Receiver says regardless, concert promoter was running a Bernie Madoff-like ponzi scheme

2.29.08

Concert promoter fallout hits investors, creditors worldwide

South Florida Business Journal - by Paul Brinkmann

The assets of former entertainment mogul Jack Utsick are being tracked and recovered around the globe, two years after the SEC sued him for securities fraud.

The $300 million case against Utsick, of Miami Beach, and his Worldwide Entertainment involves thousands of creditors and investors, including hundreds of airline pilots.

The remaining companies, now in receivership with Fort Lauderdale attorney Michael Goldberg, also have ownership interest in stadiums and concert venues around the world. (See: Goldberg v. Malik)

Goldberg, of Akerman Senterfitt, spent the last two years trying to analyze the finances and recover money for creditors in the case. Goldberg recently wrote a letter to investors, saying his analysis of Worldwide's books was complete.

"Although we do not have evidence of whether it was intended to be a Ponzi scheme, Worldwide falls into the textbook definition of a Ponzi scheme," he wrote in the January letter. (Ponzi schemes pay out with money from new investments, not with actual profit from operations.)

Utsick and Worldwide were once listed as the third-largest entertainment promoter in the world by Billboard magazine. Utsick arranged events for the likes of Shania Twain, Elton John, Aerosmith and Riverdance.

The SEC said in 2006 the entire company could be a Ponzi scheme.

Utsick's attorney, David Chase of Fort Lauderdale, said he and his client have declined public comment on the case. A message left at Utsick's Miami Beach phone number was not returned.

The demise of Worldwide has proved tragic for some airline pilots who invested their retirement funds, said Louis Smith, a retired pilot and owner of FLTops.com, a Georgia-based Web site and financial planning company for pilots.

Utsick is a former pilot who actively pitched his colleagues with unregistered security offers.

"It's sad, it really is," Smith said. "It was depressing when I learned about how many people this happened to. I know one pilot who apparently invested $1 million in this."

Smith said he asked Utsick for financial statements of his operations in 2005, but was sent a future concert schedule and photos of Utsick with Mick Jagger, Fergie and other celebrities instead.

Goldberg filed six new lawsuits this month in U.S. District Court, seeking to nullify fraudulent payments made to investors and to sell property involved in the case - a $950,000 home on Middle River Terrace in Fort Lauderdale.

In the five recent recovery actions, Goldberg is seeking $388,663 paid to five investors around the U.S., including two Florida residents. They are only the latest in such recoveries attempted in the case.

"The law allows me to recover profit paid out to the investors," Goldberg said. "In a scheme like this, it's like a game of musical chairs: Some of the investors are sitting on big comfy chairs when the music stops, [and] you try to bring back that money into the case to pay out all the creditors evenly."

Last year, Goldberg obtained ownership of the landmark Wuhlheide Amphitheater in eastern Berlin, out of a lease arrangement Utsick had with the city. He plans to sell that for the benefit of creditors in the case.

The SEC said Utsick had used some investor money to buy two multimillion-dollar condos in Miami Beach and to fund a lavish lifestyle. Goldberg has since obtained the condos, he said.

The targets of the SEC lawsuit also included American Enterprises and Entertainment Funds, along with their principals, Robert Yeager and Donna Yeager. As part of the settlement, none of the defendants admitted or denied the SEC's allegations. However, they agreed not to participate in business activities related to the case against them. Goldberg's receivership was a result of the SEC case.

pbrinkmann@bizjournals.com (954) 949-7562