'Hamilton' Ticket Ponzi Scheme Victims Include Greenwich Hedge Fund Founder: Report

GREENWICH, CT — Hedge fund founder Paul Tudor Jones along with Dell founder Michael Dell and several others fell victim to an alleged Ponzi scheme involving the sale of tickets to the wildly popular "Hamilton," according to various media reports.

The scheme involved approaching investors with the promise of great guaranteed gains if they would invest to help purchase large blocks of tickets for the show, according to a lawsuit filed by the Securities and Exchange Commission.

The SEC lawsuit alleges that about $81 million was raised from at least 125 investors in 13 states to resell tickets for popular events, including “Hamilton.”

Joseph Meli and Steven Simmons were criminally charged and haven’t entered pleas. A third man, Mark Varacchi, pleaded guilty to fraud.
Simmons, 48, of Wilton and Meli, 42, of Manhattan were each charged with conspiracy, securities fraud, and wire fraud. Meli was also charged with wire fraud.

Jones has an estimated net worth of $4.6 billion. A pitch that normally sounds too good to be true usually throws up red flags for experienced investors, but their guard may be lowered if the pitch comes from someone they know, according to Bloomberg.

Related: Wilton Man, 48, Accused of Running a 'Ponzi Scheme': U.S. Attorney

"As alleged, while soliciting funds from investors for legitimate-sounding investments, Steven Simmons and Joseph Meli were in fact running Ponzi schemes," said Deputy United States Attorney Joon H. Kim. "Meli allegedly made up out of whole cloth purported deals to buy Broadway tickets that he could later sell at a profit. But as alleged, Meli was just robbing Peter to pay Paul. Thanks to the work of the FBI, the curtain has fallen on Simmons and Meli's alleged fraud scheme."

The SEC lawsuit names Meli, Matthew Harriton and Jessica Meli as defendants.

One company named in the lawsuit, Advance Entertainment, represented that it had an agreement with the producer of “Hamilton” to purchase 35,000 tickets to the musical.

The promise was that investors would get their money back, plus at least a 10 percent annualized profit, according to the lawsuit. They were also promised 50 percent of any profits from ticket resales that remained after investors had received their initial payback.

At least $48 million of funds were used to repay and provide returns to initial investors, the lawsuit states.

About $1.2 million was transferred to Harriton for personal use, according to the lawsuit.

Other funds were transferred to various companies that are entities that Meli or Harriton control, and it appears that money was used for personal purchases, such as jewelry, private school tuition and payments to casinos, according to the SEC complaint. Funds were also transferred to Meli’s wife, Jessica Ingber Meli.

Beginning in at least November 2015 and ending around January 2017 Simmons represented that investor funds would be invested in securities and Meli represented the ticket operation, according to prosecutors.

"In later consensually recorded conversations with the [cooperating witness], Meli discussed his 'fraudulent ticket deal' and described playing a 'shell game' with investor monies, prosecutors said.

• The conspiracy count carries a maximum prison sentence of five years and a maximum fine of $250,000, or twice the gross gain or loss from the offense.
• The securities fraud count carries a maximum prison sentence of 20 years and a maximum fine of $5 million, or twice the gross gain or loss from the offense.
• The wire fraud count carries a maximum prison sentence of 20 years and a maximum fine of $250,000 or twice the gross gain or loss from the offense.

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