A former stockbroker who is no stranger to legal hot water was arrested Monday on charges he had defrauded the producers of a beleaguered Broadway production of Daphne du Maurier’s gothic novel “Rebecca.”
Mark C. Hotton, 46, of West Islip, N.Y., was arrested Monday morning and charged with two counts of wire fraud, and faces 20 years in federal prison if convicted. Hotton is accused to inventing phantom investors who promised millions in bogus money to Ben Sprecher, the lead producer of the “Rebecca” Broadway musical.
"Mark Hotton perpetrated stranger-than-fiction frauds both on and off Broadway," Manhattan U.S. Attorney Preet Bharara said in a statement Monday. "Hotton concocted a cast of characters to invest in a major musical - investors who turned out to be deep-pocketed phantoms. To carry out the alleged fraud, Hotton faked lives, faked companies and even staged a fake death, pretending that one imaginary investor had suddenly died from malaria."
Hotton and his wife Sherri have previously faced fraud charges, and Hotton had reportedly filed for bankruptcy in 2011, according to Bloomberg. The same Bloomberg report said that Hotton, who was once a broker at Oppenheimer & Co., has an extensive disciplinary record with the Financial Industry Regulatory Authority.
The Broadway staging of “Rebecca” was suspended for a second time earlier this month after a bizarre series of events that called into question the identify of one Paul Abrams, a South African-based investor who had reportedly signed on to invest $4.5 million into the production – an agreement that collapsed after Abrams was said to have died suddenly of malaria. A Sept. 27 feature in the New York Times detailed the incredulous twists and turns that had brought “Rebecca” to its knees just before rehearsals had been expected to begin, and after money had already been spent on the set design for the musical. In that story, Sprecher admitted to having “made mistakes putting together the financing” and confirmed that he had never met or spoken to Mr. Abrams.
It now appears that Abrams was not the only investor Hotton allegedly fabricated. Just over a week ago, Ronald G. Russo, a lawyer for Ben Sprecher, told the Times that a private investigation had found that Hotton had invented four investors, including Abrams. At the time, a joint criminal investigation by the Federal Bureau of Investigation and the U.S. Attorney’s office into the collapse of the Broadway production had been underway.
“Following an extensive search over the last week, I can now confirm that there is no evidence whatever that ‘Paul Abrams,’ or any of the other three investors brought to this production by Mr. Hotton, ever existed,” Russo said in a statement to the Times last week.
If the private investigation that identified Hotton took roughly a week to complete, as Russo indicated, it appears to have begun after the Times published its feature article about the production’s troubles. IBTimes has not been able to locate any earlier claims by the production company that it was unable to verify the identity of any investors beyond Mr. Abrams or that there was a local mediator handling the investments. Abrams appears to have been operating both as an investor himself and the middleman for three others who were on the hook for $2.5 million in addition to Abrams’ own $2 million. When Hotton was unable to deliver those millions, he reportedly claimed to be working on getting the “Rebecca” producers a $1.1 million loan, according to the Wall Street Journal. It is unclear whether Hotton was acting as himself or a made-up character in the brokering of this loan (which did not materialize).
Playbill.com published excerpts of recently unsealed court documents that identify the three other presumably fictitious investors as individuals based in the UK. The documents also purport that the production paid Mr. Hotton over $32,000 between fees, commissions, and an advance he said he needed in order to pay for a safari he claimed to have taken with Abrams’ son.
Prior to Monday’s development, Sprecher’s claims about the mysteriously vanished financing had come under some scrutiny, with some insiders reportedly questioning whether Sprecher might have fabricated the investor himself.
In an interview with NPR in late September, Times theater reporter Patrick Healy, who has covered the story extensively, said “some have theorized that this Paul Abrams figure may have been created out of whole cloth to try to attract other investors into the show. There is no evidence of that,” he continued. “Ben Sprecher says that is not true. But, on the other hand, he has not been able to confirm the identity of this man.”
Russo told the Wall Street Journal that Sprecher "is extremely gratified that Mr. Hotton has been taken into custody," adding that his client "cooperated completely with the investigation."
"Mr. Hotton's fraudulent conduct did enormous damage to Broadway and to 'Rebecca,'" Russo continued.
While the fraud charges likely came as something of a relief to Sprecher and his co-producers, one Broadway attorney had earlier insisted that Sprecher/Forlenza Productions should not expect to be free of liability regardless of whether the production company was a victim of the alleged fraud. Though the $4.5 million investment in question never surfaced, there are other investors who did commit financing to the show.
“[Sprecher] has enormous civil liability,” John Breglio told The Times earlier this month, “and a criminal investigation isn’t going to deter any lawyer from trying to get investors’ money back.”
Requests for comment to a spokesperson for the “Rebecca” production were not returned.
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