Prosecutors indicted former talent agent Roland Scahill, 41. He is accused of criminal possession of stolen property, grand larceny and scheme to defraud.
Prosecutors said Scahill conned seven people, most of whom were his friends, by convincing them he was producing a play about famed opera singer Kathleen Battle called "The KB Project."
Scahill spent the money to buy stocks and stock option contracts, pay credit card bills and pay for personal items like rent and food, prosecutors said.
Scahill has pleaded not guilty to all charges. He "is therefore presumed to be innocent," his attorney James DeVita said. "That is how our system of justice is supposed to work."
Prosecutors said in 2014, Scahill told seven would-be investors he was lead producer of a new Broadway show about Battle.
Battle, daughter of an Ohio steelworker and a church volunteer, rose to sing with the New York Metropolitan Opera, until she was fired in 1994. Scahill claimed he was mounting a "one-woman show" focusing on the day Battle was fired from the MET Opera, according to court documents.
Scahill said he had secured the rights to Battle's life story, arranged for Academy Award-winning actress Lupita Nyong'o to star and received a commitment from Broadway's historic Booth Theatre as a show venue, prosecutors said.
Later, Scahill said he had struck a deal with Netflix to film the play and make it available for subscribers online, according to the Manhattan District Attorney's Office.
"This indictment closes the curtain on Roland Scahill's phantom production," Manhattan District Attorney Cyrus Vance Jr. said in a written statement.
Prosecutors said Scahill started out small, allegedly telling initial investors he was raising capital at $15,000 per share.
But when it became clear there was no play, investors demanded their money back, prosecutors said. Scahill issued them checks, which prosecutors said bounced. After that, Scahill stopped communicating with the investors, according to court documents.
During an investigation, according to the indictment, representatives for Nyong'o and the theater said they had not been approached by Scahill and were not working for him in any capacity.
The alleged scam is strikingly similar to Mel Brooks' original musical comedy "The Producers," in which a producer and his accountant try to bilk victims by getting them to invest in a musical that is intended to fail.
Scahill is being held at the Manhattan Detention Complex on $100,000 bond, according to the New York City Department of Corrections.