Broadway producer says he was fraud victim

Associated Press Modified: October 5, 2012 at 2:17 am •  Published: October 5, 2012
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Court and regulatory records show that Hotton has been the subject of multiple fraud complaints since the late 1990s.

Last year he filed for bankruptcy, seeking to discharge $15 million in debt, only to have a court-appointed trustee, Kenneth Silverman, accuse him in a court filing of failing to properly disclose his ownership of several businesses and bank accounts and withholding information in ways that were "knowing and fraudulent."

In a lawsuit last year, a debt auction company accused Hotton and his wife of selling off $7.2 million worth of accounts from an electrical business they owned that were "based on drastically inflated or fictitious invoices." He settled a 2006 lawsuit in which a real estate company accused him misappropriating $4 million.

A Long Island couple who lived a few blocks from Hotton in West Islip, are currently embroiled in a legal battle in which they have accused him of stealing their life savings — nearly $5.4 million — while he was working as a broker at Oppenheimer & Co., an investment bank. They claim much of the money went into a Ponzi scheme.

The Financial Industry Regulatory Authority, which registers securities dealers, lists Hotton as having been the target of multiple complaints by his customers. M.S. Farrell and Co., an investment banking firm, said in a regulatory filing that it fired Hotton in 1997 for misconduct. FINRA records said Hotton was also the subject of complaints at Ladenburg Thalmann & Co., where he worked prior to joining Oppenheimer. He also has a 1990 conviction for possession of stolen property, for which he served 280 hours of community service.

In notes attached to his FINRA file, Hotton has denied all of the above allegations of wrongdoing, in some cases blaming them on routine business disputes or sour grapes over investments that performed poorly.

Hotton took a new job with Obsidian Financial Group in February, but couldn't make it through the registration process and was let go in May, according to the company's president, Kevin Sharma.

"The regulators had too many issues with him," Sharma said.

Russo said Sprecher was unaware of Hotton's background when he began working with him last winter.

"Ben certainly did not do a deep due diligence," Russo said. But he noted that those types of investigations aren't common on Broadway, which has long been lampooned for less-than-rigorous financial practices. "Maybe Broadway will do things differently in the future."

After Abrams' supposed death, Sprecher booked a flight to London to try and meet with a one of Abrams purported representatives, a man he only knew as "Wexler," but canceled the trip when this person, whose true identity remains unknown, stopped communicating, Russo said.

In recent days, Sprecher has been dealing with a federal probe while trying to save the show.

The producer has met for hours with Justice Department investigators and turned over "hundreds" of emails to the FBI, Russo said.

Sprecher said he had managed to line up a new investor, but the arrangement fell through when someone spooked off the newcomer — whose identity was supposed to be secret — with an anonymous email accusing the producer of being complicit in fabricating Abrams.

"We are just kind of shell shocked," Sprecher said. "It's very hard for me to understand why this is happening."

He pledged that the show, which was indefinitely postponed on Monday, would eventually go on, though he couldn't yet say where or when.

"'Rebecca' is moving forward. And that's all I really care about at this moment," he said.