No. 37

October 01, 2016

Yesterday was day two in Miami federal court for the sentencing of a former concert promoter who prosecutors say defrauded thousands of investors out of $200 million. Prosecutors wanted U.S. District Judge Cecilia M. Altonaga to impose a sentence of more than 17 years behind bars for 73-year-old Jack Utsick, who pleaded guilty to mail fraud in June 2016 after his extradition from Brazil in 2014. They say Utsick defrauded nearly 3,000 investors by hiding a decade of losses by Worldwide Entertainment Inc. and promising double-digit returns. A doctor testified that Utsick suffers from long-term bipolar disorder, likely affected his judgment in orchestrating the scheme. Utrick's lawyers have asked for a sentence of six years.

Psychiatrist Michael Hughes said Utsick had many classic hallmarks of bipolar disorder such as visions of grandiosity, inflated self-esteem and excessive activities that can have painful consequences. He said "he always felt he was the smartest guy in the room and that he could beat the system. If he had a disappointment, he couldn’t tolerate that. He had to find a way to overcome it. He still thinks that way. I wouldn’t invest with him.”

Worldwide Entertainment Inc. promoted tours by numerous top-level acts including the Rolling Stones, Fleetwood Mac, David Bowie, Elton John, and Aerosmith. Utsick’s attorney says he never intended to defraud investors and hoped to turn the company’s fortunes around. Worldwide promoted thousands of shows by major artists from 1995 to 2006 and owned several concert venues, but court documents show it was losing money every year. Defense attorney Eric Lisann said Utsick never intended to defraud investors and hoped to turn the company’s fortunes around before it was effectively shut down by the Securities and Exchange Commission in 2006. Before his company’s implosion, Utsick was considered one of the top independent concert promoters in the business, according to friends and associates.

On April 17, 2006, the SEC obtained permanent injunctions and other relief by consent against Worldwide Entertainment, Inc., Entertainment Group Fund, Inc., and their principal John P. ("Jack") Utsick, American Enterprises, Inc., Entertainment Funds, Inc., and their principals Robert Yeager and Donna Yeager. Simultaneously with the filing of its Complaint, the Commission also filed Consents to the entry of Judgments of Permanent Injunction and Other Relief, executed by all the defendants, with proposed judgments for entry by the District Court. Defendants, without admitting or denying the allegations of the Complaint, consented to the entry of a judgment permanently enjoining them from engaging in the violations set forth above, and providing for an asset freeze, repatriation order, an accounting and disgorgement, with prejudgment interest, and the imposition of civil penalties, in amounts to be determined at a future date.

On April 20, 2006, the Court appointed Michael I. Goldberg, Esq. as Receiver over the corporate defendants. Goldberg, who took over the company after the SEC action, said it became clear quickly that Utsick was operating a Ponzi scheme; older investors were being paid with money from new ones and no actual profits being earned. “This is the definition of a Ponzi scheme,” he testified. Many of the wronged investors were former airline pilots, which Utsick had been before he went into the concert promotion business. Court documents showed a court-appointed receiver has been able to return only about $34 million of the $207 million in estimated losses to the investors. Assistant U.S. Attorney John Gonsoulin said "This was not an accident. This was not a mistake. This was not confusion. He lied from the beginning. He lied all the way to the end.”

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