Monday, January 19, 2009

Utsick showbiz fraud, ponzi scheme case stretches to Australia


Million dollar rift over rip-off claims

By Ben Butler

Two top concert promoters misappropriated millions of dollars from shows including Robbie Williams and Coldplay tours and the hit musical Dirty Dancing, it has been alleged.

Veteran rock promoter Michael Chugg has agreed to pay $1.5 million to settle the stoush. And a separate claim against showbiz stalwart Kevin Jacobsen, worth up to $3 million, is ready to go to court in New South Wales next month.

The allegations against Mr Chugg and Mr Jacobsen follow the collapse of Worldwide Entertainment Group, run by Florida promoter Jack Utsick.

Worldwide, which funded shows put on in Australia by Mr Jacobsen and Mr Chugg, failed in 2006 amid allegations that the company had been a Ponzi scheme.

US authorities appointed receiver Michael Goldberg to collect the company's debts.

In a report filed with the Miami District Court in November 2007, Mr Goldberg alleged Worldwide had invested about $5 million in a partnership with Mr Chugg, "who proceeded to fraudulently divert much of the funds to his own use".

Mr Goldberg alleged Mr Chugg kept rebates from venues that should have been paid back to the partnership and had used Worldwide's money to invest in three un-named music festivals, two of which failed.

In a report filed in August, Mr Goldberg said Michael Chugg Entertainment had agreed to pay $1.5 million, made up of a downpayment of $500,000 and 15 monthly payments of $66,666.66.

Mr Chugg said yesterday a "disagreement about the proper interpretation of various agreements" had been amicably finalised.

Worldwide's separate claim against Mr Jacobsen has been before the NSW Supreme Court since 2005.

Settlement discussions are believed to be taking place, and a court is yet to rule on the allegations. The case is to return to court on February 13.

In an August 2005 judgment, Justice Clifford Einstein said Mr Jacobsen and companies associated with the promoter might owe Worldwide as much as $3 million.

Worldwide is not related to Geelong-based World Wide Entertainment.


Ponzi schemes pay returns out of money received from new investors, rather than from real investments such as in shares or property.

To continue, a Ponzi scheme relies on ever-increasing numbers of new investors.

Eventually, not enough new investors can be found or the fraud is uncovered, and the scheme collapses.

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