Crime

Feds: Ex-arts guru Jack Utsick swindled $300M from investors before leaving the country

Stacey Carter, John Legend, Zascha, and Jack Utsick attend the wrap party for musician Alicia Keys' "Diary Tour" at Blvd April 21, 2005 in New York City.
Stacey Carter, John Legend, Zascha, and Jack Utsick attend the wrap party for musician Alicia Keys' "Diary Tour" at Blvd April 21, 2005 in New York City. Getty Images

Jack Utsick, a one-time global concert promoter whose entertainment empire crumbled under heavy debts, was extradited from Brazil to Miami over the weekend to face federal charges that he swindled $300 million from investors before leaving the country.

Utsick, who had been under arrest in Brazil while fighting his extradition over the past two years, appeared Monday on nine counts of mail fraud in Miami federal court. Magistrate Judge Jonathan Goodman ruled that the 72-year-old Utsick would be held before trial, until he resolves his choice of defense attorneys.

Utsick, formerly of Miami Beach, is accused of diverting millions of dollars from thousands of his investors in what authorities have described as a Ponzi scheme to pay for collector cars, a luxury condo, artwork and other personal expenses.

Utsick was a once-prominent entertainment guru who promoted shows for Elton John and the Rolling Stones through his company, Worldwide Entertainment of Miami Beach. He consistently put on some of the largest concerts in the United States and Europe.

An indictment, filed by prosecutor Jerrob Duffy, accuses Utsick of using “false pretenses” to solicit millions of dollars from investors for his “own benefit” between 1996 and 2006. The case, investigated by the FBI, ranks among the larger Ponzi schemes in South Florida.

Utsick’s temporary defense attorneys, Michael J. Rosen and Philip E. Pitzer, said their client was not a “fugitive,” as the prosecutor suggested, because he had left the country years before he became aware that he was being charged by the U.S. attorney’s office in Miami.

After Monday’s hearing, the lawyers issued a statement on Utsick’s behalf:

“Jack Utsick devoted his life to his company, Worldwide Entertainment, whose only goal was to present the best possible entertainment to the public. Jack created the second largest concert promotion business in the world, selling millions of tickets to thousands of shows.”

“Jack is not the man the government portrays him to be,” the statement said. “Jack looks forward to clearing his name in court where the case will be decided.”

At Monday’s hearing, Duffy accused Rosen, a prominent defense attorney, of improperly receiving $307,000 from his client before a Miami federal judge had ordered Utsick in 2009 to pay back more than $4 million in a civil settlement with the Securities and Exchange Commission. The SEC never received Utsick’s payment.

“Mr. Rosen received money from the fraud,” said Duffy, who noted that his legal fees should have been paid back to Utsick’s investors. Duffy said he will file a motion to disqualify him from representing Utsick.

Rosen fired back that “the government’s information is misinformation and bad information. If they want to put it writing, I will respond.”

At one point, Goodman, known for his sense of humor, quipped: “And I thought today was going to be routine.”

Goodman postponed Utsick’s arraignment and detention hearing until his selection of permanent defense attorneys is resolved.

Utsick’s company, Worldwide Entertainment, was placed in receivership while the SEC pursued a lawsuit accusing him of fraud in 2006. He left the country for Brazil the following year.

After disputes between Utsick and his partners, Donna and Robert Yeager, the SEC began an investigation into the firm's far-flung enterprises.

Initially, investigators determined Utsick and the two former partners were selling unregistered securities to finance concerts featuring bands that included Santana, the Pretenders and Aerosmith, according to court records.

Then, regulators said they discovered that Utsick was actually losing money on most venues, though he had been claiming to be earning millions of dollars each year — $112.5 million in 2005.

“What we were seeing was a Ponzi scheme,” receiver Michael Goldberg, a lawyer who has been tracking down assets, told the Miami Herald in 2009.

In other words, he said, Utsick was using money from new investors to pay off old ones until the alleged scheme collapsed. He failed to pay back high-interest promissory notes that he had issued to finance his concerts.

Along the way, Utsick tapped into his investors' funds to support a lavish lifestyle, including a condo in South Beach's Portofino Towers, $34,000 for artwork, $200,000 for a yacht, and nearly $500,000 in credit card bills for purchases at Macy's, Bloomingdale's and Victoria's Secret, according to SEC filings.

To keep the company going, Utsick was paying investors — many of them former airline pilots like him — from revenues of future concerts, court records stated.

In all, the longtime promoter was accused of fleecing about $300 million from some 3,300 investors, according to the SEC’s suit. Goldberg said many of the investors knew Utsick from his days as a TWA pilot in the 1970s and lost their life savings.

In previous statements, Utsick blamed his financial problems on the rapid growth of his business and pledged to work to repay investors. His investors realized a return of about “25 cents on the dollar,” or about $60 million in total, Goldberg said Monday.

Court records show Utsick left his home in Miami Beach and moved to Brazil in late 2007.

Just days before he departed, he sold a Porsche and a Mercedes-Benz and pocketed the money — a violation of a court order, regulators said.

In 2009, U.S. District Judge Paul Huck imposed a final settlement ruling in the SEC case, ordering Utsick to pay back about $4.1 million, plus interest. Utsick immediately appealed the ruling.

Separately, the Yeagers settled with the SEC by paying back $7.5 million.

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