11:23am PT by Eriq Gardner
Alleged 'Hamilton' Ponzi Schemer Gets Plea Deal After Accusing Government of Misconduct
Joseph Meli, accused of running a Hamilton pyramid scheme, has accepted a plea bargain that has the ticket broker pleading guilty to one count of securities fraud. Five other charges related to the pyramid scheme have been dismissed. The development comes just days after Meli's attorneys at Kasowitz Benson Torres — notable for its extensive connections with President Donald Trump — brought a motion to suppress evidence based on alleged government misconduct.
According to the indictment from the U.S. Attorney for the Southern District of New York as well as a related lawsuit by the Securities and Exchange Commission, Meli and colleagues approached investors with the opportunity to recoup their money plus a 10 percent return and an additional share of profits by reselling tickets to Hamilton, an Adele concert and other high-profile entertainment events. Meli allegedly held out the representation that he had an agreement with the producer of Hamilton to purchase tickets in bulk. Prosecutors not only said this representation was false, but also accused Meli and others — including popular sports radio personality Craig Carton — of diverting money for personal expenditures and gambling debts. At least $51 million from some 125 investors was allegedly diverted "to perpetuate a Ponzi scheme and to enrich themselves."
The case drew lots of attention and was headed to trial next year. In anticipation, Meli's attorneys have been exploring the dark underbelly of ticket reselling in the Broadway theatrical community by seeking all sorts of documents. A trial won't be needed, though, after Meli appeared in court on Tuesday to plead guilty to securities fraud. A co-defendant, Steven Simmons, pled guilty on Monday.
Daniel Fetterman, the Kasowitz attorney representing Meli, confirmed the appearance and commented, "Mr. Meli is pleased that the United States Attorney’s Office for the Southern District of New York has agreed to dismiss the charges against him concerning the Sentinel Ponzi scheme, and he looks forward to putting the case involving his ticket reselling business behind him.”
The timing and circumstance of the plea agreement are certainly curious.
Last week, in a court document that is no longer under seal and obtained by The Hollywood Reporter, Meli sought to suppress statements he claimed were elicited by a government confidential informant just a day before the Justice Department announced Meli's arrest and charges.
"At issue are the Government’s tactics in its pre-indictment investigation of Mr. Meli on January 26, 2017," states the motion. "On that date, the Government directed its informant Mark Varacchi (the 'Confidential Witness' or the 'CW'), a longtime friend of Mr. Meli’s, to surreptitiously record Mr. Meli outside the presence of the legal counsel that Mr. Meli had retained in connection with the Government’s investigation. That day – over the phone, in-person, and via WhatsApp message — Mr. Meli insisted to the CW that he 'hired a [lawyer] named Marc Kasowitz,' that he 'can’t leave' his attorneys’ office, and that any conversation between the two of them happen at his 'attorneys’ office.' Despite Mr. Meli’s repeated protests, the Government knowingly sent the CW to bypass Mr. Meli’s attorneys, Kasowitz Benson Torres LLP, and to lure Mr. Meli into isolation so that he could be questioned outside the presence of his counsel and without the benefit of legal advice."
Kasowitz's name should be familiar. Once described by Bloomberg as "Trump's go-to lawyer," he was leading Trump's defense against Robert Mueller's investigation of Russian collusion during the last presidential election. Kasowitz no longer has that role, but still represents Trump in various ongoing matters, including a defamation lawsuit brought by a former Apprentice contestant.
According to Meli, he met the confidential witness in a car parked directly in front of the offices of Kasowitz Benson Torres and after telling Varacchi that Kasowitz had been hired to represent him, Meli was asked about the fraud investigation. Meli says he gave an answer that prosecutors have pointed to as evidence of his guilt and flight risk.
"This Court will be hard-pressed to find a more prototypical example of the misconduct Rule 4.2 [of the Rules of Professional Conduct] was designed to guard against," Fetterman wrote last week in a brief to the judge. "Here, the Government manipulated Mr. Meli, a known represented person, into 'giving his case away' within a stone’s throw of his attorneys’ offices."
A spokesperson for the U.S. Attorney’s Office for the Southern District declined comment.
Prosecutors originally charged Meli with conspiracy, wire fraud, and securities fraud. The latter count carried a maximum sentence of up to 20 years, but upon the plea agreement reviewed by The Hollywood Reporter, Meli could see a much lighter sentence of between 78 to 97 months under sentencing guidelines. The deal also allows Meli's attorneys to seek a lighter punishment from the judge.