Craig Carton, who co-hosts a morning radio show in New York on WFAN, was arrested at his home in Manhattan early Wednesday.
The Securities and Exchange Commission alleges that Carton and Joseph Meli falsely claimed they had access to large blocks of face value tickets to popular concert performances.
Investors were falsely promised high returns from the price markups in ticket resales. But instead of purchasing tickets for resale, Carton and Meli allegedly misappropriated at least $3.6m to repay earlier investors and cover such other expenses as Carton’s gambling debts.
Carton allegedly stole an additional $2m by tricking a concert venue into forwarding an investor’s money into a bank account belonging to one of Carton’s companies.
Shows included Katy Perry, Adele, Metallica, Barbara Streisand and Justin Bieber.
Lured by false promises
According to the SEC, one investor was provided documents falsely representing that large blocks of Adele tickets were being purchased at face value directly from Adele’s management company when in fact no such agreement was in place.
“As alleged in our complaint, investors were lured with promises of big profits from resales of A-list concert tickets, but little did they know their money was being used to cover Carton’s gambling debts among other things,” said Paul Levenson, director of the SEC’s Boston regional office.
The US regulator is seeking disgorgement of ill-gotten gains plus interest and penalties against Carton and Meli along with six businesses they control: Advance Entertainment LLC, AdvanceM Ltd., Misoluki Inc., Misoluki LLC, Ticket Jones LLC, and Tier One Tickets LLC.
In a parallel action, the US Attorney’s Office for the southern district of New York announced criminal charges against Carton.
He is scheduled to appear in court on Wednesday.
In January, Meli was charged by the Securities and Exchange Commission with scamming money through a Ponzi scheme that promised high returns by buying and selling tickets to see high-demand shows, including Broadway smash hit Hamilton.
The SEC accused Meli and his business partner Matthew Harriton of running a similar scam, telling investors that their money would be pooled to buy large blocks of tickets that would be resold at a profit and produce high returns for investors.
The pair allegedly raised more than $97m from at least 138 investors in 17 states.