On January 27, 2017, the Securities and Exchange Commission (“SEC”) charged Defendants Joseph Meli (“Meli”), Matthew Harriton (“Harriton”), 875 Holdings, LLC (“875 Holdings”), 127 Holdings, LLC (“127 Holdings”), Advance Entertainment, LLC (“Advance Entertainment”), and Advance Entertainment II, LLC (“Advancement Entertainment II”) (collectively, the “Defendants”) with perpetrating a fraudulent Ponzi scheme. The SEC Complaint alleges that Defendants raised approximately $81 million from at least 125 investors for a purported purpose of buying large blocks of tickets to major events and concerts, specifically the Broadway hit musical “Hamilton,” and reselling tickets at a profit to generate high returns. In actuality, the SEC alleges that Defendants operated a Ponzi scheme, making payments to prior investors using funds from new investors, while siphoning funds to support their lavish lifestyle, including jewelry purchases, private school tuition, luxury cars, and casino bets. The Complaint charges Defendants with violating Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)], and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 340.10b-5]. See SEC Complaint.
According to the SEC Complaint, beginning in January 2015 through October 2016, Meli and Harriton solicited and collected funds for investments in 875 Holdings, 127 Holdings, Advance Entertainment, and Advance Entertainment II, entities all owned and controlled in various equities of ownership by Meli and Harriton. Some investors invested in more than one entity, and the Complaint alleges it is unclear whether Meli and Harriton distinguished among the entities while making fraudulent representations to investors.
The entity “Advance Entertainment” specifically received over $50 million from investors and pursuant to a “Funding Agreement” signed jointly by Meli and an investor, Advance Entertainment made completely false representations to investors that there was an agreement in place with Hamilton’s Producers to purchase 35,000 tickets to the Broadway hit show and that the investors’ funds would be used to pay a portion of the cost of getting the tickets. In fact, none of Meli or Harriton’s entities had any legitimate agreement with any Hamilton producers and all of the representations were false.
Defendants did not pool the $81 million in collected funds and purchase any tickets to Hamilton shows, Adele concerts, or other high demand events and concerts, but instead operated a fraudulent Ponzi scheme, paying out approximately $48 million to repay and provide purported returns to previous investors and using approximately $3 million in investors’ funds for their personal use.
Lax & Neville LLP has extensive experience in representing victims of Ponzi schemes and is currently representing clients who invested with Defendants. Lax & Neville LLP has also successfully represented victims in various aspects in the Madoff Ponzi scheme and defended various victims of the Agape World Ponzi scheme in the Eastern District of New York Bankruptcy Court. Further, Lax & Neville LLP has nationally represented small broker-dealers, financial services professionals and securities industry companies in regulatory matters and securities-related and commercial litigation. Please contact our team of attorneys for a consultation at (212) 696-1999.