Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that CRAIG CARTON was sentenced to 42 months in prison for securities fraud, wire fraud, and conspiracy to commit those offenses.  CARTON was convicted after a one-week trial before Chief U.S. District Judge Colleen McMahon, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Radio personality Craig Carton solicited investments for his ticket buying scheme by claiming to have an in with the operator of two New York-area arenas and a major concert promotion company.  He talked of his ability to buy blocks of tickets to live events and sell them for a profit on the secondary market.  But the talk-show host was all talk.  Carton’s purported agreements to buy blocks of tickets were part of an elaborate fiction.  Today he has learned that the price of defrauding investors is a term in prison.”

As set forth in the Complaint, Indictment, and the evidence presented at trial:

CARTON and Joseph Meli worked together to induce investors to provide them with millions of dollars, based on representations that the investor funds would be used to purchase blocks of tickets to concerts, which would then be resold on the secondary market.  CARTON and Meli purportedly had access to those blocks of tickets based on agreements that Meli had with a company that promotes live music and entertainment events (the “Concert Promotion Company”) and that CARTON had with a company that operates two arenas in the New York metropolitan area (the “Sports and Entertainment Company”).  In fact, neither the Concert Promotion Company nor the Sports and Entertainment Company had any such agreement with CARTON, co-defendant Michael Wright, Meli, or any entity associated with them.  After receiving the investor funds, CARTON, Wright, and Meli misappropriated those funds, using them to, among other things, pay personal debts and repay prior investors as part of a Ponzi-like scheme.   

In the fall of 2016, CARTON, Wright, and Meli exchanged emails and text messages regarding their existing debts.  On September 5, 2016, for example, Wright emailed CARTON and Meli, “for the sake of our conversation tomorrow,” and outlined “the debt past due and due next week.”  Wright listed several apparent creditors, to whom he, Meli, and/or CARTON were personally indebted for over $1 million.  Wright listed eight possible options for repaying the debt, including “Run to Costa Rica, change name, and start life all over again – may not be an option.”  CARTON responded to Wright and Meli, stating “don’t forget I have $1m coming tomorrow from ticket investor[.]  will need to be discussed how to handle.”  On September 7, 2016, CARTON emailed Wright and Meli, referenced a potential investor (“Investor-1”) in an upcoming holiday concert tour, and suggested “borrow[ing] against projected profits” on that investment. 

Later in the fall of 2016, CARTON began negotiating with a hedge fund (the “Hedge Fund”) regarding a transaction in which the Hedge Fund would extend CARTON capital to finance CARTON’s purchase of event tickets, which CARTON would then resell at a profit.  In early December 2016, Meli texted CARTON and Wright and discussed using the Hedge Fund’s capital “to repay debts,” and not for the purchase of tickets. 

The next day, December 7, 2016, CARTON emailed the Hedge Fund five agreements between (i) Meli and a company controlled by Meli (the “Meli Entity”) and (ii) the Concert Promotion Company.  In each of the purported agreements, the Concert Promotion Company agreed to sell the Meli Entity up $10 million worth of tickets to different concert tours.  However, these agreements were fraudulent and had not, in fact, been entered into by the Concert Promotion Company.

The following day, the Hedge Fund and CARTON executed the revolving loan agreement (the “Revolving Loan Agreement”), under which the Hedge Fund agreed to provide CARTON with up to $10 million, for the purpose of funding investments in the purchase of tickets for events.  The Revolving Loan Agreement provided, in sum and substance, that the proceeds of the loan would be used only to purchase tickets pursuant to agreements for the acquisition of tickets, including the agreements with the Concert Promotion Company, and for limited business expenses.  The Hedge Fund would receive a share of the profits from the resale of the tickets.

The Hedge Fund then sent $700,000 to the Meli Entity to finance the purchase of tickets pursuant to the agreements between the Meli Entity and the Concert Promotion Company.  Meli, however, then sent this money to a bank account controlled by Wright, who then, on December 12, sent $200,000 to CARTON’s personal bank account (the “CARTON Bank Account”), which CARTON then wired to a casino.  Also on December 12, Wright sent another $500,000 to an individual who had previously lent CARTON $500,000, which was due to be repaid that day.

Later in December 2016, the Hedge Fund sent an additional $1.9 million to the Meli Entity, to finance the purchase of tickets pursuant to agreements between the Meli Entity and the Concert Promotion Company.  Once again, the Concert Promotion Company had not entered into any such agreements.  Meli, Wright, and CARTON engaged in text messages regarding the disposition of these funds.  Some of the money was used by Meli to repay two individuals who had previously invested with Meli in a related scheme involving the purported investment in the resale of tickets, and by CARTON to pay casinos and to pay Investor-1 a purported return on an earlier investment in a ticket-related venture, among other things.

CARTON also induced the Hedge Fund to wire $2 million to the Sports and Entertainment Company, based on a purported agreement CARTON purportedly had with the Sports and Entertainment Company (the “Sports and Entertainment Company Agreement”).  The Sports and Entertainment Company Agreement purportedly gave an entity controlled by CARTON (the “CARTON Entity”) the right to purchase $2 million of tickets to concerts at one of the venues operated by the Sports and Entertainment Company.  CARTON, among other things, sent the Hedge Fund a copy of the Sports and Entertainment Company Agreement that purportedly had been signed by the chief executive officer of the Sports and Entertainment Company.  However, this agreement was fraudulent and had never been entered into by the Sports and Entertainment Company or signed by the chief executive officer. 

On December 20, 2016, when the Hedge Fund wired the $2 million to the Sports and Entertainment Company, CARTON contacted the Sports and Entertainment Company and told them, in sum and substance, that the wire had been sent in error and should be sent to the bank account for an entity operated by CARTON and Wright, for which Wright is the signatory.  After the money was rewired to that account, Wright wired $966,000 to Wright’s personal bank account and $700,000 to the CARTON Bank Account.  CARTON then wired approximately $188,000 from the CARTON Bank Account, including at least $133,000 in wires to several casinos.

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In addition to the prison term, CARTON, 50, of New York, New York, was sentenced to three years of supervised release and ordered to pay $4,835,186.56 in restitution and to forfeit $4,590,000.  CARTON’S co-defendant, Michael Wright, pled guilty on September 27, 2018, to one count of wire fraud and was sentenced to 21 months in prison. 

Joseph Meli pled guilty to securities fraud in October 2017 and is currently serving a 78-month sentence imposed by U.S. District Judge Kimba M. Wood in April 2018.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and thanked the Boston Regional Office of the U.S. Securities and Exchange Commission.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Brendan F. Quigley and Elisha J. Kobre are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that MICHAEL WRIGHT was sentenced to 21 months in federal prison for his participation in a scheme to defraud investors who invested millions of dollars based on false representations that their funds would be used to purchase tickets to various live events for re-sale at a profit on the secondary market.  WRIGHT pled guilty on September 27, 2018 before Magistrate Judge Stewart D. Aaron to one count of wire fraud.   His plea was accepted by Chief U.S. District Judge Colleen McMahon, who also imposed today’s sentence. 

U.S. Attorney Geoffrey S. Berman said:  “Michael Wright previously admitted to his conduct related to an elaborate ticket-buying scheme to defraud investors of millions of dollars.  Wright and his co-defendants induced their clients to invest in their phony business through false representations and lies, when in fact, it was a Ponzi-like enterprise.  While Michael Wright’s ticket-buying business operated as a fiction, now a 21 month term in federal prison will be his stark reality.”

According to allegations in an Indictment filed in Manhattan federal court, previous court filings, and statements made in public court proceedings:           

WRIGHT participated in a scheme along with Craig Carton and Joseph Meli to induce investors to provide them with millions of dollars, based on representations that the investor funds would be used to purchase blocks of tickets to concerts and other live events, which would then be re-sold on the secondary market.  Carton and Meli purportedly had access to those blocks of tickets based on agreements that Meli had with a company that promotes live music and entertainment events (the “Concert Promotion Company”) and that Carton had with a company that operates two arenas in the New York metropolitan area (the “Sports and Entertainment Company”).  In fact, neither the Concert Promotion Company nor the Sports and Entertainment Company had any such agreement with Carton, Wright, or Meli, or any entity associated with them.  After receiving the investor funds, Carton, Wright, and Meli misappropriated those funds, using them to, among other things, pay personal debts and repay prior investors as part of a Ponzi-like scheme.  

For example, on December 8, 2016, a New York-based hedge fund (the “Hedge Fund”) and Carton executed a revolving loan agreement (the “Revolving Loan Agreement”), under which the Hedge Fund agreed to provide Carton with up to $10 million, for the purpose of funding investments in the purchase of tickets of events.  The Revolving Loan Agreement provided, in sum and substance, that the proceeds of the loan would be used only to purchase tickets pursuant to agreements for the acquisition of tickets and for limited business expenses. The Hedge Fund would receive a share of the profits from the resale of the tickets.

Later in December 2016, Carton induced the Hedge Fund to wire $2 million to the Sports and Entertainment Company, based on a purported agreement he had with the Sports and Entertainment Company (the “Sports and Entertainment Company Agreement”).  Under this supposed agreement, the Sports and Entertainment Company Agreement gave an entity controlled by Carton (the “Carton Entity”) the right to purchase $2 million of tickets to concerts at one of the venues operated by the Sports and Entertainment Company.  Carton, among other things, sent the Hedge Fund a copy of the Sports and Entertainment Company Agreement that purportedly had been signed by the chief executive officer of the Sports and Entertainment Company.  However, this agreement was fraudulent and had never been entered into by the Sports and Entertainment Company or signed by the chief executive officer. 

On December 20, 2016, when the Hedge Fund wired the $2 million to the Sports and Entertainment Company for the purchase of tickets, Carton contacted the Sports and Entertainment Company and told them, in sum and substance, that the wire had been sent in error and should be sent to the bank account for an entity operated by Carton and WRIGHT, for which WRIGHT is the signatory. The prior day, December 19, 2016, WRIGHT had e-mailed Carton wire information for this account.   After the Sports and Entertainment Company’s $2 million investment was diverted to that account, WRIGHT wired $966,000 to WRIGHT’s bank account, of which WRIGHT sent approximately $690,000 to repay a gambling loan of Carton’s which WRIGHT had guaranteed and approximately $250,000 to repay WRIGHT’s personal home equity line of credit.  WRIGHT further diverted $40,000 of the Hedge Fund’s investment for his own personal expenses, including to pay off credit card debt, and nearly $1 million to Carton’s personal bank account.

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WRIGHT, 42, of Upper Saddle River, New Jersey, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Carton was convicted on November 7, 2018, of securities fraud, wire fraud, and conspiracy to commit those offenses, and will be sentenced before Chief U.S. District Court Judge Colleen McMahon on April 5, 2019. 

Meli pled guilty to securities fraud in October 2017 and is currently serving a 78-month sentence imposed by U.S. District Court Judge Kimba M. Wood in April 2018.  

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and thanked the Boston Regional Office of the U.S. Securities and Exchange Commission.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Brendan F. Quigley and Elisha J. Kobre are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the conviction of CRAIG CARTON for securities fraud, wire fraud, and conspiracy to commit those offenses.  CARTON’s co-defendant, Michael Wright, pled guilty before U.S. Magistrate Judge Stewart D. Aaron in September 2018 for his participation in the scheme.  CARTON is scheduled to be sentenced on February 27, 2018, at 4 p.m. by Chief U.S. District Judge Colleen McMahon, who presided over the one-week trial.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Radio personality Craig Carton solicited investments for his ticket buying scheme by touting his show business contacts and ability to buy blocks of tickets to live events such as Metallica, Barbra Streisand, and others, and sell them for a profit on the secondary ticket market. As a unanimous Manhattan jury has found, Carton was all talk.  Carton fabricated contracts for blocks of tickets and spent the almost $7 million he collected from investors on gambling and personal expenses.  We commend the jury for seeing through Carton’s blatant lies, and holding him responsible for his Ponzi-like scheme. Today’s verdict is a win for investors; lying to them is a federal crime.”

As set forth in the Complaint, Indictment, and the evidence presented at trial:

CARTON and another individual (“CC-1”) worked together to induce investors to provide them with millions of dollars, based on representations that the investor funds would be used to purchase blocks of tickets to concerts, which would then be re-sold on the secondary market.  CARTON and CC-1 purportedly had access to those blocks of tickets based on agreements that CC-1 had with a company that promotes live music and entertainment events (the “Concert Promotion Company”) and that CARTON had with a company that operates two arenas in the New York metropolitan area (the “Sports and Entertainment Company”).  In fact, neither the Concert Promotion Company nor the Sports and Entertainment Company had any such agreement with CARTON, Wright, CC-1, or any entity associated with them.  After receiving the investor funds, CARTON, Wright, and CC-1 misappropriated those funds, using them to, among other things, pay personal debts and repay prior investors as part of a Ponzi-like scheme.   

In the fall of 2016, CARTON, Wright, and CC-1 exchanged emails and text messages regarding their existing debts.  On September 5, 2016, for example, Wright emailed CARTON and CC-1, “for the sake of our conversation tomorrow,” and outlined “the debt past due and due next week.”  Wright listed several apparent creditors, to whom he, CC-1, and/or CARTON were personally indebted for over a million dollars.  Wright listed eight possible options for repaying the debt, including “Run to Costa Rica, change name, and start life all over again – may not be an option.”  CARTON responded to Wright and CC-1, stating “don’t forget I have $1m coming tomorrow from ticket investor[.]  will need to be discussed how to handle.”  On September 7, 2016, CARTON emailed Wright and CC-1, referenced a potential investor (“Investor-1”) in an upcoming holiday concert tour, and suggested “borrow[ing] against projected profits” on that investment. 

Later in the fall of 2016, CARTON began negotiating with a hedge fund (the “Hedge Fund”) regarding a transaction in which the Hedge Fund would extend CARTON capital to finance CARTON’s purchase of event tickets, which CARTON would then re-sell at a profit.  In early December 2016, CC-1 texted CARTON and Wright and discussed using the Hedge Fund’s capital “to repay debts,” and not for the purchase of tickets. 

The next day, December 7, 2016, CARTON emailed the Hedge Fund five agreements between (i) CC-1 and a company controlled by CC-1 (the “CC-1 Entity”) and (ii) the Concert Promotion Company.  In each of the purported agreements, the Concert Promotion Company agreed to sell the CC-1 Entity up $10 million worth of tickets to different concert tours.  However, as alleged, these agreements were fraudulent and had not, in fact, been entered into by the Concert Promotion Company.

The following day, the Hedge Fund and CARTON executed the revolving loan agreement (the “Revolving Loan Agreement”), under which the Hedge Fund agreed to provide CARTON with up to $10 million, for the purpose of funding investments in the purchase of tickets for events.  The Revolving Loan Agreement provided, in sum and substance, that the proceeds of the loan would be used only to purchase tickets pursuant to agreements for the acquisition of tickets, including the agreements with the Concert Promotion Company and for limited business expenses.  The Hedge Fund would receive a share of the profits from the resale of the tickets.

The Hedge Fund then sent $700,000 to the CC-1 Entity to finance the purchase of tickets pursuant to the agreements between the CC-1 Entity and the Concert Promotion Company.  CC-1, however, then sent this money to a bank account controlled by Wright, who then, on December 12, sent $200,000 to CARTON’s personal bank account (the “CARTON Bank Account”), which CARTON then wired to a casino.  Also on December 12, Wright sent another $500,000 to an individual who had previously lent CARTON $500,000, which was due to be repaid that day.

Later in December 2016, the Hedge Fund sent an additional $1.9 million to the CC-1 Entity, to finance the purchase of tickets pursuant to agreements between the CC-1 Entity and the Concert Promotion Company.  Once again, the Concert Promotion Company had not entered into any such agreements.  CC-1, Wright, and CARTON engaged in text messages regarding the disposition of these funds.  Some of the money was used by CC-1 to repay two individuals who had previously invested with CC-1 in a related scheme involving the purported investment in the resale of tickets, and by CARTON to pay casinos and to pay Investor-1 a purported return on an earlier investment in a ticket-related venture.

CARTON also induced the Hedge Fund to wire $2 million to the Sports and Entertainment Company, based purportedly on an agreement he had with the Sports and Entertainment Company (the “Sports and Entertainment Company Agreement”).  The Sports and Entertainment Company Agreement purportedly gave an entity controlled by CARTON (the “CARTON Entity”) the right to purchase $2 million of tickets to concerts at one of the venues operated by the Sports and Entertainment Company.  CARTON, among other things, sent the Hedge Fund a copy of the Sports and Entertainment Company Agreement that purportedly had been signed by the chief executive officer of the Sports and Entertainment Company.  However, this agreement was fraudulent and had never been entered into by the Sports and Entertainment Company or signed by the chief executive officer. 

On December 20, 2016, when the Hedge Fund wired the $2 million to the Sports and Entertainment Company, CARTON contacted the Sports and Entertainment Company and told them, in sum and substance, that the wire had been sent in error and should be sent to the bank account for an entity operated by CARTON and Wright, for which Wright is the signatory.  After the money was rewired to that account, Wright wired $966,000 to Wright’s personal bank account and $700,000 to the CARTON Bank Account.  CARTON then wired approximately $188,000 from the CARTON Bank Account, including at least $133,000 in wires to several casinos.

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CARTON, 49, of New York, New York, was convicted of one count of conspiracy to commit securities fraud and wire fraud, one count of wire fraud, and one count of securities fraud.  The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense.  The securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense.  The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and thanked the Boston Regional Office of the U.S. Securities and Exchange Commission, which has filed civil charges against CARTON and CC-1 in a separate action. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Brendan F. Quigley and Elisha J. Kobre are in charge of the prosecution.