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Feds: Arrests in scam banking on 'Hamilton,' Adele shows

Associated Press logo Associated Press 1/28/2017 By LARRY NEUMEISTER, Associated Press
Joseph Meli leaves Manhattan federal court Friday, Jan. 27, 2017 in New York, after he was freed on $1 million bail in a Ponzi scheme case. Prosecutors say he conspired to misappropriate tens of millions of dollars after raising $81 million from wealthy people who thought they were investing in ticket businesses for popular shows like an Adele concert and Broadway's "Hamilton." (AP Photo/Larry Neumeister) © The Associated Press Joseph Meli leaves Manhattan federal court Friday, Jan. 27, 2017 in New York, after he was freed on $1 million bail in a Ponzi scheme case. Prosecutors say he conspired to misappropriate tens of millions of dollars after raising $81 million from wealthy people who thought they were investing in ticket businesses for popular shows like an Adele concert and Broadway's "Hamilton." (AP Photo/Larry Neumeister)

NEW YORK (AP) — Two men were charged Friday with roles in Ponzi schemes that cheated wealthy people, including some who believed they were investing in ticket businesses for popular shows like an Adele concert and Broadway's "Hamilton."

Steven Simmons leaves Manhattan federal court Friday, Jan. 27, 2017 in New York, after he was freed on $1 million bail on charges that he conspired to cheat wealthy investors in 13 states of tens of millions of dollars. Prosecutors say the conspiracy raised $81 million by promising investors they could share profits in ticket resale businesses for popular shows like Broadway's "Hamilton" and an Adele concert. (AP Photo/Larry Neumeister) © The Associated Press Steven Simmons leaves Manhattan federal court Friday, Jan. 27, 2017 in New York, after he was freed on $1 million bail on charges that he conspired to cheat wealthy investors in 13 states of tens of millions of dollars. Prosecutors say the conspiracy raised $81 million by promising investors they could share profits in ticket resale businesses for popular shows like Broadway's "Hamilton" and an Adele concert. (AP Photo/Larry Neumeister)

Joseph Meli, 42, of Manhattan, and Steven Simmons, 48, of Wilton, Connecticut, were arrested on charges alleging they enticed wealthy individuals to make multi-million-dollar investments.

The Securities and Exchange Commission said in a civil complaint that the Ponzi schemes led people in 13 states to invest $81 million. Meli's scheme included investments in businesses that would buy large blocks of tickets for major concerts and musicals, authorities said.

The SEC said at least $51 million of the $81 million was diverted to pay off other investors or for personal expenses of coconspirators. Simmons was not charged in the civil complaint, but both men were charged criminally with conspiracy, securities fraud and wire fraud.

They were each freed on $1 million bail as U.S. Magistrate Judge James C. Francis IV rejected a prosecutor's request that they be held without bail.

Simmons declined to comment as he left Manhattan federal court, though his attorney noted he had no criminal record. Meli's attorneys called the accusations false.

Deputy U.S. Attorney Joon H. Kim said Meli and Simmons ran Ponzi schemes even as they pitched backers with legitimate-sounding investments.

"Meli allegedly made up out of whole cloth purported deals to buy Broadway tickets that he could later sell at a profit," Kim said. "But as alleged, Meli was just robbing Peter to pay Paul."

William F. Sweeney Jr., head of the FBI's New York office, said the defendants had joked about their Ponzi scheme, saying it was a "shell game."

"When fraudsters think they're going to get away with scheming investors out of money, they tend to forget that at some point the money will run out. It's the way a Ponzi scheme ends," he said.

According to a criminal complaint, the fraud stretched from November 2015 through January and the Ponzi schemes developed as investors demanded their money.

Meli spent over $200,000 at a luxury car dealership, the complaint said.

Assistant U.S. Attorney Joshua Naftalis had sought to have both men detained without bail. He said Simmons was a danger to the community because he told an FBI agent after his arrest he hoped Meli "put two slugs in the back of the cooperator's head."

Attorney Florian Miedel, representing Simmons, told the magistrate judge that Simmons had made an "ill-advised, jokey comment" but had no criminal history.

The prosecutor said Meli was a risk to flee, citing a statement heard by investigators Thursday in which he claimed he was draining his bank account and had gotten together his passport and valuables. Naftalis said that comment led investigators to make the arrests Friday, earlier than they had planned.

Michael Bowen, an attorney representing Meli, said his client drained his account Thursday to pay Bowen's law firm to represent him after learning he was under investigation. He said Meli also had turned over his passport and valuables to the law firm for safekeeping.

In a statement, Bowen and attorney Marc Kasowitz said the complaint against Meli was not true and he will "vigorously defend against the criminal charges."

The Adele concert and "Hamilton" were identified in the SEC's complaint.

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