Friday, February 06, 2009

To calm casino investors Ilitch forced to pony up $45 million cash injection


Motor City Adds More Equity; Deal Passes

An amendment for Motor City Casino passed last Tuesday after a game of tug-of-war between investors and the company. The two reached an agreement when Motor City parent company CCM Merger committed to a $45 million equity injection.

Deutsche Bank launched the amendment Jan. 13, and investors balked when the company asked for loosened leverage covenants but CCM, a vehicle of Detroit Red Wings owner Marian Ilitch, did not offer to put equity into the deal (CIN, 1/19). CCM then came back to investors with a $20 million equity injection offer.

"It was a non-starter," said one investor. "[The $45 million] is what got the deal done. Everything else was secondary to that."

The pricing on the facility was raised 300 basis points to LIBOR plus 5 1/2%, and a LIBOR floor of 3% was added.

A spokeswoman for the Detroit-based company declined comment, and a spokeswoman for Ilitch Holdings, the parent company of CCM did not return a call.

Jack Utsick faces contempt in SEC ponzi scheme case that spawned Paris Hilton & Michael Malik, lawsuits


Ex-promoter faces contempt in Fla. SEC fraud case


MIAMI (AP) — A once high-flying concert promoter of acts such as Aerosmith, Elton John and Shania Twain could face contempt charges for failing to show up in Miami for a Securities and Exchange Commission fraud case that has spawned a multimillion-dollar lawsuit against Paris Hilton.

The promoter, John Utsick, 66, now lives in Brazil and refuses to return to the U.S. out of fear he'll be arrested for possible criminal violations, his attorney Richard Kraut said at a hearing Friday. The SEC wants to take his deposition regarding assets he took from his former company, Worldwide Entertainment Inc.

"Mr. Utsick has created this issue. He decided to flee," SEC attorney Robert Levenson said at the hearing.

Kraut said Utsick isn't hiding, but he wouldn't divulge in court where he lives in Brazil. "He's not in the Amazon someplace," the lawyer said. "He's not dodging anything."

The deposition dispute is the latest twist in a case first brought by the SEC in 2006 claiming that Utsick fleeced some 3,000 investors out of nearly $300 million between 1998 and 2005. Utsick, whose company promoted tours and concerts by top rock and country music acts and other shows, allegedly created a Ponzi scheme in which he paid older investors out of money from new investors, while his business actually lost gobs of money.

U.S. District Judge Paul Huck previously found against Utsick and appointed a receiver to identify assets around the world intended to return some of the lost investments. That receiver, Michael Goldberg [Akerman Senterfitt], said he soon will send the first installment of as much as $25 million to be divided among investors, and eventually hopes to recover up to $60 million.

One of Utsick's yet-to-be sold former assets is a 17,500-seat amphitheater in Berlin, Germany. There's also sizable property in northern Florida, condos in the Miami area and six homes in California, Goldberg said.

The SEC wants to take Utsick's deposition to find assets he took personally and may still have. Kraut said Utsick's position is that as chief of the company he was entitled to the assets as a form of salary. Huck said he would give the two sides one more week to reach an agreement before deciding on the contempt issue.

"I don't have a lot of sympathy for Mr. Utsick. He's the one who put himself in this situation," Huck said.

The Hilton lawsuit stemmed from a 2006 film in which she appeared called "National Lampoon's Pledge This!" Utsick's old company, Worldwide Entertainment, invested in the movie and was an executive producer. Part of the deal was that Hilton was to pitch the movie on TV talk shows and media interviews, but Goldberg says that never happened.

"Hilton failed to attend any talk shows or telephonic or in-person interviews," the lawsuit says.

Goldberg said he is seeking about $7 million from Hilton and her management company, with trial in that case set for May 18. Ultimately any money recovered would go to Utsick's defrauded investors.

Hilton's lawyers contend that she fulfilled her main obligation to the film — publicity events at the Cannes Film Festival — and that there were only "vague and unspecific requests" that she do other appearances after it was released. At the time, they said, she couldn't do it because she was filming her reality TV show "The Simple Life."

"Defendants are not currently aware that the producers ever arranged any dates or agreements for Ms. Hilton to appear on any talk show," attorneys Michael Weinstein and Stephen J. Binhak said in court papers.
NOTE: this case also spawned a multimillion dollar fraudulent transfer lawsuit against Detroit casino syndicator and real estate developer Michael J. Malik, Sr., (Goldberg v. Malik) who is a longtime business partner with Mrs. Marian Ilitch. Ilitch Holdings, Inc. subsidiaries include Detroit Tigers (Comerica Park), Detroit Red Wings (Joe Louis Arena), Fox Theatre, MotorCity Casino, Olympia Entertainment, etc.

Ex-promoter faces contempt in SEC fraud case


MIAMI - A once high-flying concert promoter is facing contempt for failing to show up in Miami for a Securities and Exchange Commission fraud case.

A federal judge decided Friday to give 66-year-old John Utsick another week to give a deposition in the case. Utsick moved from Miami to Brazil in 2007.

The SEC claims that Utsick and others fleeced thousands of investors out of $300 million from 1998 to 2005.

Utsick once promoted shows around the world by acts ranging from Aerosmith to Elton John to Shania Twain. Utsick's lawyer says he won't come to the U.S. unless he is guaranteed he won't be arrested on possible criminal charges. SEC lawyers say they have no authority to make such a promise.

Thursday, February 05, 2009

Criminal investigators examining ponzi scheme centered around concert promoter Jack Utsick


Fla. rock concert promoter in Ponzi probe

MIAMI, Feb. 4 (UPI) -- Criminal investigators have joined a financial probe of former Miami concert promoter Jack Utsick accused of cheating investors in a Ponzi scheme, sources say.

Utsick, 65, was once of the world's biggest rock concert promoters, staging shows by such music stars as Elton John, the Rolling Stones, Santana, the Pretenders and Aerosmith. But now officials allege Utsick, who is living in Brazil, has refused to obey two court orders to return to the United States in a civil lawsuit, The Miami Herald reported Wednesday.

The newspaper, without naming sources, said Utsick is also part of an FBI criminal investigation for allegedly diverting millions from his concert investors to pay for collector cars, a luxury condo, artwork and other personal expenses. The U.S Securities and Exchange Commission has seized Utsick's company, Worldwide Entertainment of Miami Beach, Fla.

"What we were seeing was a Ponzi scheme," plaintiffs' attorney Michael Goldberg told the Herald.

Court records indicate Utsick is accused paying investors -- many of them former airline pilots -- from revenues of future rock concerts.

Wednesday, February 04, 2009

Federal case against one-time concert promoter Jack Utsick now includes FBI investigation


Feds want promoter Jack Utsick in Miami for Ponzi case
Miami Beach concert promoter Jack Utsick has rejected court orders to return to Miami, where he is under investigation by the FBI for allegedly fleecing his investors out of millions.


Three years after his entertainment empire crumbled under debts and lawsuits, Miami concert promoter Jack Utsick is under FBI investigation for allegedly diverting millions from his investors to pay for collector cars, a luxury condo, artwork and other personal expenses.

Utsick -- once one of the world's largest concert promoters -- has been ordered to appear in federal court in Miami on Friday in a civil case filed by regulators trying to recover money they say he took from hundreds of investors who backed his concerts.

But Utsick, 65, who is now living in Brazil, has refused so far to obey two court orders to return to Miami.

Utsick, who promoted shows for Elton John and the Rolling Stones, could not be reached for comment. But documents in the federal civil case say he has requested immunity from arrest if he agrees to travel to Miami.

Lawyers for the U.S Securities and Exchange Commission, which has seized his company, said they could not make those guarantees.

"All I can say at this point is that he hasn't shown up," said Bob Levenson, trial counsel for the SEC.

Judy Orihuela, a spokeswoman for the FBI's Miami office, declined to comment.

The criminal investigation is the latest development in the government's ongoing case against the once-prominent entertainment guru, whose Worldwide Entertainment of Miami Beach consistently put on some of the largest concerts in the United States and Europe.

After disputes between Utsick and his partners, the SEC began an investigation four years ago into the firm's far-flung enterprises.

Initially, investigators determined Utsick and two former partners were selling unregistered securities to finance concerts featuring bands that include Santana, the Pretenders and Aerosmith, according to court records.

Then, regulators said they discovered that Utsick was actually losing money on most venues, though he had been claiming to be earning millions of dollars each year -- $112.5 million in 2005.

"What we were seeing was a Ponzi scheme," said receiver Michael Goldberg, a lawyer [Akerman Senterfitt law firm] who has been tracking down assets for nearly three years.

Along the way, Utsick was tapping into his investors' funds to support a lavish lifestyle, including a condo in South Beach's Portofino Towers, $34,000 for artwork, $200,000 for a yacht, and nearly $500,000 in credit card bills for purchases at Macy's, Bloomingdale's and Victoria's Secret, according to SEC filings.

To keep the company going, Utsick was paying investors -- many of them former airline pilots -- from revenues of future concerts, court records state.

In all, the longtime promoter was accused of fleecing investors out of $293 million, according to the government's lawsuit in 2006.

Goldberg said many of the investors knew Utsick from his days as a TWA pilot in the 1970s.

"What's sad is that some of these people lost their life savings," Goldberg said. "They took money from their retirement accounts because they trusted him.''

In previous statements, Utsick blamed his financial problems on the rapid growth of his business and pledged to work to repay investors. But investors will more than likely realize only a return of "pennies on the dollar," said Goldberg, who is expected to soon disburse more than $21 million in a first round of reimbursements.

Court records show Utsick left his home in Miami Beach and moved to Brazil in late 2007.

Just days before he departed, he sold a Porsche and a Mercedes-Benz and pocketed the money -- a violation of a court order, regulators said.

Despite two court orders to return to Miami in the government's civil case, Utsick has refused, court records state.

Utsick's attorney, Richard Kraut, declined to comment on whether his client would return for the court hearing Friday before U.S. Judge Paul Huck, who is expected to rule on a contempt motion.

Kraut has asked regulators to give assurances Utsick will not be arrested if he returns to Miami, but the SEC has declined to make any such promise.

Goldberg said he didn't believe the SEC could offer any such protection.

"There is no such provision under the SEC that even allows that,'' he said. "At this point, he's not cooperating with us."

Tuesday, February 03, 2009

Ilitch issues press release indicating CCM Merger convinced enough investors to amend credit facility

CCM Merger Successfully Amends Credit Facility
DB 2/3/2009 11:43:00 AM

DETROIT, Feb 03, 2009 /PRNewswire via COMTEX News Network/ -- CCM Merger Inc, parent company of MotorCity Casino Hotel, announced today that it has reached an agreement with the required number of lenders for an amendment to its credit agreement. "We are very pleased to have completed this amendment under these most difficult market conditions," said Gregg Solomon, CEO of MotorCity Casino Hotel. "We appreciate the leadership of Deutsche Bank Trust Company Americas, as administrative agent, and the continued support of our entire lender group."

About MotorCity Casino Hotel

Located on Grand River at the Lodge Freeway (M-10), MotorCity Casino Hotel is owned by Marian Ilitch and is the only locally-owned and operated casino in Detroit. The entertainment complex has undergone a $325 million expansion project which includes a casino expansion, 400 room luxury hotel and spa, a new convention and banquet center, several new dining options, bars and lounges, a nightclub and an intimate live entertainment theater. For more information about MotorCity Casino Hotel, visit

SOURCE: MotorCity Casino Hotel

Monday, February 02, 2009

Another aide to Alaska's Rep. Don Young implicated in Abramoff Lobbying Scandal


Rep. Don Young aide implicated in lobbying scandal


WASHINGTON (AP) — A second former staffer to an Alaska congressman has been implicated in the Jack Abramoff influence-peddling investigation as the scandal sweeps up a growing number of ex-Capitol Hill aides and lobbyists.

Fraser Verrusio, who worked under Republican Rep. Don Young when the congressman chaired the House Transportation and Infrastructure Committee, figures in plea deals reached recently by two former Abramoff associates and a one-time congressional aide.

Identified in federal court papers only as "Staffer D," he's described accepting an all-expenses-paid trip to Game One of baseball's 2003 World Series from lobbyists who wanted his help.

Two attorneys familiar with the case said Monday that Staffer D is Verrusio, who was policy director on the transportation committee for about five years. The attorneys spoke on condition of anonymity because of the ongoing investigation.

An attorney for Verrusio, Paul Rauser, didn't immediately return a call. A Justice Department spokeswoman declined comment.

The lavish trip to the series game between the Florida Marlins and the New York Yankees at Yankee Stadium has already helped prosecutors win corruption-related guilty pleas from three people: Trevor Blackann, a former aide to two Missouri Republicans; James Hirni, a former Abramoff lobbying associate; and Todd Boulanger, another former Abramoff deputy.

Boulanger and Hirni helped provide the World Series trip. Blackann and Verrusio were the recipients and were also treated to a chauffeured SUV, dinner at an expensive steakhouse and a visit to a strip club, court papers say.

The purpose was in part to influence Verrusio and Blackann to help an equipment rental company win favorable language in a highway bill, according to a plea deal Boulanger accepted Friday.

Abramoff is in prison and has cooperated with the Justice Department to help convict more than a dozen people, including former Rep. Bob Ney, R-Ohio.

Mark Zachares, also a former Young aide, pleaded guilty to conspiracy in April 2007. Zachares acknowledged accepting gifts and a golf trip to Scotland from Abramoff's team in exchange for official acts on their behalf.

Young's spokeswoman did not immediately return a call for comment Monday. Young has denied wrongdoing but in December he stepped down under pressure as lead Republican on the Natural Resources Committee, saying he wanted to focus on clearing his name in an unrelated corruption investigation in Alaska.

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