(CelebrityAccess MediaWire) — The Securities and Exchange Commission said Monday it has charged independent promoter Jack Utsick Presents and Worldwide Entertainment with improperly raising $300 million from 1998 through 2005 by selling investments in shows featuring performers such as Shania Twain and Aerosmith.
Instead of concerts, the investor funds went in part to finance two multimillion dollar condos in Miami Beach and a “lavish lifestyle” for chief executive, Jack Utsick, according to the Miami Herald.
The SEC sued Worldwide Entertainment and Utsick in Miami federal court on Monday, 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 emphasized that he does not admit to or deny any wrongdoing.
The 63-year-old Utsick has grown his company into one of the four major promoters in the United States, producing tours by the Rolling Stones, the Bee Gees and Bruce Springsteen, as well as numerous high-grossing 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 said in a statement.
Also named in the suit are two companies controlled by Robert and Donna Yeager, American Enterprises and Entertainment Funds, and another company controlled by Utsick, Entertainment Group Funds.
The Herald reports that the SEC is after the Yeagers and Utsick for selling unregistered securities to finance a variety of entertainment ventures, including concerts by Carlos Santana, The Pretenders and Aerosmith.
“Even businesses that tout their success through affiliations with public figures and celebrities can turn out to be frauds,” David Nelson, director of the SEC’s Miami office, told the paper.
According to the SEC, Utsick and the Yeagers enticed their investors by promising high returns, from 15 to 25 percent, and in some cases, 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,” said the SEC.
Utsick reportedly failed to 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.
In his statement, Utsick said the funds were principally used to fund concerts and events and that he repaid $100 million in principal and interested to investors. In the one instance of a cancelled event, he said he refunded all invested money.
According to the Herald, 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 has asked the court to place all four companies under receivership and will investigate the companies’ accounts in order to have investors’ money returned.
“Definitely a receivership is in the best interests of investors,” Verges told the paper.
In his statement, Utsick agreed to freeze assets, repay investors and pay fines, and said he hoped to be able to work out a consulting arrangement with the receiver, Michael Goldberg, in order to reorganize the company.
Utsick’s companies operate through 11 affiliates offices around the world. –by CelebrityAccess Staff Writers