According to the old song, there’s a broken heart for every light on Broadway. Now you can add a Tony Award-winner to the roster of those with crushed dreams.
Ben Sprecher’s planned production of Rebecca, the gothic novel by Daphne du Maurier, was closed down recently just as rehearsals were due to begin because of investor fraud, the New York Times reports.
No newbie, Sprecher has worked in theater for decades, built three theaters, and produced many plays, including Fortune’s Fool, American Buffalo and Voices in the Dark. The musical version of Rebecca is his biggest project to date, with a cost of $12 million to stage it in New York.
After a postponement early in 2012 because of financing setbacks, Sprecher was introduced by an acquaintance to Mark Hotton, a stockbroker and securities dealer.
Hotton purported to know a South African businessman, Paul Abrams, who might invest. Hotton appeared well-connected and credible. His resume included employment at Oppenheimer & Co., M.S. Farrell and Co., and Ladenburg Thalmann & Co. Hotton agreed to connect Sprecher with Abrams for a percentage of the funds raised.
Abrams and three colleagues promised $4.5 million in financing, so Sprecher was able to line up other investors and plan the production’s opening for November 2012. Abrams was listed as co-producer.
In August, Hotton came to Sprecher with bad news. Abrams had died in London of malaria. The $4.5 million was now gone. Another investor pulled out after receiving an anonymous email warning of problems, and the production collapsed. After the New York Times reported no record of Abrams’ death, private detectives hired by Sprecher soon found that none of the South Africans existed.
Mark Hotton has been recently involved in several civil suits for fraud, including allegedly defrauding a couple of their lifetime earnings and overstating the value of receivables sold to a debt auction company, the AP reports. Other legal issues include a suit settled for misappropriation of funds and a judgment for receiving stolen property. The FBI is now investigating Hotton for fraud. Oppenheimer & Co. also filed a lawsuit against Hotton, according to justia.com.
Sprecher apparently made several mistakes. First is not doing due diligence on Hotton and instead taking him at face value. A simple Web search would have uncovered past and present legal issues.
Second, he never met or talked to Abrams, communicating only by email. Their one face-to-face meeting was cancelled. Surely, a co-producer of a Broadway play would have flown to New York to meet Sprecher before promising millions in investment.