Former Math Teacher Pleads Guilty in Ticket-Resale Scam

(Bloomberg) -- A former math teacher charged with scamming investors out of more than $60 million through a Ponzi scheme disguised as an effort to buy and sell tickets to concerts, musicals and sporting events pleaded guilty, as federal prosecutors in New York increasingly clamp down on fraud in the ticket-resale business.

National Event Co. Chief Executive Officer Jason Nissen was charged in May with raising funds from investors under the pretense that he was going to use the proceeds to purchase and resell tickets to popular events, such as the Super Bowl and the hit Broadway musical “Hamilton.” Instead, prosecutors said, he just used the money to repay earlier investors.

On Wednesday, Nissen, 45, of Roslyn, New York, pleaded guilty to a single count of wire fraud before U.S. District Judge Paul A. Engelmayer in Manhattan. While he had faced as long as 20 years in prison if convicted at trial, his plea agreement calls for him to serve five years to a little more than 10 years when he is sentenced Aug. 21.

Nissen told the judge he borrowed money from investors to finance large quantities of tickets, often at high interest rates, and was forced to seek more funding due to poor sales and other business problems. He also faces a fine of as much as $250,000, or twice the gain to him or the loss to others, and will have to repay his victims $65 million to $72 million in restitution.

“I know that my conduct was wrong and I wish to apologize to those who trusted me with their investments and loans and for any harm I have caused,” Nissen said, pledging to work diligently to repay his victims and also apologizing to his wife and two daughters. “I am to blame for what I did.”

Ticket Resales

The case was the second to focus on a scam centered around resales of tickets to "Hamilton," whose success drove Broadway revenue to an all-time high of $1.45 billion in the 2016-17 season, according to the Broadway League. A concert promoter, Joseph Meli, and Steven Simmons pleaded guilty in October to similar charges as part of an alleged $95 million Ponzi scheme. They are scheduled to be sentenced next week.

Former radio sports talk host Craig Carton and Michael Wright were charged in September with ripping off investors including a New York hedge fund of millions of dollars in an alleged scam involving tickets to concerts for performers including Adele and Katy Perry. Both have pleaded not guilty and are scheduled to go on trial in October.

‘Hamilton’ Tickets

According to court filings, Nissen operated his ticket resale business since 2012 and began the fraud three years later, telling victims he would use their money to buy blocks of tickets to events such as "Hamilton," the Super Bowl, the U.S. Open and the World Cup and resell them at a profit.

One victim, diamond wholesaler Taly USA Holdings Inc., gave Nissen more than $1.9 million to buy tickets for an Ultimate Fighting Championship, but Nissen withdrew more than $43,000, sent another $383,000 to an account of another company he controlled that had a negative balance and transferred $1.5 million to a personal account, according to court filings.

Prosecutors said Nissen forged financial documents and ledgers and sent them to victims as proof of how their money was being used. Nissen eventually was unable to secure further financing and admitted to executives of the diamond company that he had been operating a Ponzi scheme, according to the complaint.

Nissen went to the diamond wholesaler’s office to provide the executive and his CFO with details of what he’d done with their money, and the men videotaped the encounter without Nissen’s knowledge, according to court filings. According to a transcript of the meeting, Nissen admitted he was using the wholesaler’s money to pay earlier investors, and that he’d forged documents to hide his fraud, including doctoring a bank statement to show a bogus wire transfer.

According to court filings, Taly USA lost more than $16.1 million, Falcon Strategic Partners IV LP lost $37.7 million to $44.1 million, Hutton Ventures lost $5.5 million to $9.4 million and two other investors lost more than $5 million. Nissen’s companies filed for Chapter 11 bankruptcy in June, shortly after he was charged.

Nissen is a former math teacher in Queens who was fired in 2004 after being caught reselling Dave Matthews Band tickets to his students for a profit, according to the New York City Department of Education.

The case is U.S. v. Jason Nissen, 17-cr-477, U.S. District Court, Southern District of New York (Manhattan).

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