resell tickets for the hit Broadway musical “Hamilton.” Meli is listed as a Director for DTI in a Sept 9 filing with the Securities and Exchange Commission during a private stock offering valued at $105 million. It’s unclear if Meli’s current legal entanglement will have any consequences for DTI or if the Sept. 9 filing is tied to an October announcement that DTI had raised $75 million.
Meli is a well-known Manhattan promoter and businessman who has long been around the New York concert scene. The former Bulldog Entertainment Group boss made a splash in 2007 when he announced an intimate concert series for stars like Prince and Billy Joel with tickets selling for $15,000 a pop. In 2015 he teamed up with the Barclays Center to create Brooklyn Direct, “a new programming division designed to work directly with agents and managers to book events by artists not on tour for Barclays Center and other venues,” according to Billboard.
Prosecutors allege that Meli misled investors about their contacts with producers of the Hamiton musical and only spent a fraction of the millions of dollars raised to buy up entertainment tickets, instead spending the money on jewelry, vacations, and private schools.
The two began approaching investors in 2015 with a plan to pool investor money and use the funds to buy up large blocks of tickets.
“Investors received written contracts which promised full repayment of principal plus a 10% annualized profit, to be paid in less than one year from investment,” according to the SEC criminal complaint, which alleges Meli and Harriton offered to split additional profits above the 10% return 50-50 with investors.
“Contrary to the representations by Meli and Harriton, only a small portion of investor funds was used to make payments to entities with any apparent connection to the ticket reselling business,” the complaint alleges. “Instead, at least $48 million of incoming funds from apparent investors was used to repay and provide purported investment returns to other investors, thereby perpetuating the illusion of a profitable, ongoing investment. This enabled Meli and Harriton to raise even more money from investors and to fraudulently use investor money for personal benefit.”
Meli controlled a number of companies including 875 Holdings, 127 Holdings, Advance Entertainment and Advance Entertainment II. According to the SEC complaint, Meli falsely claimed to have an agreement with the producer of the Broadway musical Hamilton allowing him to purchase 35,000 tickets to be sold with an annualized return for investors of 10%.
“Those representations were false,” according to the complaint. “Neither Advance Entertainment nor any of Meli or Harriton’s other entities had any legitimate agreement with the Hamilton producer in question to purchase tickets to the musical, and no purchase of 35,000 tickets to the musical with investor money was made.”
Prosecutors allege Meli and Harrington also made false representations about plans to procure Adele and Desert Trip tickets, but that only $9 million of the $81 million raised was ever spent buying up tickets. Instead, the pair used the money to pay back investors on a previous project to the tune of $48 million. In a parallel criminal case, Meli was also arrested, with Steven Simmons, 48, of Wilton, Conn., on federal securities and wire fraud charges bought by federal prosecutors in Manhattan. Authorities accuse the men in the criminal case of running a similar scheme that defrauded investors putting money into what they thought was a hedge fund. The investments were instead used to repay earlier investors, the authorities said.