The two men, Joseph Meli and Matthew Harriton, are said to have raised more than $81 million from at least 125 investors in this scheme. The investors received written contracts promising full repayment of principal plus a 10 percent annualized profit, to be paid in less than one year from investment, according to the SEC complaint. In addition, investors were promised 50 percent of any profits from the ticket resales that remained after investors received their return of principal and 10 percent return. Perhaps thinking they should not throw away their shot at making lots of money, victims placed money into the scheme expecting that if they just would wait for it, they would eventually be satisfied.  

However, said the SEC, almost no money was spent to purchase tickets of any kind. Instead, at least $48 million from newer investors was spent to deliver on the promises made to earlier investors so that the scheme could stay alive. At one point the team said they had made an agreement with the producer of Hamilton to bulk purchase 35,000 tickets to the show, with a return promised within eight months, though the SEC said no such deal actually took place. 

Whatever wasn't used to pay off earlier investors was, instead, diverted towards Meli and Harriton, who used the money to pay for things like jewelry purchases, private school and camp tuition for their children, and casino payments, according to the SEC. 

“As alleged in our complaint, Meli and Harriton raised millions from investors by promising big profits from reselling tickets to A-list events when in reality they were moving investor money in a circle and creating a mirage of profitability,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office.

So, what comes next?

The SEC’s complaint, filed in U.S. District Court for the Southern District of New York, charges Meli and Harriton along with their four purported ticket reselling businesses named Advance Entertainment, Advance Entertainment II, 875 Holdings, and 127 Holdings.  The complaint seeks disgorgement of ill-gotten monetary gains plus interest and penalties.  Meli’s wife and another company are named as relief defendants in the complaint for the purposes of recovering investor funds allegedly in their possession. 

Perhaps that would be enough.