'Rebecca' musical producers sue backer, claim he invented investors and even faked a death
The producers of "Rebecca: The Musical" sued a Long Island, New York, man charged with inventing bogus investors who were purportedly prepared to save the Broadway musical.
The lawsuit was filed today by Ben Sprecher and Louise Forlenza in New York State Supreme Court in Manhattan. They seek more than $100 million from Mark Christopher Hotton and his wife, Sherri, who the producers claim sabotaged their roughly $12 million musical with an elaborate fraud.
Mark Hotton, a 46-year-old former Oppenheimer & Co. broker, was arrested Oct. 15 at his West Islip home and charged with wire fraud. U.S. Attorney Preet Bharara in Manhattan said Hotton made up the promise of a $4.5 million investment and a possible $1.1 million loan to get tens of thousands of dollars in purported expenses and fees from the producers.
At least one unknown individual is also a defendant, a man or woman who sent anonymous emails to an unidentified investor prepared to invest at the 11th hour. One of the emails said the "walls are about to cave in on Mr. Sprecher and the Rebecca Broadway production," causing the "angel" to back out, according to the complaint.
"Plaintiffs are working tirelessly to save the show, but if it cannot be saved, then defendants are responsible for its destruction, along with at least hundreds of millions of dollars in lost profit damages," the producers said in the complaint.
Gerald Shargel, a lawyer representing Mark Hotton, declined to comment on the lawsuit in a telephone interview. Although Sherri Hotton wasn't charged in the "Rebecca" case, the producers claimed in their suit that she helped her husband as he created fake documents and investors.
Previews were to start at the Broadhurst Theatre Oct. 30. With the indefinite postponement of "Rebecca,"a new play by Nora Ephron starring Tom Hanks will begin previews at the Broadhurst in March.
Hotton filed for bankruptcy protection in February 2011. Creditors include a neighboring family, the Pitches, who claim they were swindled out of their life savings of more than $5 million, according to court papers.
"There's a long line of creditors," Timothy Dennin, a lawyer who represents the Pitches, said in an interview. "It appears that there's not going to be any significant recovery for anyone."
Dennin said Hotton filed for protection in U.S. Bankruptcy Court in Central Islip two days before the Pitches' arbitration was to begin against Oppenheimer and Hotton. Hotton left Oppenheimer in February 2009, according to his disciplinary record from the Financial Industry Regulatory Authority.
Hotton created shell companies to defraud victims of more than $15 million, the Justice Department said in court papers.
The partnership to produce "Rebecca" was formed in March 2011, according to the complaint. The producers initially announced an April 2012 Broadway opening, but in late January said in a press release that they were postponing because they couldn't raise all the money.
At about the same time, according to the producers' complaint, Forlenza was introduced to Hotton by a man named Jeffrey Troncone, whom she met through a client of her accounting business.
Troncone put Forlenza and Sprecher in touch with legitimate investors, including one who put $250,000 into the show, according to the complaint. Troncone couldn't be reached for comment on the lawsuit.
Hotton told Forlenza that he had arranged for funding of a successful West End musical, which the complaint doesn't name. In late January or early February, Hotton met with Sprecher and Forlenza at their West 52nd Street office, where he was retained to raise money, according to the complaint. They had already secured at least $7 million, and any fees for him were to come from their share of profits, they said.
Weeks later, Hotton produced subscription documents signed with four names representing $4.5 million three in England and one in Australia, according to the complaint. Two of them, Paul Abrams and Julian Spencer, would later be named in the musical's press releases. None existed, according to the complaint.
Shortly before the July 31 deadline when the money was due, Hotton told the producers that Abrams contracted malaria, according to the complaint. On Aug. 5, Hotton said Abrams had died.
Within days, Hotton invented another character, a "Mr. Wexler," who purportedly represented the Abrams estate. Wexler exchanged e-mails with Sprecher, according to the complaint.
In one e-mail to Wexler, Sprecher offered to put a dedication in the Playbill for the musical in Mr. Abrams' memory, according to the complaint.
The last-minute angel had read press reports about the show's woes. He went as far as putting $2.25 million in escrow, according to the suit. Privacy was of "utmost importance" to the investor, who pulled out after receiving three anonymous emails warning about the show.
Sherri Hotton, 43, couldn't immediately be reached for comment on the suit. She was arrested with her husband last week on charges of money laundering and wire fraud in connection with a separate case and is in federal custody, said Robert Nardoza, a spokesman for U.S. Attorney Loretta Lynch in Brooklyn. Sherri Hotton was denied court-appointed counsel and is seeking an attorney, Nardoza said. Shargel said he is not representing her.
Ron Russo, a lawyer for Sprecher, said earlier this week that his client was cheated by an expert.
"There were hundreds of captains of industry who were duped by Bernie Madoff," Russo said in an interview. "This guy was as good as they come."
The case is Rebecca Broadway Limited Partnership v. Hotton, 653659/2012, New York State Supreme Court, New York County (Manhattan).
Editors: Mary Romano, Stephen Farr
To contact the reporters on this story:
Philip Boroff in New York at pboroffbloomberg.net; Chris Dolmetsch in New York at cdolmetschbloomberg.net.
To contact the editors responsible for this story: Michael Hytha at mhythabloomberg.net; Jeffrey Burke at jburke21bloomberg.net.