MANHATTAN (CN) – A federal judge has advanced one of three lawsuits against an investment bank tied to the $81 million ticket-resale scam involving the Broadway musical “Hamilton.”
Adam Blank, the former president of the Sleepy’s mattress chain, made an investment of $1.5 million in 2016 and filed suit last year against TriPoint Global and TriPoint Capital, accusing the financial-service companies of fumbling their due diligence.
At the time Blank made his investment, Lin-Manuel Miranda’s “Hamilton” had opened some months earlier to rapturous critical acclaim. Blank said TriPoint CEO Mark Elenowitz touted the ticket-sale business as a “can’t lose” investment opportunity, assuring him that the tickets could always be sold at face value.
There was a catch, however, to getting in on the most sought-after shows: Blank said Elenowitz required an investment in the “Main Fund” for various tickets to assorted events, if he wanted to invest in “Hamilton” and Adele concert tickets.
Blank said he split $300,000 evenly among the so-called Hamilton Fund, Main Fund and Desert Trip Fund, the name of the 2016 Coachella-related festival featuring Paul McCartney, Bob Dylan, Neil Young, The Rolling Stones, The Who and Pink Floyd’s Roger Waters.
With Elenowitz’s assurance that there were “no red flags,” Blank said he invested another $1.2 million that August.
The Securities and Exchange Commission unraveled the scheme in January 2017, however, bringing charges against Joseph Meli and Matthew Harriton, who had been paying Elenowitz commissions.
Regulators said 125 investors across 13 states were conned into thinking Meli and Harriton had a deal with “Hamilton’s” producers to buy 35,000 tickets in bulk and sell them on the lucrative secondary market.
Meli, 44, copped a plea deal late last year and was sentenced to 6 1/2 months in Otisville.
Neither Harriton nor Elenowitz have been criminally charged, but a spate of shareholder suits followed.
In addition to Blank’s case, Tripoint faces suits from I.B. Trading and David Nagelberg, now in discovery before different judges.
U.S. District Judge Andrew Carter gave the green light Friday to Blank’s lawsuit, finding that the investor proved enough signs of “conscious misbehavior or recklessness” for the case to advance.
“Despite his lack of investigation, Elenowitz repeatedly told plaintiffs that he had conducted due diligence and had close ties with the operators of the ticket resale business,” Carter wrote in a 41-page opinion. “This conduct represents an extreme departure from the standards of care, particularly when viewed in the context of Elenowitz’s repeated assurances that he ‘would continue to have [plaintiffs’] back’ and would ‘make sure that every investment was fully and completely vetted, reviewed and investigated.’”
Carter dismissed charges against TriPoint’s chief operating officer Michael Boswell.
In a phone interview, attorney David Pfeffer of the firm Tarter Krinsky & Drogan said he was pleased with the ruling, which he predicted would pave the way for a trial.
“We do not see any possibility of losing a summary judgment motion,” Pfeffer said, explaining that statements already entered into the record would be enough for the case to reach a jury.
An attorney for Elenowitz and TriPoint did not respond an email request for comment.