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Entertainment

Broadway producer says he was fraud victim

October 5th, 2012 11:34 pm by DAVID B. CARUSO, Associated Press

NEW YORK -- The psychological thriller "Rebecca" was a hit for author Daphne du Maurier and filmmaker Alfred Hitchcock. Leave it to Broadway to one-up the master of suspense.


A planned New York production of the 1938 novel as a musical collapsed this week 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 of malaria -- never existed.


The FBI has launched an investigation. Private investigators are on the case. The full truth may take some time to come out, but the lead producer of "Rebecca," Ben Sprecher, says he now believes he was taken in by an elaborate fraud.


"I never made up any investor. I never made up Paul Abrams. I never made up any of this," Sprecher said in a brief interview with The Associated Press on Thursday.


But two months after the "death," Sprecher's lawyer, Ronald Russo, said he has concluded that Abrams and the three other investors in the musical were indeed works of stagecraft, propped up by forged documents and bogus correspondence.


"Rebecca's" troubles began last winter, when the producers postponed a planned spring opening because of problems lining up financing for the $12 million show.


It was the second setback for Sprecher, a theater veteran who is trying to produce his first big-budget Broadway show, after past work as a theater owner and manager, and producer on revivals including "A Moon for the Misbegotten" and "American Buffalo."


The musical, about a woman nearly driven mad in a gloomy English mansion by the ghostly memory of her new husband's late wife, had successful runs in Vienna and other European cities over the past six years, but Sprecher had pulled the plug on a planned London premiere last year due to production and financial problems.


Then, a white knight seemed to appear. According to Sprecher's lawyer, the producer was introduced to a Long Island stock broker and securities dealer, Mark Hotton, who said he had connections to an international businessman named Paul Abrams who might be able to raise the remaining cash.


Soon, Sprecher had a signed contract in hand in which Abrams and three of his associates had agreed to put up $4.5 million, Russo said. By May, the producers had announced the musical would open at Broadway's Broadhurst theater in November. Abrams was listed as a co-producer on the press release.


But on the eve of rehearsals, with elaborate sets already under construction, Russo said, Hotton had some startling bad news: Abrams had contracted malaria on a trip to Africa and died in London in early August.


The news threw the production's future into doubt. It also raised concerns about Sprecher's credibility.


After The New York Times noted in an article last month that it could find no record of a millionaire named Paul Abrams dying of malaria in London, Sprecher acknowledged in an interview that he had never met the man in person or even spoken to him by telephone. All of their communication had been through email, sometimes through intermediaries.


Now, Russo said he believes that Hotton is to blame for the fiasco, and that Abrams and his three supposed associate investors were all figments of his imagination.


"These four people were probably made up," Russo said, though, he added, he wasn't sure why. "I don't know what motive this guy would have to give four fictitious names."


The AP's attempts to reach Hotton this week were unsuccessful. One of his lawyers, Heath Berger, declined to comment. Several phone numbers that had been listed in Hotton's name or used by his businesses have been disconnected.


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.

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