In the two years since "Hamilton" debuted, hundreds of thousands of New Yorkers have paid a staggering $1,200, on average, to see the musical. Meanwhile, the rest of us have baffled at the rapturous, borderline delirious effect the show has on its devotees, who have literally thronged for a chance to see a nerd-rap retelling of Alexander Hamilton's revolutionary-era exploits.
But two guys saw that hysteria and decided to monetize it. On Friday, the SEC announced charges against two businessmen, Joseph Meli and Matthew Harriton, who allegedly set up a $81 million ponzi scheme to con investors into promises of big returns on Hamilton ticket resales. It is the reductio ad absurdum of contemporary New York City.
Meli, a seasoned promoter of high-price events, and Harriton, who appears to be son of a former Bear Sterns senior executive, began raising money in late 2015, convincing investors that their company Advance Entertainment had a deal with Hamilton's producer to snatch up 35,000 tickets for resale, the SEC case states. They allegedly guaranteed returns of at least 10 percent. Alas, no agreement existed. Instead, most of the money ended up the managers' bank accounts, according to the SEC.
As the scheme advanced – apparently Adele tickets were also mentioned for profitable arbitrage – only a tenth of the original capital ended up in entities that were connected to Broadway scalping. Eventually the original investors expected their money back. Since the two masterminds were operating what Meli called a “shell game,” according to the SEC, they had to pay the old investors with about $48 million in investments from from new marks.
“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,” said Paul G. Levenson, Director of the SEC’s Boston office.
Meanwhile, the SEC said, the duo blew nearly $2 million on jewelry, casino trips and – in a kind of sad detail – summer camp tuitions. There is no indication that they ever used their victims' cash to see Lin-Manuel Miranda's acclaimed musical theater experience.
Meli and Harriton face two charges each of fraud in the sale of securities.