NCL runs Fraud.org and talks to 15,000 consumers every year, most of whom have been scammed or cheated in some way. When we speak out about these scams we often hear “how could they have been so stupid?” or “who would fall for that?” Well, con men and women have been around since the dawn of humankind and they are very good at what they do. The reality is that even the most sophisticated individual, if they don’t proceed with caution, can become a fraud victim. The cautionary tale below, currently in the news, demonstrates this.
Broadway producer Ben Sprecher had his heart set on mounting “Rebecca: The Musical,” based on a classic novel by Daphne du Maurier. A 46-year-old Long Island “investor” and former stockbroker named Mark Hotton came forward agreed to raise $4.5 million. In the process, he allegedly fabricated emails and correspondence from four investors whom he said had put up the money for the show. In reality, these investors didn’t exist.
The producers reportedly paid Hotton $60,000, including an advance to pay for his supposedly taking one of the fictional investors on a safari. Hotton used fake Web sites and domain names, then claimed one of the investors who had agreed to put down $1.1 million had died unexpectedly of malaria on the safari. Meanwhile, of course, Hotton raised none of the $4.5 million.
When the producers met with Hotton initially, they were convinced he was legitimate because he held the Series 7 license required to be a stockbroker. In fact his license had lapsed. Meanwhile, Hotton had earlier defrauded a Connecticut real estate firm in a similar scheme, and had been charged with inducing another company to advance him $3.7 million to buy a portion of the purported accounts receivable of a business run by his Hotton and his wife. Prosecutors alleged all of this in Hotton’s indictment in federal court.
So how could these producers have potentially protected themselves from this serial con man?
- Done a background check for criminal or civil violations before sending him a dime of their money
- Made sure his stockbroker license was in good standing
- Asked to talk with the investors personally
- Been suspicious of the claim that Hotton needed to take an investor on a safari!
More than anything, this story shows that even a sophisticated Broadway producer can be vulnerable to an experienced con man. But there were some red flags and we advise consumers, don’t ignore your instincts. Above all, trust but verify!