Two New Yorkers were charged with raising over $81 million from investors after promising to make money off of popular live events shows.
Mathew Harriton and Joseph Meli allegedly convinced at least 125 investors to invest in a Ponzi scheme based on false claims of buying and selling tickets for popular shows including Lin-Manuel Miranda’s Hamilton. On Friday, the Securities and Exchange Commission charged the two men.
A Ponzi scheme is an investment operation that is completely fraudulent. Scammers that use Ponzi schemes take money from new investors to pay returns to other investors. Scammers that use Ponzi schemes promise higher returns on investments than traditional investments.
Harriton and Meli allegedly scammed investors claiming they had an agreement with Hamilton’s producer to buy tickets in bulk. The alleged scammers told investors that their funds will pay part of the tickets. Then, Meli and Harriton promised to resell the tickets at a higher price. Harriton and Meli also promised investors that in less than a year they would earn their money back plus an additional 10% annualized profit, according to a SEC federal civil complaint.
The SEC complaint alleges that Meli and Harriton only used a small portion of investor funds to make payments to people connected to the ticket reselling business. Instead, the New Yorkers took the money and developed a Ponzi scheme, according to the SEC charges. In addition, Meli and Harriton also spent over a million dollars of investors’ money on personal expenses including private school tuition, jewelry, and casinos.
Hamilton started off as an Off-Broadway theater production in February 2015 and the production quickly sold out. The show then hit Broadway in August 2015 and received one of the highest advance box office sales in recent history. By 2016, Hamilton received 16 Tony nominations and winning 11 total Tony awards including Best Musical. In addition, the show won the 2016 Pulitzer Prize for Drama. Hamilton helped launch Lin-Manuel Miranda, the show’s creator, to superstardom.