New York Sports Radio Personality Craig Carton and Another Arrested, Charged with Running a Ponzi Scheme; SEC Files Related Complaint
On September 6, 2017, the Unities States Attorney for the Southern District of New York and the FBI announced the arrests of Craig Carton of New York, NY and Michael Wright of Upper Saddle River, NJ. They both were charged with one count each of securities fraud, wire fraud and conspiracy in a complaint filed in New York federal court that same day.
Craig Carton was the co-host of WFAN’s popular radio morning talk show “Boomer and Carton,” with former NY Jet quarterback Boomer Esiason. He formerly worked for years as a radio host on New Jersey 101.5 FM.
The federal complaint, consisting of the sworn statement of an FBI Special Agent, alleges that Carton, Wright and an unnamed third person persuaded investors to provide them with funds which were purportedly to be used to purchase large blocks of concert tickets at face value. The tickets were then to be sold at a marked up price on the secondary market, with investors to receive a portion of the profit on the re-sale of the tickets. This scheme took place from September 2016 through January 2017.
The complaint alleges that Carton, Wright and the third party went so far as to create phony contracts showing the purchase of the concert tickets from promoters and/or concert venues. The contracts were provided to investors to entice them to invest in the ventures. In fact, these contracts were fabricated.
The complaint further alleges that, in classic Ponzi scheme-like fashion, Carton used the funds entrusted to him by investors to pay off pre-existing personal debts and make payments to earlier investors.
The SEC civil complaint was filed on the same day, also in New York federal court. This complaint, however, named additional parties. Joseph Meli of New York, NY was named as well as a company he controlled, Advance Entertainment, LLC. Four entities created by Carton, and in which he was an officer/executive, were also named as defendants: AdvanceM, Ltd., Misoluki, Inc., Ticket Jones, LLC and Tier One Tickets, LLC.
The two individuals and the five entities are charged with securities fraud.
Wright is not named as a defendant or mentioned by name in the SEC complaint. The complaint does say that Meli was arrested in January 2017. Presumably he is the “unnamed” third party in the criminal complaint who participated in this fake ticket re-sale scheme.
The SEC complaint goes into a little more detail than the criminal complaint. It alleges that by the summer of 2016 Carton had accumulated $2.5 million in gambling related debts to casinos and individuals. Thereafter, according to the SEC, “Carton solicited investments in ticket reselling enterprises purportedly engaged in purchasing and reselling large blocks of concert tickets for substantial profits.”
Carton falsely represented to investors that he and/or Meli had access to millions of dollars of concert tickets at face value for resale.
In fact, Carton and Meli did not have contracts for the purchase of concert tickets and did not use the funds invested to acquire such tickets. Rather, the funds were used to pay the individuals’ debts and pay off earlier investors.
The complaint alleges they misappropriated at least $5.6 million.
The SEC complaint recounts, as an example, that Carton persuaded an individual investor to forward him $1 million. Within one week of receiving the funds, Carton used $730,000 of those funds to pay off pre-existing gambling debts.
Carton himself and through his lawyer has denied the allegations of the criminal complaint.
Lubiner, Schmidt & Palumbo is a securities arbitration, regulatory and employment law firm with experienced securities attorneys. We represent brokerage firms, individual brokers and investors.