NEW YORK (AP) — A former stock broker was arrested early Monday on charges he directed an elaborate fraud on Broadway starring fictitious investors — a scheme that doomed the musical adaptation of Alfred Hitchcock's psychological thriller "Rebecca."
Mark Hotton, his wife and three associates also were charged in a separate money laundering scheme on Long Island. They were awaiting a court appearance later Monday.
Federal prosecutors in Manhattan accused Hotton of conning the "Rebecca" producers by convincing them he had lined up $4.5 million in financing and the possibility of a $1.1 million loan for the show. In return, they said, he collected tens of thousands of dollars in commissions.
"Mark Hotton perpetrated stranger-than-fiction frauds both on and off Broadway," Manhattan U.S. Attorney Preet Bharara said in a statement. "Hotton concocted a cast of characters to invest in a major musical - investors who turned out to be deep-pocketed phantoms. To carry out the alleged fraud, Hotton faked lives, faked companies and even staged a fake death, pretending that one imaginary investor had suddenly died from malaria."
The planned Broadway production of the 1938 novel collapsed earlier this month amid questions about its financial backing, and a growing suspicion that one of its primary investors — a secretive businessman named Paul Abrams who had supposedly pledged $4.5 million, then suddenly died — never existed.
Lead producer Ben Sprecher "is extremely gratified that Mr. Hotton has been taken into custody," said his attorney, Ronald Russo, adding that Sprecher has "cooperated completely with the investigation."
"Mr. Hotton's fraudulent conduct did enormous damage to Broadway and to 'Rebecca,'" Russo said. "Mr. Sprecher is totally committed to bringing 'Rebecca' to New York."
Hotton was charged with two counts of wire fraud, each punishable by up to 20 years in prison. His attorney, Heath Berger, did not immediately return a call for comment.
According to the criminal complaint unsealed Monday, Hotton tricked the producers into believing he had secured the money from four overseas investors, who weren't real. The producers agreed to pay Hotton $15,000 in fees and commissions between March and June 2012, prosecutors said. He was also paid an additional $18,000 "advance" against his 8 percent commission, they said.
When it became obvious that investors' commitments would fall through, Hotton allegedly tried to broker a $1.1 million loan for the producers, prosecutors said.
The prosecutors say Hotton "enlisted his same cast of invisible men to carry out a real estate scam." They did not name the Connecticut real estate company.
Hotton also was accused of using a similar scheme to con a Connecticut-based real estate company into paying $750,000 to him and entities he controlled, Manhattan prosecutors said.
In the separate Long Island case, federal prosecutors in Brooklyn accused Hotton and his wife of cheating business partners out of $3.7 million.
An indictment alleges that the couple, while operating three electrical contracting companies, created fake invoices showing money owed by third parties. They then allegedly sold the purported debts to other companies.
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Associated Press writers Kiley Armstrong and Ula Ilnytzky in New York City and Frank Eltman on Long Island contributed to this report.