Oct. 16 (Bloomberg) -- The producers of “Rebecca: The Musical” have 10 weeks to raise $4.5 million or confront the prospect of returning millions more in funds.
Such a task would be formidable in the best of circumstances. It’s all the more daunting because investors are likely to be wary of putting money into a project whose twisted history -- replete with phantom angels and a rainmaker currently in the hands of federal authorities -- is more gothic than the show itself.
That’s the predicament faced by Ben Sprecher and Louise Forlenza, the lead producers, or general partners, of “Rebecca.”
They have until Dec. 31 to fill their financial hole or face the real-life investors who contributed millions and are entitled to a full refund, according to a criminal complaint filed in Manhattan federal court yesterday against Mark Hotton, a former Oppenheimer & Co. broker.
Hotton, 46, was charged with wire fraud after allegedly pocketing thousands of dollars in commissions for raising $4.5 million from investors who turned out to be figments of his imagination, according to the complaint.
In a telephone interview, Sprecher said he hadn’t done anything wrong. “I did a Google search on him,” he said of Hotton.
“Rebecca” was budgeted at $12 million to $14 million and based on Daphne du Maurier’s 1938 novel. It was to have been directed by Michael Blakemore and Francesca Zambello.
“We’re going to put the show on,” Sprecher, 58, said. The existing investors, he said, “have been fantastically supportive.” An opening has been delayed indefinitely.
Hotton and entities he controlled received more than $60,000 from the “Rebecca” fraud, including compensation for arranging a $1.1 million loan that was never funded, according to the complaint.
Hotton pleaded not guilty and was detained in jail, said Robert Nardoza, a spokesman for the U.S. Attorney’s Office.
The twice-delayed show, which most recently had planned to begin performances on Oct. 30 at the Broadhurst Theatre, has already spent $6 million in production costs, according to the complaint.
The general partners owe additional money to vendors, including the Shubert Organization, which owns the Broadhurst, according to the complaint. Sprecher would not say how much more is owed. Shubert is also an investor in the show.
The prospects for Sprecher and Forlenza, referred to in the complaint as “Producer-1” and “Producer-2,” are not enviable, one Broadway veteran said yesterday.
“Given the notoriety of the production, it’s hard to overcome that,” said attorney Mark Sendroff, a partner with Sendroff and Baruch, an entertainment law firm.
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.
A third party suggested to Producer-2 that she approach Hotton, who portrayed himself as someone experienced in raising money, according to the complaint.
Hotton seemed passionate about the show, Sprecher said.
“When you talk about something with someone who shares your enthusiasm,” he said, “it engenders a certain amount of trust.”
On Feb. 7, 2012, just over a year after Hotton filed for bankruptcy protection in federal court on Long island, the “Rebecca” partnership made an agreement with TM Consulting, a company he controlled, said the complaint. He’d raise money for the show for a fee of $7,500, plus 8 percent of any funds over $250,000, according to the complaint.
The producers paid Hotton the $7,500 plus “expense reimbursements,” according to the complaint, amounting to about $18,000 in March and April.
He wrote in e-mails to the producers that he was successful.
“I have soft circles on $3.18 million,” he wrote in one cryptic e-mail cited in the complaint.
On about March 5, Producer-1 e-mailed Hotton to say that he was meeting with a large investor who’d committed the Broadhurst and that he needed “everything with me regarding the capitalization target” at the meeting. That was likely to have been the top executives of Shubert.
That month, Hotton provided the unnamed producer with signed agreements from four investors to buy stakes in “Rebecca,” according to the complaint. They were “Paul Abrams,” “Roger Thomas,” “Julian Spencer” and “Walter Timmons.” In April, Hotton sent Producer-1 a list of e-mail contact details for them, which contradicted contact information for them supplied weeks before, the complaint said.
Prosecutors said that websites associated with the investors Hotton supplied were almost identical to one another and featured photographs of the same office building, albeit from different angles. Both were created through web.com within the past year and registered by Hotton, according to the complaint.
In late April, Hotton demanded an advance against his 8 percent commission reflecting costs for treating “Abrams” to a safari, the complaint said. It was then that Producer-1 sent an e-mail address he had for “Abrams” introducing himself and inviting him to a “Rebecca” event for group sales agents.
“Abrams” wrote back that Mr. Hotton had spoken highly of the producer.
“I received your invitation and Mr. Hotton and my assistant have been working all morning to switch our safari to next week so we can attend the event,” the e-mail said, according to the complaint.
The producers learned in August from a purported assistant of “Abrams” that he had suddenly died.
Sendroff said that dangling a larger-than-usual share of any profits would help entice new investors to the show.
“They could be offering tremendously generous terms,” he said.
Sprecher said he’s searching for new money.
“Do you know of anyone who wants to invest?” he asked a reporter.
The case is U.S. v. Hotton, 12-2686, U.S. District Court, Southern District of New York (Manhattan).
Muse highlights include Jeffrey Burke on books, Craig Seligman on movies.
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