Joe Meli is feeling the pressure this week after his mother Anna Meli was named as a relief-defendant in a high-profile probe by federal authorities investigating an alleged Ponzi scheme to defraud investors of tens of millions of dollars.
Authorities allege that Anna Meli received $405,000 in investor funds originally earmarked to buy up and resale tickets for hot shows like “Hamilton” and Desert Trip. Authorities allege Joe Meli and co-defendant Matthew Harriton stole $75 million of the $97 million they raised and used the money to repay previous investors and fund Meli’s lavish lifestyle.
That’s up $24 million from the original January charges, which alleges Meli and Harriton stole $51 million. The indictment and accompanying lawsuit are a rapid fall from grace for the New York promoter, who had promoted concerts for Billy Joel and was believed to have an inside track with the producers of top Broadway shows for tickets that could be flipped for resale. Meli was even a board member of ticket consolidation firm DTI, and was suspended by CEO Curtis Cheng after the indictments came to light. Meli is currently being sued by the U.S. Securities and Exchange Commission (read the updated civil complaint here) for the fraudulent scheme. Meli has also been indicted by U.S. Attorney Preet Bharara on criminal fraud charges.
Authorities now say they have Meli on tape making damaging statements about the case to a cooperating witness, including a December 2016 recording where Meli allegedly said “All I’ve been doing all along is the shell game. You know how it works, right? You take money from one guy to pay off the other guy.”
In a separate recorded conversation, Meli also allegedly told the cooperating witness “Everything is fungible. I’ve been moving things around and playing the shell game to keep that prick at bay by giving him little payments. But I’ve been taking it from other people,” and said an investor account “might as well be my personal account.”
The SEC is suing Meli to recover investor funds, and in an updated complaint filed March 7, authorities allege that Joe and Jessica Meli used $3 million in investor funds to buy a home in East Hampton, N.Y. The rest of the money was allegedly stolen by Meli and Harriton, including “$5 million in payments for jewelry and other retail purchases, private school and camp tuition, automobiles, private club memberships and expenses, wine, restaurants, driving services (including limousines) and payments to casinos,” according to the complaint. Another $1.8 million was paid to “architecture, design, or construction firms.”
From January 2015 to January 2017, Meli and Harriton pitched investors on a plan to buy up tickets for concerts and festivals, promising “full repayment of principal plus a 10% annualized profit, to be paid in less than one year from investment,” according to the updated complaint. “In addition, investors were typically promised 50% of any profits from the ticket resales that remained after investors received their return of principal and 10% annualized profit.”
Instead of using the money to buy up tickets, authorities allege Meli and Harriton diverted the money from one of four holding companies — Advance Entertainment, Advance Entertainment II, 875 Holdings and 127 Holdings — to shell companies and used the money to pay back investors with past companies connected to Meli. On one occasion, an investor deposited $1.5 million into an account used by Advance Entertainment to buy up tickets. The next day, Meli withdrew the money and dispersed it “to a third party who has no involvement in ticket sales or live event production,” the civil complaint says.
Authorities say Meli diverted at least $57 million to “repay and provide purported investment returns to other investors, thereby perpetuating the illusion of a profitable, ongoing investment.”
One tactic the men used to defraud investors was to offer up a letter of intent with the producers of “Hamilton,” promising the sale of 35,000 tickets to Meli for $7 million. Authorities said the letter was a fake and likely fabricated by Meli. So was a letter from producers of a Broadway version of Harry Potter and the Cursed Child — Meli claimed he had an agreement with the show’s producers to purchase 250,000 tickets for a total of $62.5 million — he didn’t. In fact, Meli allegedly created fake ticket purchase agreements for tours by Metallica, Nine Inch Nails, Adele and last year’s Desert Trip concert in Palm Springs as part of his scheme to defraud investors.
Occasionally, investors would ask Meli for complimentary, premium tickets for their personal use to live performances, including the “Hamilton” musical and Adele concerts. To fill the orders, Meli and Harriton would simply purchase the tickets “on the secondary market, often paying in excess of $1,000 per ticket, well above face value, and sometimes paying significantly more than $1,000 per ticket,” according to the complaint.
“Harriton personally placed these ticket orders and arranged for payment of the tickets from investor funds,” the suit alleges. “The tickets were then provided to the requesting investor at no cost to the investor. This supposed benefit was offered at least in part for the purpose of duping investors into believing that Meli and Harriton were actually engaged in a large-scale ticket reselling enterprise. The use of funds from certain investors to purchase tickets for other investors’ personal use was not disclosed and was inconsistent with representations made to investors by the Defendants.”
Federal authorities are requesting an injunction to stop Meli and Harriton from spending any more investor money. They also want the judge to place a freeze on any accounts connected to the men and the various entities they control.
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