EFTA02351614.pdf

From: Richard Kahn Sent: Monday, February 6, 2017 4:11 PM To: Jeffrey Epstein Subject: Fwd: (BN) 'Hamilton' Ponzi Schemers' Victims Said to Include Tudor Jo Looks like there are many not to shrew= billionaires.... =div> 'Hamilton' Ponzi Schemers'=Victims Said to Include Tudor Jones 2017.02-06 10:00:00.17 G=T By Matt Robinson, Kathe=ine Burton, Zeke Faux and Christian Berthelsen (Bloomberg) -- When U.S. authorities busted a P=nzi scheme that centered on marked-up tickets to the hit Br=adway musical "Hamilton" last month, prosec=tors described phone calls about a "big name"=investor who'd demanded his money back. &nbs=; As it turns out, there were several big names -- including billionaires Paul Tudor Jones and Michael Dell, as well as an</=pan> executive at Och-Ziff Capital Management Group -- among the m=re than 125 people who had unwittingly poured cash into the=/span> sprawling scam, according to people with knowledge of the</=pan> matter. The ringlead=rs would approach people and encourage them to put money in=a pool to buy blocks of tickets for the hottest concerts an= plays, the government said. The most prominent was "=amilton," whose popularity pushed prices to the highest inBroadway history. Victims were promised their money back and at least a 10 percent profit. &n=sp;It's rare that any Ponzi scheme ensnares business luminaries so highly skilled in the art of scrutinizing in=estment pitches. But to veteran securities lawyers, the case has some of the hallmarks of an affinity fraud like Bernard Madoff's -- in which a con man's familiarity can help inst=ll trust, even with a pitch that sounds too good to be true= &nbs=; Hamilton Tickets a 'Give=way' 40=9CWhen the promise of a quick buck is being made by someone a former Securities and Exchange Commission enforcement=attorney now in private practice. Still, "the idea t=at there were blocks of Hamilton tickets available for purc=ase should have been a giveaway." &=bsp; Three men have been charged. One is Joseph Meli, a Ne= York event promoter and Hamptons socialite who once ran a $=,00O-a- ticket concert series in the enclave, featuring&nbs=;Billy Joel, EFTA_R1_01330017 EFTA02351614 Prince and James Taylor. Photos show him party=ng with executives and celebrities including Renee Zellwege=. His co- defendant, Steven Simmons, was allegedly the midd=eman tasked with raising money from investors for hedge fun=s. Both appeared in court on Jan. 27 and remain free on bai=. A third, Mark Varacchi, pleaded g=ilty to fraud on Wednesday and was released on $250,000 bai=. Varacchi was an investment fund manager whose firm was ba=ed in Connecticut. He turned to Meli to help repay $4.2 mil=ion he'd taken from investors, according to prosecu=ors. It isn't clear how he met Meli or the others. M=Ii and Simmons haven't entered pleas yet. Meli*=99s lawyer called the allegations untrue while Simmons' <=pan>lawyer declined to comment. &nb=p; &=bsp; Hedge Fund Informant The criminal complaint described=an informant who contacted the Federal Bureau of Investigat=on through his attorney late last year, saying he'd=conspired with Meli and others to raise money under false p=etenses to pay off an earlier investor. He offered to help i= the investigation and became an informant, according to th= complaint. The informant was Varacchi, according to people=with knowledge of the case. The sc=m went on at least two years, according to a parallel c=vil case the SEC filed against Meli and Matthew Harriton, M=li's business partner. Harriton couldn't be reached<=r>for comment, and the men's companies didn't respond=to requests for comment. Harriton wasn't named in t=e criminal case. Meli, 42, used hi= music connections to ingratiate himself with Wall Street t=aders, according to one of the people with knowledge of the=case. He hung out at the exclusive Bridgehampton Tennis and=Surf Club and he'd get tickets to "Hamilton=E24). and other shows for his friends, the person said. = Meli lied to at least one victim, claiming he had a=cess to another 35,000 tickets for "Hamilton"=and could sell them at a markup, according to authorities. H= really did contact the show's producer to resell b=lk tickets but was rebuffed, they said. In August 2015= when the show moved to Broadway, they said Meli talked to t=e "big name" investor, offering to introduce him to the show's producer. He repeatedly put it off and while the meeting never happened, the investor sent $3.5 million to</=pan> Meli's company after several weeks to help buy ticket=. &nb=p; &=bsp; Och-Ziff as Bait &n=sp; Meli also lured potential victims by claiming other hi=h- profile investors including Och-Ziff had bough= in, according to people who said he approached them. One s=id he was shown a contract with the hedge fund's na=e on it. Executives there considered investing on behalf of=clients but passed, according to a person with knowledge of=the firm. However one Och-Ziff exe=utive, Boaz Sidikaro, was friends 2 EFTA_R1_01330018 EFTA02351615 with Meli and invested pe=sonally, according to people familiar with the case. Sidika=o didn't respond to a request for comment. Accordin= to his Linkedln profile, he's an executive managing director at the firm, where he's worked for almost 20 years. To be sure, not every investor was neces=arily pitched a chance to profit on "Hamilton.Q=9D The SEC says Meli and Harriton gathered money for four i=vestment vehicles. The first promised to resell tickets for=a variety of "high-profile events," the age=cy said without identifying them. But the musical featured =n at least some pitches for the three other vehicles, it said. Dell has a net worth estimated at $19.6 billion= according to the Bloomberg Billionaires index, and the com=any he founded, Dell Technologies, is the world's l=rgest closely held tech company. Jones runs the $11 billion=Tudor Investment Corp., one of the oldest hedge funds. He h=lped start the Robin Hood Foundation, a charity whose goal i= to end poverty in New York City. &=bsp; = Shell Game =nbsp;There's no indication the investors were aware of a scam and their spokesmen declined to comment. Jim Margolin, aspokesman for Manhattan U.S. Attorney Preet Bharara, declined to comment on the case. W=ile Ponzi schemes can last years or even decades, they can*=804ot go on forever. According to prosecutors, Varacchi recorded calls in December in which Meli said he was running a "shell<=span> game," taking money from new investors to pay off ol= ones. Meli said he'd just gotten another $7 millio= from one, enough to pacify the big investor so he wouldn*=80.t raise alarms. "I wa= able to avoid it by shell-gaming it," Meli said, a=cording to prosecutors. "But I'm running out of that game</=pan> too." <mailto: =/html>= To contact the=reporters on this story: Matt Robinson in New York at mrobinsonS5@bloomberg.net; Katherine Burton in New York at kburton@bloomberg.net <mailto:kburton@bloombe=g.net> ; Zeke Faux in New York at <= href="mailto:zfaux@bloomberg.net">zfaux@bloomberg.net; Christian Berthelsen in New York at cberthelsenl@bloomberg.net To contact the edito=s responsible for this story: Jesse Westbrook at jwestbrookl@bloomberg.net; =span>Margaret Collins at mcolli=s45@bloomberg.net <mailto:mcollins45@bloomberg.net> ; Peter Eichenbaum at peichenbaum@bloomberg.net D=vid Scheer, Heather Smith 3 EFTA_R1_01330019 EFTA02351616