The Securities and Exchange Commission on April 29 charged a chief compliance officer with perpetuating a previously charged scheme run by his cousin that involved stealing millions of dollars from investors who were allegedly falsely promised their funds would be used for the purchase and resale of tickets to Broadway shows.
According to the SEC’s complaint, James Siniscalchi, chief compliance officer of a company that claimed to have special access to profitable and highly sought-after event tickets, knowingly misused investor money to benefit himself and his extended family. The SEC alleges that Siniscalchi and his business partners rebranded businesses formerly run by his cousin, Joseph Meli, who ultimately settled to SEC fraud charges and pled guilty to securities fraud in a parallel criminal action, and that this rebranding was done with Meli’s knowledge and help.
In the wake of Meli’s arrest, Siniscalchi and his business partners allegedly raised approximately $2.7 million net from investors. The investors were allegedly promised their money would be used only to purchase tickets to events including the Broadway shows Harry Potter and the Cursed Child, Hello Dolly, and Bruce Springsteen on Broadway, and a professional boxing match between Floyd Mayweather Jr. and Conor McGregor.
In actuality, Siniscalchi allegedly misused investor funds to benefit himself and Meli and his family. The SEC alleges that Siniscalchi took steps to conceal from investors Meli’s involvement given the widely publicized civil and criminal cases that were then pending against Meli. In efforts to hide Meli’s role, Siniscalchi allegedly instructed staff not to include Meli on e-mails to investors and referred to Meli as “Keyser Soze,” in reference to a fictional movie character from the movie The Usual Suspects who secretly operated as a crime kingpin.
“As alleged in our complaint, investors were lured in with promises of big profits, but Siniscalchi really just took over his cousin’s fraudulent scheme to steal money,” said Paul Levenson, Director of the SEC’s Boston Regional Office.
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Siniscalchi with violating the antifraud provisions of the federal securities laws and seeks a permanent injunction from future violations, disgorgement of allegedly ill-gotten gains, with interest, and financial penalties.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Siniscalchi and Meli.