Are you an Ethical Person?
Global corporate fraud declines; insider fraud rise

Fraud on Broadway

“Rebecca: The Musical”: A Stranger than Fiction Fraud

You can’t write stuff as bizarre as this real-life tale of how a Broadway musical in production was forced to close down before it even started because of the promise of investors that never existed. Previews were to start at the Broadhurst Theatre October 30 but have been postponed indefinitely.

Here is the story. The producers of “Rebecca: The Musical, ” Ben Sprecher and Louise Forlenza, sued Mark Hotton, a 46-year-old former Oppenheimer & Co. broker, charging him with inventing bogus investors who were purportedly prepared to save the Broadway musical.

The lawsuit was filed on October 20 in New York State Supreme Court in Manhattan. The producers seek more than $100 million from Hotton and his wife, Sherri, who the producers claim sabotaged their roughly $12 million musical with an elaborate fraud.

Hotton, was arrested October 15 at his West Islip, Long Island home and charged with wire fraud. U.S. Attorney Preet Bharara said Hotton made up the promise of a $4.5 million investment and a possible $1.1 million loan to get tens of thousands of dollars in purported expenses and fees from the producers.

Gerald Shargel, a lawyer representing Hotton, declined to comment on the lawsuit in a telephone interview. Hotton had filed for bankruptcy in February 2011.

The partnership to produce “Rebecca” was formed in March 2011, according to the complaint. The producers initially announced an April 2012 Broadway opening, but in late January said in a press release that they were postponing because they couldn’t raise all the money.

At about the same time, according to the producers’ complaint, Forlenza was introduced to Hotton by a man named Jeffrey Troncone, whom she met through a client of her accounting business.

Hotton told Forlenza that he had arranged for funding of a successful West End musical, which the complaint doesn’t name. In late January or early February, Hotton met with Sprecher and Forlenza at their West 52nd Street office, where he was retained to raise money, according to the complaint. They had already secured at least $7 million, and any fees for him were to come from their share of profits, they said.

Weeks later, Hotton produced subscription documents signed with four names representing $4.5 million -- three in England and one in Australia, according to the complaint. Two of them, Paul Abrams and Julian Spencer, would later be named in the musical’s press releases. None existed, according to the complaint.

Shortly before the July 31 deadline when the money was due, Hotton told the producers that Abrams contracted malaria, according to the complaint. On August 5, Hotton said Abrams had died.

It’s amazing the lengths some people will go to ‘earn a living’ by committing fraud rather than working just as hard as they did to develop and carry out the intricate scheme and earn their money the old-fashioned way.

I did not believe this story the first time I read it. I thought it to be yet another ‘urban legend.’ But, it is a true story. You know how I know? Hollywood has already set the cast for a future motion picture to portray the real-life story of the fraud starring Leonardo diCaprio, who played the real-life swindler Frank Abagnale in the movie, Catch Me If You Can. I know what you are thinking --- really???

Blog posted by Steven Mintz, aka Ethics Sage, on October 24, 2012