Prosecutors Extradite Accused Ponzi Scheme Operator from Brazil to Florida
On Dec. 8, former Miami Beach concert promoter Jack Utsick made his first appearance in federal court on eight counts of mail fraud related to a Ponzi scheme he ran for nearly 10 years. Utsick previously settled civil charges with the U.S. Securities and Exchange Commission related to the scheme. But four years ago, he left the United States for Brazil just before the United States Attorney’s office in Miami unsealed an indictment against him. Earlier this year, Brazil’s Supreme Federal Court ordered Utsick’s extradition back to the U.S.
Utsick’s Ponzi Scheme
We typically associate Ponzi schemes with securities trading. The scheme operator collects money from clients under the pretense of investing the funds in stocks or mutual funds, when in reality he simply uses new money to cover liabilities to older clients. There is usually no “investment” activity whatsoever.
Here, the SEC discovered Utsick “defrauded more than 3,300 investors out of approximately $300 million.” Only Utsick did not promise to invest the money in stocks. Rather, he promised to invest his clients’ funds in his own concert promotion businesses, which operated under the name Worldwide Entertainment, Inc. As the Miami Herald noted, “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.” Utsick parlayed his success into fantastic promises of up to 25% returns on investment.
According to the SEC, most of Utsick’s businesses lost money. Michael I. Goldberg, a court-appointed receiver named to oversee assets seized from Utsick and other Worldwide Entertainment principals, concluded in a 2008 letter to investors, “[I]t has been determined that contrary to representations made to [investors], Worldwide sustained annual operating losses as far back as 1995” and was only able to make distributions by raising money from new investors. “[A]lthough we do not have evidence of whether it was intended to be a Ponzi scheme,” Goldberg said, “Worldwide falls within the textbook definition of a Ponzi scheme.”
The criminal indictment against Utsick specifically charges him with using the mail on at least nine occasions to further his Ponzi scheme. The criminal case is separate from the SEC’s civil proceedings, which took place in 2006 before Utsick left the country. The SEC ordered Utsick to pay back more than $4 million to investors, but he has yet to comply.
Victims Left With Pennies on the Dollar
As always, an indictment is not a conviction and Utsick is innocent until proven guilty. But the SEC’s civil case already illustrates the significant harm caused to investors by Utsick and Worldwide Entertainment. The receiver overseeing Worldwide noted recently he has only been able to return about 21% of the principal invested by clients between 1995 and 2006. Most of the money has been lost forever. That is why, if you have been the victim of a Ponzi scheme or other securities fraud, it’s important you contact a Florida stockbroker fraud attorney right away. Call the offices of Gregory Tendrich, P.A., if you need to speak with an attorney today.