Oct. 15 (Bloomberg) -- The Broadway producers of “Rebecca -- The Musical” were defrauded by a Long Island, New York, man who concocted fictional investors and the prospect of $4.5 million in financing to collect undeserved commissions, prosecutors said.
Mark Hotton, a 46-year-old former Oppenheimer & Co. broker, was arrested at his West Islip home this morning. He made up the promise of financial backing and a possible $1.1 million loan to get more than $60,000 from producers of the musical, Manhattan U.S. Attorney Preet Bharara said today in a statement. Previews were to have begun at the Broadhurst theater on Oct. 30.
The musical, based on Daphne du Maurier’s novel, had a budget of as much as $14 million. Producers signed an agreement with Hotton in February to make up a $4 million shortfall -- not realizing the investors Hotton said he had rounded up were bogus, Bharara said.
“Mark Hotton perpetrated stranger-than-fiction frauds both on and off Broadway,” Bharara said. “To carry out the alleged fraud, Hotton faked lives, faked companies and even staged a fake death, pretending that one imaginary investor had suddenly died from malaria.”
Producers paid Hotton more than $15,000 in fees plus $18,210.88, for purportedly treating one of the fictional investors, Paul Abrams of Hawthorn, Australia, to a safari, prosecutors said.
In early August, Hotton forwarded to producers an e-mail purportedly from one of Abrams’ assistants that he had died, and Hotton corresponded that he was about to fly from Newark, New Jersey, to interact with Abrams’s estate and “get it worked out,” the complaint said.
On Sept. 8, the producers announced that rehearsals would be delayed by two weeks “due to the death of a major investor.” On Sept. 30, they said the postponement was indefinite.
Ben Sprecher, one of the two lead producers of the show, was pleased that Hotton was arrested, said Sprecher’s lawyer, Ron Russo.
“He’s a bad guy and he did a lot of damage to ‘Rebecca,’” Russo said in an interview. “This is a major step in clearing Ben’s reputation.”
“Mr. Sprecher remains committed to bringing ‘Rebecca’ to Broadway,” Russo said.
The complaint said the production’s legitimate investors are entitled to a full refund of their contributions should the partnership created to stage the show fail to raise $12 million by year-end. The complaint quotes an e-mail by an unidentified “Rebecca” producer that $6 million was already spent and that more money is owed to vendors including the owner of the theater and advertising agency.
Hotton was also charged with running a second scheme, in which he allegedly tricked a Connecticut-based real estate company into paying him and entities he controlled $750,000, Bharara said.
Hotton, who was scheduled to appear in court today in Central Islip, New York, faces two counts of wire fraud, with a maximum possible sentence of 20 years in jail on each charge, authorities said.
Gerald Shargel, Hotton’s lawyer, declined to comment on the case until he had a chance to review the charges.
Hotton filed for bankruptcy protection last year in federal court on Long Island.
Hotton worked at Oppenheimer in Jericho, New York, from November 2005 to February 2009, according to a 42-page disciplinary record from the Financial Industry Regulatory Authority. In March 2010, a customer accused him of doing excessive, unsuitable and unauthorized trading, according to the report. The allegation was settled for $113,500, with Oppenheimer and Hotton splitting the penalty, according to the report.
The case is U.S. v. Hotton, 12-2686, U.S. District Court, Southern District of New York (Manhattan).
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