Miami Beach-based Worldwide Entertainment, the world’s second-largest independent concert promoter, has been charged with fleecing $300 million from investors to finance dozens of events, some featuring stars as big as Elton and Shania Twain.
Instead of shows, investor funds went in part to finance two multimillion dollar condos in Miami Beach and a ”lavish lifestyle” for Worldwide’s chief executive, Jack Utsick, federal securities regulators charged.
The Securities and Exchange Commission sued Worldwide Entertainment and Utsick in Miami federal court yesterday, claiming he defrauded some 3,300 investors from 1998 to 2005.
In a statement issued through his lawyer, Utsick said he voluntarily entered into an agreement with the SEC to sort out the financial mess and repay investors, but stressed he has not admitted or denied wrongdoing.
Over the last three decades, the 63-year-old has promoted top-flight tours by performers such as the Rolling Stones, the Bee Gees and Bruce Springsteen, as well as numerous musicals.
Utsick blamed the tangle on his business’ burgeoning growth over the past four years.
”Unfortunately, as often happens with very rapid growth, internal record-keeping and accounting controls were not adequate to handle the rapid increase in business that resulted,” he stated.
Also named in the suit are two companies — American Enterprises and Entertainment Funds — controlled by Robert and Donna Yeager, and another company controlled by Utsick, Entertainment Group Fund.
The Yeagers’ attorney, Richard Serafini of Fort Lauderdale, could not be reached for comment.
According to the SEC, Utsick and the Yeagers sold unregistered securities to finance a variety of entertainment ventures, including concerts by Carlos Santana and Aerosmith.
”Even businesses that tout their success through affiliations with public figures and celebrities can turn out to be frauds,” said David Nelson, director of the SEC’s Miami office.
According to the SEC, Utsick and the Yeagers enticed investors with promises of hefty returns: 15 to 25 percent, and in some cases, an additional 3 percent of profits.
The investments were usually for one year and many investors rolled over their ”profits” from project to project, the SEC said.
”In truth, most of the entertainment projects lost money and, as a result, Utsick and his companies paid earlier investors with funds raised from new investors,” the SEC said.
Utsick did not disclose $7 million in commissions paid to the Yeagers, the profitability of their investments or that the states of Wisconsin, Missouri and Michigan have taken disciplinary actions against the company, the SEC said.
In his statement, Utsick said the funds were principally used to fund concerts and events and that he repaid $100 million in principal and interest to investors. In the one instance of a canceled event, he said he refunded all money to investors.
Utsick’s company was placed in receivership in January after two investors filed a lawsuit against him, said Teresa Verges, assistant regional director.
The SEC is now asking the court to place all four companies under receivership and will investigate the companies’ accounts in order to have investors’ money returned, she said.
”Definitely a receivership is in the best interests of investors,” she said.
Utsick has already agreed to freeze assets, repay investors and pay fines.
In his statement, he said he hoped to be able to work out a consulting arrangement with the receiver, Michael Goldberg, in order to reorganise the compa
Utsick started his career in the 1970s in the Northeast, according to his Web site. He has a long history of promoting top-flight tours and also has management interests in theaters and amphitheaters in the United States, Europe and as far away as New Zealand and a record label, Omega Records, distributed by Sony. His enterprise operates through 11 affiliate offices around the globe.