Lin Manuel Miranda’s much-acclaimed musical Hamilton made a big splash in the theatre community in 2015 and 2016. Tickets for shows have sold out only minutes after being made available, and scalpers have collectively made millions from those who are desperate to see the show.
While Miranda has publicly condemned scalpers who use ticket bots to snatch up tickets, more insidious individuals have tried to use the show’s appeal to scam people out of their money. The Securities and Exchange Commission (SEC) has filed a lawsuit against two such individuals – Joseph Meli and Matthew Harriton – claiming the pair operated a Ponzi Scheme that involved reselling tickets to Hamilton and separate concert events.
“From in or about January 2015 through October 2016, Meli and Harriton offered and sold a total of approximately $81 million of interests in four different entities. . . all of which purportedly engaged in ticket resales,” the suit states.
“Mirage of profitability”
The SEC alleges that the defendants collected millions of dollars from 125 investors in 13 states. They told these investors that they had a deal with a Hamilton producer to purchase 35,000 tickets that could be resold in the secondary ticket market for high profits.
However, the agency says that Meli and Harriton never had a legitimate contract and that the tickets were never actually purchased. In a press release, Paul G. Levenson – director of the SEC’s Boston regional office — explains that the pair “were moving investor money in a circle and creating a mirage of profitability.”
Meli and Harriton accomplished this by using $48 million from newer investors to repay principal returns to early investors. Meanwhile, the SEC claims that the men extracted $2 million through shell companies that was used for an array of personal purchases – including jewelry, tuitions for private school and camp, and casino payments.
The SEC is asking for an emergency freeze of the defendants’ assets for the purposes of disgorging any illicit monetary gains, plus interest and penalties. Meli’s wife and one of the alleged shell companies have also been named as relief defendants for $365,000 in investor funds that they purportedly have in their possession.
Credit: Mary Beth Quirk, The Consumerist