Investors cheated in US ticket-reselling scams

Bruce Springsteen, whose Broadway concerts' prime tickets are selling for up to S$13,500 each, is one of the artists who have teamed up with TicketMaster on a programme that limits sales to fans who have been vetted to confirm they are not scalpers.
Bruce Springsteen, whose Broadway concerts' prime tickets are selling for up to S$13,500 each, is one of the artists who have teamed up with TicketMaster on a programme that limits sales to fans who have been vetted to confirm they are not scalpers.PHOTO: REUTERS

NEW YORK • Reselling could be the ticket to making lots of money, but some investors have reportedly fallen victim to scams.

The carrot is enticing. The prime tickets to Bruce Springsteen's Broadway concerts are going for as much as US$10,000 (S$13,500) each on StubHub. Even a cheap seat costs US$1,400. Never mind that it says US$75 on the ticket.

The Boss' run at Broadway's Walter Kerr Theatre is the latest example of how today's ticket resellers drive prices to giddy levels.

No wonder investors want in on this action that is worth an estimated US$15 billion a year.

But some investors, including billionaire Michael Dell, are singing the blues because their money was allegedly used for other purposes.

The pitch is an old one. The supposed fraudsters typically tell their marks they have the inside track on hot tickets. The marks hand over money and - poof! - it is gone.

The latest case involves Craig Carton, a popular New York sports radio shock jock. He was arrested this month, accused of taking part in a multi-million-dollar scam involving tickets to shows by singers Adele, Barbra Streisand and Justin Bieber.

He got Mr Doug Pardon, a partner at hedge fund Brigade Capital Management, to persuade colleagues to lend US$10 million to Carton's ticket resale business. The firm reasoned that he had the connections to buy blocks of tickets cheaply for resale. But Carton used some of Brigade's money to pay off gambling debts, prosecutors said.

He has pleaded not guilty.

It is not the first time supposedly sophisticated investors have been lured in with promises of lofty returns and celebrity connections.

Money managers are susceptible as they prowl for investments in a low-interest-rate world.

"Because of what's happened in the last six months, if you're a hedge fund and you're investing in ticket brokers, shame on you," said Mr Jesse Lawrence, founder of resale marketplace TicketIQ. "Don't do it, unless you can 100 per cent verify how they're getting tickets."

The Carton case and two other high-profile ticket fiascos pulled back the curtain.

Joseph Meli, a concert promoter and socialite, allegedly cheated more than 125 investors, including Mr Dell, in a scheme centred on tickets to Broadway musical Hamilton and popular concerts.

A former New York City mathematics teacher, Jason Nissen, after running a well-respected broker firm, was accused of falsely telling investors he had used their money to buy tickets to sought-after events, including the football Super Bowl and Hamilton. He was repaying earlier investors, the government said.

Meli and Nissen have pleaded not guilty.

Ticket brokers typically buy up blocks of seats, employing bots and reselling them through their own channels and familiar websites.

Springsteen and Taylor Swift are among artists trying to beat the bots, teaming up with TicketMaster on a Verified Fan programme. It limits ticket sales to fans who have been vetted to confirm they are not scalpers.

Though demand is high, fewer than 5 per cent of the Springsteen Broadway tickets have hit the resale market, according to TicketIQ.

Hamilton shows, at the height of their fervour, often had upwards of 45 per cent of seats sell through the secondary market.

Swift is taking it a step further. In her version of Verified Fan, she is giving priority to fans who spend money on her music and products.

New York Attorney-General Eric Schneiderman, who recently finished a three-year investigation of the industry, is also cracking down on the bot runners.

Earlier this year, he got six companies to pay US$4.2 million in settlements for violating New York ticket laws by using bots to scoop up thousands of tickets.

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A version of this article appeared in the print edition of The Straits Times on September 27, 2017, with the headline 'Investors cheated in US ticket-reselling scams'. Print Edition | Subscribe