Joe Meli orchestrated an elaborate scheme to convince the owners of DTI Management he was purchasing their company and then allegedly used the phony purchase to raise money from investors, a new lawsuit claims.
DTI Management and CEO Curtis Cheng have been added to a lawsuit that alleges Meli defrauded investors of nearly $8 million. The suit, brought by investor Michael Connor and his group TGT, alleges that DTI and Cheng are liable for aiding and abetting fraud carried out by Meli. The plaintiff is seeking reimbursement and $10 million in punitive damages.
According to the complaint (read it here), Meli – who already has multiple lawsuits filed against him and was arrested by the FBI earlier this year for allegedly orchestrating an elaborate Ponzi scheme – was using a Letter of Intent to purchase DTI for $63 million to convince investors like Connor that he was a legitimate businessman. In the LOI, Meli’s company Advance Entertainment appears to be entering into an agreement to purchase DTI for $48 million in cash and $15 million in Advance stock, executed with a $250,000 ‘good faith’ wire transfer to DTI. Advance would be 100 percent owner of DTI per this agreement presented to the plaintiff on June 13, 2016.
A spokesperson for DTI acknowledged that the letter of intent was real but said it was never actually executed. DTI spokesperson Montieth Illingworth told Amplify “Mr. Cheng and DTI were deceived into dealing with Mr. Meli not only by his representations, but also by his purported relationships with powerful and influential people in entertainment, and what appeared to be a track record of success. It was in that context that DTI initially considered his letter of intent to acquire DTI—a deal that never came to fruition. It is also in that context that Mr. Meli later became an employee of DTI.”
According to bank account records acquired by the plaintiff, Meli had nowhere near $48 million in cash to close the deal and struggled to provide the $250,000 in ‘good faith’ money wire transferred to DTI.
Meli’s acquisition of DTI never materialized and by July 2016, Meli presented Connor with a different proposal that said investment firm CVC would be purchasing DTI and that Advance would receive an equity interest in that new entity instead of 100 percent ownership.
CVC ended up investing $75 million to purchase substantial ownership of DTI and DTI returned the ‘good faith’ deposit of $250,000 back to Meli on Aug. 26, 2016.
In addition to alleging that DTI used Meli’s purchase offer as leverage to get a larger purchase price, the suit claims that DTI and Cheng are liable for Meli as an executive because they failed to do their due diligence before unleashing him on their clients and allowing him to flaunt their association as credibility.
Meli is accused of falsifying an agreement between him and Hamilton producer Jeffrey Sellers that suggested Meli would receive a block of Hamilton tickets to resell at a significant increase. In fact, the suit suggests that DTI hired Meli as the head of their entertainment division because they thought he could bring in opportunities like the Hamilton deal.
The suit alleges that Meli used his position as the director and head of the entertainment division at DTI to “bait” TGT into investing $7.8 million in advance tickets for the Broadway debut of Harry Potter and the Cursed Child. TGT provided the money to help purchase 250,000 Harry Potter tickets at $250 (face value) through Advance Entertainment, which promised to place them on DTI’s platform for a return of five times their investment.
Just 13 days after Connor paid the nearly $8 million dollars, he learned that Meli was indicted on multiple criminal charges for securities and wire fraud. The day after they paid him, Meli allegedly paid the money out to 14 other investors and then to legal counsel once he was indicted, according to the suit.
Though the suit says no entity other than Meli was directly involved in the Harry Potter agreement, it was partially his position at DTI that coaxed the investors into trusting Meli.
As Amplify has previously reported, Meli and his wife stand accused of swindling investors out of $51 million and face charges of conspiracy, securities fraud and wire fraud. Meli told investors he was raising money to buy up 35,000 tickets for Hamilton as part of an agreement with one of the show’s producers. Authorities say Meli and his co-defendant Steven Simmons never bought the bulk of the tickets and instead used some of the money to repay old investors and misappropriated millions for private school tuition, jewelry and gambling.
Officials with DTI dispute the claims in the lawsuit and argue they too are victims of Meli’s fraud. On Wednesday, DTI spokesman Montieth Illingworth issued the following statement to Amplify:
The TGT lawsuit paints the picture of Joe Meli’s alleged scheme of half-truths, lies, and outright fraud. In that broad and extensive scheme, TGT, a sophisticated investor, was duped by Mr. Meli—like so many other sophisticated investors were also duped. So were DTI and Curtis Cheng. While we certainly empathize with the TGT plaintiffs, they are attempting to portray DTI and Mr. Cheng as somehow a part of Mr. Meli’s scheme— something that is simply not the case. There is no factual basis for those allegations against DTI and Mr. Cheng. The fact is DTI and Mr. Cheng were also victims of Mr. Meli’s alleged scheme.
Mr. Cheng and DTI were deceived into dealing with Mr. Meli not only by his representations, but also by his purported relationships with powerful and influential people in entertainment, and what appeared to be a track record of success. It was in that context that DTI initially considered his letter of intent to acquire DTI—a deal that never came to fruition. It is also in that context that Mr. Meli later became an employee of DTI.
It’s important to underline that the deals TGT got involved in with Mr. Meli were with Mr. Meli’s own companies—not DTI. Further, nothing in TGT’s allegations claim that Mr. Cheng or anyone else at DTI had any communication with anyone at TGT. It was all Mr. Meli. There is no legal basis to these allegations against DTI and Mr. Cheng, and no facts to support them.
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