Two Charged in ‘Hamilton’ Ticket Resale Scheme

MANHATTAN (CN) – The Securities and Exchange Commission brought fraud charges against two New York men accused of running an $81 million “mirage of profitability” Ponzi scheme centered on coveted “Hamilton” and Adele tickets.

The SEC filed a lawsuit Friday in Manhattan federal court, claiming Joseph Meli and Matthew Harriton solicited $81 million from at least 125 investors, located in 13 states, by claiming they had a deal with a producer of the mega-hit musical “Hamilton” to purchase 35,000 tickets in bulk and reap high profits in the secondary ticket market.

But the complaint claims Meli, 42, and Harriton, 52, never had a legitimate contract with a “Hamilton” producer and the tickets were never purchased.

Paul G. Levenson, director of the SEC’s Boston regional office, said in a press release Friday that “Meli and Harriton raised millions from investors by promising big profits from reselling tickets to A-list events when in reality they were moving investor money in a circle and creating a mirage of profitability.”

Secondary ticket outlets like StubHub and Craigslist offer resold “Hamilton” tickets from around $400 and up, with some tickets going for over $1,500.

The 17-page lawsuit alleges that Meli and Harriton, both of New York City, used $48 million from newer investors to repay principal returns to early investors. According to the complaint, investors were promised 10 percent annualized profit after recouping principal, plus 50 percent of any ticket resale profits after their return of principal and 10 percent return.

The SEC claims the defendants extracted $2 million through shell entities for personal spending including jewelry, private school and camp tuition, and casino tabs.

The complaint cited an anonymous investor who put $1.8 million into Meli and Harriton’s scheme in four parts beginning in January 2016.

The investor said his payments were made to buy tickets to “Hamilton” and Adele concerts, and also went toward a diversified fund to purchase and resell various tickets to assorted events. Another separate investment in tickets allegedly went toward the 2016 Coachella-related Desert Trip festival that featured Paul McCartney, Bob Dylan, Neil Young, the Rolling Stones, the Who, and Pink Floyd’s Roger Waters.

“Hamilton” broke records for Broadway ticket sales last November, grossing more than $3.3 million in a single week for eight performances.

The government seeks an emergency asset freeze against Meli and Harriton and disgorgement of all ill-gotten gains from the alleged scheme. According the complaint, Meli admitted in December 2016 that he had been running a “shell game” that used certain investors’ funds to pay back other investors.

Meli’s wife Jessica Ingber Meli and 127 Partner LLC were named as relief defendants in the complaint for the purposes of recovering $136,000 and $229,000, respectively, of investor funds allegedly in their possession.

The SEC is represented by Alicia Reed at its Boston office.

The case has been assigned to U.S. District Judge Louis L. Stanton.

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