Back from Brazil, ex-music promoter faces $300M fraud case
MIAMI (AP) - A former airline pilot who reached the heights of the music promotion business by producing shows for acts ranging from the Rolling Stones to Santana to Coldplay sat shackled in a Florida courtroom Wednesday, faced with a $300 million fraud case after spending years fighting extradition from Brazil.
Jack Utsick, who once jetted around the world hobnobbing with celebrities, had a yacht and owned condos in one of South Beach's swankiest towers, now must spend months until trial in another high-rise: Miami's downtown federal detention center. U.S. Magistrate Judge Edwin Torres denied bail for Utsick, 72, mainly because he refused to return from Brazil amid investigations by the Securities and Exchange Commission and FBI.
Prosecutor Jerrob Duffy says Utsick, who was in the business about 10 years, fled in 2007 to avoid prosecution. Utsick's lawyer, Philip Pitzer, says he moved legitimately to Brazil in hopes of building a concert amphitheater in Sao Paulo. Either way, it took a lengthy Brazilian court battle before Utsick was finally extradited last year to face the 2010 fraud case.
Pitzer said Utsick will plead not guilty to eight mail fraud counts that each carry a potential 20-year prison sentence. No trial date has been set.
Before his troubles began, Utsick ran Worldwide Entertainment Inc., by 2006 ranked by Billboard among the top three independent entertainment promoters in the world. The company handled tours by rock bands such as Aerosmith and the Pretenders, pop stars Shania Twain, Elton John and Ricky Martin, even shows such as Broadway On Ice. The list goes on.
Operating such tours and buying venues in which to stage them takes money, and that means investors. According to Duffy and the SEC, Utsick and his partners ran the company like a Ponzi scheme, paying off old investors with money from new ones because there were no profits. They promised unrealistic returns of 15 to 25 percent and vastly misrepresented the financial health of the enterprise, investigators say.
"The reality is, the defendant's business really didn't make money," Duffy said. "He was losing money. He lied to investors about what he was going to do with the money and he lied about his track record."
Some of the investor money went straight into Utsick's pocket, investigators say, for such things as payments and upkeep on the two million-dollar-plus Portofino Tower condos at the tip of Miami Beach, travel and living expenses, art work, a yacht and many other personal expenses. And, prosecutors say, he used about $17 million in investor money to unsuccessfully trade in stock options, which was never disclosed to them.
All told, authorities say about 3,300 investors were victims of fraud. A court-appointed receiver, attorney Michael Goldberg, said so far about 25 percent of the money has been recovered through sales of assets, property and other means. A life insurance policy on Utsick worth at least $30 million could eventually provide more money to investors, Goldberg added.
Utsick's daughter, Tanya Utsick, and several friends who attended Wednesday's hearing said he was a victim of government overreach and did not operate a fraudulent business. They portrayed Utsick as an honorable person who would have made good on his commitments.
"There was no part of this that was a Ponzi scheme," said one former investor, Wilson Stevenson. "If they had just left Jack alone, he would have turned it around."
Tanya Utsick rejected Duffy's contention that her father lived a "rock star lifestyle," insisting instead he was a modest person trying to keep his promotion business afloat.
"He did not live a lavish lifestyle," she said.
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