Rock Promoter in $300M Fraud Case Denied Bail

(CN) - A federal magistrate judge in Florida denied bail Wednesday to a former rock concert promoter recently extradited from Brazil to face charges he defrauded investors out of nearly $300 million.

In his prime, Jack Utsick was well-known for his promotion of shows by the likes of the Rolling Stones, Aerosmith, and Elton John. More recently, however, he's had a world of trouble related to what the FBI and Security and Exchange Commission says was a Ponzi scheme he controlled that duped an estimated 3,300 investors.

Prosecutors say Utsick's Worldwide Entertainment Inc., was in actuality a classic Ponzi scheme with investors receiving baseless promises of returns of between 15 percent and 25 percent, and older investors being paid with money from newer ones. They also contend he fled to Brazil in 2006 to avoid facing prosecution for his crimes.

In the complaint filed by the Securities and Exchange Commission on April 17, 2006, the government says Utsick engaged in the scheme from 1998 through late 2005. It says that it connection with the sale of investments in his entertainment companies, Utsick and others "made material misrepresentations and omissions to potential and actual investors about, among other things, the profitability of their investments, the use of proceeds, the payment of commissions, and the existence of state disciplinary actions."

The complaint says Utsick and his co-defendants commingled the proceeds of the scheme in two operating accounts, and that there was no basis from which to determine the profitability of any individual project.

In fact, the government says, "many of the entertainment projects [Utsick's companies] Worldwide and Entertainment Group [Fund] promoted ... lost money."

"Defendants also failed to disclose that they used investor funds inconsistently with the purposes they promises investors. For instance, Utsick opened an options trading account for Entertainment Group through which he has lost almost $10 million of the more than $17 million of investor proceeds he traded," the complaint says. "Additionally, Utsick used investor proceeds to pay for most of his personal living expenses through the Relevant Period, including the purchase of two luxury condominiums in Miami Beach, Florida currently valued at more than $1 million each."

The complaint goes on to allege Utsick and his co-defendants failed to tell their investors that they used $7 million of their funds to pay sales commissions to various entities, or that their activities were the subject of securities actions in Wisconsin, Missouri and Michigan.

Utsick eluded the authorities until his arrest in Sao Paolo, Brazil on December 5, 2014. He was extradited to the U.S. the following day.

U.S. Magistrate Judge Edwin Torres said on Wednesday that given the history of the case, there was ample evident the now 72-year-old Utsick might attempt to flee prosecution.

Utsick has been charged with eight counts of mail fraud and has pleaded not guilty to all counts. If convicted, he faces a sentence of up to 20 years on each charge.

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