- Mark Hotton admits he created fake foreign investors for "Rebecca, the Musical"
- U.S. Attorney: "The curtain is finally closing on Hotton's elaborately staged fraud"
- Attorney for the yet-to-open show: "The damage he did to us was very substantial"
- Hotton faces up to 40 years in prison in this and another case
A businessman and former stockbroker pleaded guilty Monday to what prosecutors say was a dramatically conceived plot to scam the producers of the Broadway show "Rebecca, the Musical."
Mark Hotton, 46, of West Islip, New York, admitted to defrauding the producers of the yet-to-open show in 2011 and 2012 by creating fake foreign investors and businesses, according to a release from the U.S. Attorney's office in Manhattan.
"With his guilty plea today, the curtain is finally closing on Mark Hotton's elaborately staged fraud," Manhattan U.S. Attorney Preet Bharara said in the release. "Though his lies and deceits were the stuff of fiction, they caused real harm to his victims, and he now faces real consequences as a result."
Ronald G. Russo, the attorney representing "Rebecca," told CNN Monday that the production was relieved by Hotton's plea.
"The damage he did to us was very substantial," Russo said. "Criminal conduct withstanding, the producers are very optimistic about their ability to bring the musical 'Rebecca' to Broadway next year," he said.
Hotton also plead guilty Monday to participating in a separate scheme to defraud a Connecticut-based real estate company, prosecutors said.
He faces up to 40 years in prison for both cases. He also agreed to forfeit $500,000 and to pay $500,000 in restitution to his victims, according to the plea agreement.
A lawyer for Hotton could not be immediately reached for comment Monday.
In the "Rebecca" scam, Hotton promised the show a $4.5 million investment from four overseas investors in return for $60,000 paid to Hotton and entities that he owned, according to federal prosecutors.
The "Rebecca" producers were introduced to Hotton through the investment community in February 2012, when they had fallen about $4 million short of their budget, producer Ben Sprecher told CNN in October.
The producers signed an agreement with Hotton's TM Consulting Inc. on February 7 that entitled Hotton to a $7,500 fee and a guarantee of 8% of any money he raised in excess of $250,000, the government said.
Hotton claimed to have secured the $4.5 million from four investors, identified in an indictment as Paul Abrams of Hawthorne, East Victoria; Roger Thomas of St. Peter Port, Guernsey; Julian Spencer of Crocker Hill, Chichester, Sussex; and Walter Timmons of London. All of them Hotton allegedly created and portrayed himself through e-mail.
Sprecher said he had not doubted the legitimacy of the deal because of the phone conversations and e-mail correspondences that he had with supposed investors. Hotton had even introduced him to a woman he said was Paul Abrams' niece, he said.
But when producers started pressing Hotton for the money, Hotton told them Paul Abrams had died of malaria, Sprecher said.
Bharara said that in an investigation begun in September 2012, officials uncovered that the investors' e-mail accounts and the websites for businesses associated with the investors were all controlled by Hotton.
Producers had already spent $6 million on Rebecca and were about to begin rehearsals when they found out the $4.5 million from Hotton was not there, Sprecher said.
They are now searching to replace that capital and move forward with the show, which has been indefinitely postponed.
Hotton will be sentenced in November.