Utsick Accused Of $300M Fraud

Concert promoter Jack Utsick, Worldwide Entertainment Inc. and two other partners have agreed to settle Security and Exchange Commission charges that they raised more than $300 million from 3,300 investors nationwide between 1998 and 2005 in what amounts to a ponzi scheme.

Utsick and partners Robert and Donna Yeager, without admitting or denying guilt, proposed permanent injunctions, asset freezes, repayments of amounts received and penalties simultaneously with the filing of the civil injunctive action April 17th.

The SEC also requested the appointment of a receiver over all four corporate defendants, the commission said in a statement.

The regulatory commission accused Utsick and his partners of fleecing investors to finance dozens of events, including concerts by Shania Twain, Aerosmith, and Elton John, according to The Miami Herald.

The defendants sold unregistered securities in the form of loan agreements or units in special purpose limited liability companies to raise funds for a variety of ventures produced and/or promoted by Utsick, according to the SEC.

Utsick and his partners allegedly told prospective investors that their investments would earn annual returns ranging from 15 percent to 25 percent and, in some cases, an additional 3 percent of the profits generated by Utsick and his companies.

Instead of financing entertainment events, the investors’ money reportedly went toward two multimillion-dollar condominiums in Miami Beach and a “lavish lifestyle” for Utsick, the paper quoted federal securities regulators.

The investments in the LLCs or loan agreements were generally for a term of one year, and many investors rolled over their principal and “profits” from project to project. However, most of the projects actually lost money and, as a result, Utsick and his companies allegedly paid earlier investors with funds raised from new ones.

SEC enforcement director Linda Chatman Thomsen said, “Fraudulent schemes and the misuse of funds have a devastating impact on investors’ faith in capital raising efforts. We will continue vigorously to enforce the securities laws against those who engage in such schemes.”

Utsick was not available for comment to Pollstar, but released a statement through his lawyer, quoted by the Herald, saying he voluntarily entered into an agreement with the SEC to sort out the financial mess.

“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,” Utsick stated.