Daveed Diggs, Okieriete Onaodowan, Anthony Ramos, and Lin-Manuel Miranda (Joan Marcus)
Maybe the opening number in Broadway’s smash hit “Hamilton” describing the musical’s namesake as “ready to beg, steal, borrow or barter” to make it to America simply went to their heads.
Or maybe New Yorker Joseph Meli and Connecticut resident Steven Simmons overlooked the 10-dollar founding father’s later vow to “overwhelm them with honesty.”
On Friday, federal prosecutors in New York announced that Meli and Simmons had been arrested on charges of conspiracy, securities fraud, and wire fraud stemming from an alleged Ponzi scheme to defraud investors by promising to buy blocks of tickets to “Hamilton” and other highly-sought-after performances and then resell them for a whopping profit that never materialized.
Also on Friday the U.S. Securities and Exchange Commission filed a civil suit in New York naming as defendants Meli, New Yorker Matthew Harriton and four limited liability companies. The suit claims the duo and the purported ticket resale enterprises raised an estimated $81 million from at least 125 investors in 13 states. According to the SEC, investors were promised as much as 50 percent of any profits from the ticket resales.
But according to the SEC, the defendants threw away their investors’ shot at profits, diverting at least $51 million in what became a Ponzi scheme. Of the $51 million, at least $48 million was used to repay other investors, according to the SEC, creating “the illusion of a profitable, ongoing investment” that enabled the defendants to raise even more money.
In addition, the SEC claimed that nearly $2 million was transferred to the defendants who used the funds to pay for jewelry, private school and camp tuition, and payments to casinos. According to the SEC complaint, the defendants falsely represented they had an agreement with the producer of “Hamilton” to buy 35,000 tickets to the musical—which has been sold out months in advance.
Instead, according to the SEC, Meli himself eventually admitted he had been running “a shell game,” using the investor funds to pay back other investors.
“Meli and Harriton raised millions from investors by promising big profits from reselling tickets to A-list events when in reality they were moving investor money in a circle and creating a mirage of profitability,” said Paul Levenson, director of the SEC’s Boston regional office.
In New York, deputy U.S. attorney Joon Kim said that Meli “allegedly made up out of whole cloth purported deals to buy Broadway tickets … But as alleged, Meli was just robbing Peter to pay Paul.” But, Kim added, “the curtain has fallen.”
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