The SEC has accused Joseph Meli and Matthew Harriton of telling investors that their money would be pooled to buy large blocks of tickets that would be resold at a profit and produce high returns for investors.
Meli and Harriton are thought to have raised more than $81m from at least 125 investors in 13 states.
The bulk of the money was allegedly used to make payments to earlier investors.
Meli and Harriton are believed to have diverted almost $2m for personal expenses, such as buying jewellery, private school and camp tuition, and casino payments.
The scheme reportedly claimed that there was an agreement with the producer of Hamilton to purchase 35,000 tickets to the musical.
Investor money was supposedly paying part of that cost with the return on investment promised within eight months.
The SEC alleges no such agreement or purchase ever happened.
“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.
In a parallel action, the US Attorney’s Office for the southern district of New York announced criminal charges against Meli.
