NEW YORK (Reuters) - Entertainment featuring Bob Dylan, Paul McCartney, The Rolling Stones and even Harry Potter are now part of a U.S. regulator’s expanded lawsuit accusing two New York men of running a Ponzi scheme centered on the resale of tickets to events such as the smash Broadway musical “Hamilton.”
In an amended civil complaint filed on Tuesday, the U.S. Securities and Exchange Commission said Joseph Meli, 42, and Matthew Harriton, 52, raised more than $97 million from at least 138 investors in 17 U.S. states as part of their scheme.
That is up from $81 million raised from at least 125 investors in 13 states when the alleged fraud was made public in January.
A lawyer for Meli did not immediately respond to requests for comment. Daniel Horwitz, a lawyer for Harriton, said: “We believe the evidence will show that Matt Harriton was a victim.”
The SEC said Meli and Harriton typically told investors to expect 10 percent returns plus a stake in profits from bulk purchases and resales of tickets to events such as “Hamilton” and a concert by the British singer Adele.
Its amended complaint added events including last October’s Desert Trip festival in southern California featuring Dylan, McCartney and the Stones; and concerts for rock bands Metallica and Nine Inch Nails.
It also said Meli falsely told an investor that a company he and Harriton controlled had arranged to spend $62.5 million on 250,000 tickets for the forthcoming Broadway play “Harry Potter and the Cursed Child.”
That play, conceived in part by J.K. Rowling, has been wildly popular in London and on Monday received 11 Olivier nominations, the British equivalent of the Tony awards.
“No purchase of 250,000 tickets to the play was made with investor money,” the SEC said.
The SEC said Meli and Harriton used about $59 million they raised to repay investors, while other sums were spent on casino gambling, jewelry, private school tuition and other items.
Its amended complaint also named Meli’s mother, Meli’s wife, and five companies that Meli or Harriton controlled as “relief” defendants, because they together allegedly received close to $2.6 million of investor funds.
Federal prosecutors in January filed separate criminal charges accusing Meli and Steven Simmons, of Wilton, Connecticut, of running a similar scheme to defraud people who thought they were investing in a hedge fund.
Meli and Simmons pleaded not guilty on Feb. 28, court records show.
The SEC case is SEC v Meli et al, U.S. District Court, Southern District of New York, No. 17-00632. The criminal case is US v Simmons et al in the same court, No. 17-cr-00127.
Reporting by Jonathan Stempel in New York; Editing by Richard Chang