U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23735 / January 31, 2017
Securities and Exchange Commission v. Joseph Meli et al, Civil Action No. 1:17-cv-00632 (United States District Court for the Southern District of New York, filed January 27, 2017)
Court Orders Asset Freeze and Other Emergency Relief in Hamilton Ticket Resale Ponzi Scheme
The Securities and Exchange Commission announced that yesterday, it obtained an asset freeze and other preliminary relief against two New York City men accused of running a Ponzi scheme with money raised from investors to fund businesses purportedly created to purchase and resell tickets to such high-demand shows as Adele concerts and the Broadway musical Hamilton.
The temporary restraining order and order freezing assets restrains defendants Joseph Meli and Matthew Harriton and their companies from violating certain antifraud provisions of the federal securities laws, orders that the defendants' assets be frozen and prohibits them from accepting or depositing any additional investor funds. In addition, the order requires defendants to provide, within five days, an accounting that identifies payments received from investors and the disposition of each such payment and also to identify any significant assets they hold. Finally, the order prohibits defendants from destroying or altering documents.
The SEC's complaint, filed on January 27, 2017 in federal court in New York, alleged that the defendants misrepresented to investors that all of their money would be pooled to buy large blocks of tickets that would be resold at a profit to produce high returns for investors. The bulk of investor funds were allegedly used for other undisclosed purposes. Meli and Harriton allegedly diverted almost $2 million for such personal expenses as jewelry purchases, private school and camp tuition, and casino payments.
Meli and Harriton allegedly raised more than $81 million from at least 125 investors in 13 states.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York announced criminal charges against Meli.
The SEC's complaint charges Meli and Harriton, along with their four purported ticket reselling businesses named Advance Entertainment, Advance Entertainment II, 875 Holdings, and 127 Holdings, with violating Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 and seeks disgorgement of ill-gotten monetary gains plus interest and penalties. Jessica Ingber Meli and 127 Partners, LLC are named as relief defendants in the complaint for the purposes of recovering investor funds allegedly in their possession.
The SEC's investigation was conducted by Dahlia Rin, Rebecca Israel, John McCann, and Celia Moore of the Boston office, and the litigation will be led by Martin Healey. The SEC appreciates the assistance of the FBI and the U.S. Attorney's Office for the Southern District of New York.