If it walks like a duck, looks like duck and quacks like a duck, it’s a duck.
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“Two men were accused on Friday of bilking millions of dollars from investors with a Ponzi scheme built on a false promise to buy and resell tickets to high-profile events like the Broadway musical “Hamilton,” the federal authorities said.
The Securities and Exchange Commission, in a complaint filed in Federal District Court for the Southern District of New York, said the men, Joseph Meli and Matthew Harriton, had raised about $81 million from at least 125 investors in 13 states who were told their money was being pooled to buy large blocks of tickets to be resold for a profit.
Instead, the complaint says, Mr. Meli and Mr. Harriton used about $51 million of the money raised to repay investors, “perpetuating the illusion of a profitable, ongoing investment.”
Mr. Meli, 42, and Mr. Harriton, 52, also used the scheme to enrich themselves, the S.E.C. said in a news release, spending almost $2 million on personal expenses, including jewelry, private school and camp tuition and casino payments.
In written contracts, the two men, both of New York, typically promised investors they would see a 10 percent annual return on their investments, along with half of some of the proceeds after expenses, the complaint says.
Mr. Meli falsely told some investors he had an agreement with the producer of “Hamilton” to buy large blocks of tickets to the show that would then be resold, the complaint says.
What do Broadway tickets have in common with bank fraud? Everything as illustrated in this case.
On Broadway, investors were lured into a false plan promising that their money would be used to buy blocks of tickets and then resell them at a profit. On Wall Street, investors were lured into a false plan promising that their money would be used to acquire blocks of loans that would produce a return on investment in excess of similar AAA rated investments. Neither the blocks of tickets nor the block (pools) of loans existed when investors made their investment.
On Broadway, “Mr. Meli and Mr. Harriton used about $51 million of the money raised to repay investors, “perpetuating the illusion of a profitable, ongoing investment.” On Wall Street, the banks used a large portion of the money from investors in the false securitization scheme to maintain the illusion of a safe and reliable investment, thus preventing claims for fraud and encouraging investors to invest more money in the scheme.
On Broadway, the perpetrators were “spending almost $2 million on personal expenses, including jewelry, private school and camp tuition and casino payments.” On Wall Street huge bonuses were being paid to individuals who were responsible for selling or maintaining the illusion.
I could go on with the analogy, but you get it. If it walks like a duck, looks like duck and quacks like a duck, it’s a duck.
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Another example of little fish learning from the big fish… only the big fish have get out of jail free cards.