A New York investment bank is being accused of delivering 10 unwitting victims to alleged Ponzi scheme operator Joe Meli and falsely verifying fake documents that were used to steal tens of millions of dollars.
A new federal lawsuit (read it here) filed in the Southern District of New York alleges that investment bank TriPoint Global Equities served as the “placement agent for the Ponzi scheme,” delivering victims to Meli’s company Advanced Entertainment under the guise of a potential investment opportunity to buy up large blocks of tickets for shows like “Hamilton” and Desert Trip, but was really a “fraudulent ticket scheme,” where “[y]ou take money from one guy to pay off another guy.” The lawsuit also claims Tripoint executives verified the authenticity of several ticket purchase agreements and wire transfers from Meli that later turned out to be fake.
For its part, TriPoint has denied involvement in the scheme, claiming its leaders also are victims. They have filed a motion to be removed from the case, which names Meli and the companies he controlled as co-defendants.
“We were a small portion of the total accusations as a non-exclusive finder that became involved after many other outside investors were already involved,” TriPoint CEO Mark Elenowitz told Amplify in an email. “In addition, reps of TriPoint invested approximately $2 million and were victims of the scam as well. The plaintiffs have made allegations that they specifically know to be false. Tripoint firmly denies any wrongdoing, and will defend the case vigorously.”
Meli was arrested by the FBI in January and charged with stealing $98 million as part of an elaborate ponzi scheme. Meli was a board member of ticket consolidation firm DTI and allegedly used his position at the ticketing giant to lure in investors. Meli even circulated a fake letter of intent to purchase DTI months before the company sold an equity stake to CVC Partners.
According to the lawsuit, Meli allegedly told investors he had “an exclusive contract with a theater producer to buy up to 35,000 tickets to the Broadway show Hamilton,” as well as tickets for Adele’s 2016 world tour and the Desert Trip festival last October in Palm Springs.
Investor Matthew Hayden, who serves as chairman of the communication firm MZ North America, first learned of Meli when he met TriPoint Senior Vice President and Director Robert Nathan at a conference in Los Angeles.
“Nathan told Hayden that Tripoint was acting as a placement agent for an investment with Meli,” the lawsuit reads. “Hayden told Nathan that he was only interested in ‘low risk’ investments, and asked what due diligence Tripoint had done on Meli and Harriton and their entities. And Nathan, in furtherance of the Ponzi Scheme, delivered the hard sell.”
Nathan allegedly told Hayden that Meli and the companies he controlled were involved in a business that bought up large blocks of tickets directly from show producers and resold those tickets on the secondary market. Meli’s company 875H and Advanced Entertainment offered investors a chance to pool their money in a fund that was used to buy up a wide range of tickets, while he also operated a “side pocket” that allowed investors a chance to go after specific events.
Nathan even showed Hayden an agreement between Meli and a producer of “Hamilton: An American Musical” to sell Meli 35,000 tickets to the hit Broadway show. That document later turned out to be fake.
“Nathan assured Hayden that Tripoint had verified the Fraudulent Hamilton Agreement and the relationship between Meli and Harriton and the producer, Jeffrey Seller. This was false,” the lawsuit read. “Nathan also explained to Hayden that Hamilton producers, in particular, needed the money upfront from these ticket sales to invest in the upcoming national tour of ‘Hamilton’ in Los Angeles and Chicago.”
The lawsuit also alleges that Nathan had “examined the records of past ticket deals done by Meli and Harriton, and verified the profits made by investors,” as well as wire transfers between Meli and the investors. “This too was false. Had Tripoint actually investigated the investments, it would have confirmed that this was a Ponzi Scheme and not a legitimate investment.”
In total Nathan invested about $1.5 million and got his friend David Nagelberg to invest. Nagelberg, in turn, convinced other friends to invest with Meli including Scott Seaton, the Managing Partner of Londonderry Capital.
“Meli and Harriton told Seaton that all money received from investors would be pooled and used to buy a participation interest in profits from the resale of tickets for high-profile events,” according to the lawsuit. “They also told Seaton that they did not take any fees until after investors were repaid their original investment amount and that they, individually, were the largest investors in these deals.”
For the first half of the 2016, the investments seemed to be paying off and investors were regularly receiving dividends via wire transfer. But around September, disruptions to the payment schedule started happening and by January, the distributions stopped altogether.
Days later, Meli was arrested by the FBI for operating the Ponzi scheme. According to law enforcement agents, Meli was caught on tape telling a government informant “all I’ve been doing all along is a shell game. You know how it works, right? You take money from one guy to pay off another guy.”
Besides charging Meli and Harrington with fraud and breach of contract, the lawsuit also charges Tripoint with common law fraud, aiding and abetting, negligent misrepresentation and unjust enrichment for allegedly verifying financial documents between Meli and the producers of “Hamilton” that it knew to be fake.
The plaintiffs in the case are demanding a jury trial and asking the judge for punitive damages.
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