PHOENIX (AP) — A suburban Phoenix concert promoter has been accused of running a Ponzi scheme that bilked approximately 140 investors out of $25 million, federal authorities said Thursday.
A 37-count indictment charges Miko Dion Wady of Chandler with wire fraud and money laundering, the U.S. attorney’s office in Phoenix said. The indictment was handed up on Dec. 1 but wasn’t unsealed until after his arrest on Wednesday.
According to the indictment, the 34-year-old Wady convinced victims he was promoting concerts or tours of top-tier acts such as The Rolling Stones and Barbra Streisand and needed the money to pay upfront costs.
The scheme operated from 2004 through 2007, with Wady and three others who haven’t been indicted collecting more than $50 million from investors who were promised returns of 4 percent per month, authorities said. They returned about half of the $50 million to investors.
The indictment alleges a classic Ponzi scheme, with money from new investors being used to pay off old investors.
Wady made an initial appearance in federal court in Phoenix on Thursday afternoon and was ordered held at least until a bail hearing set for Friday. A spokeswoman for the U.S. attorney’s office didn’t know if he had an attorney.
Wady and three men identified in the indictment, James Cundiff and his sons Adam and Jeremiah, are the subject of numerous civil lawsuits filed in Maricopa County Superior Court by jilted investors.
A lawyer who represented Wady in one of those suits, Kevin Koelbel of Chandler, said Wady denied he had defrauded investors. Koelbel also said the Cundiffs were the ones who recruited investors and that the record will show that the Cundiffs always controlled the money. Wady, he said, was just a small time local concert promoter.
“They were the money people — they would go out and get the investors, and they handled all the money,” Koelbel said. “And when the investors went after them for the money, they said Miko had it all.”
But the Cundiff’s attorney said they blew the whistle on Wady and have been cooperating with federal prosecutors for nearly two years.
“We were duped,” attorney Steve Mahaffy said. “The Cundiffs were duped by Miko Wady just like all the investors. When the Cundiffs learned of Wady’s Ponzi scheme, they went right to the federal authorities.”
The indictment said the Cundiffs would give checks to Wady to cover concert expenses and he would pay them back with money from previous events within days. The Cundiffs would then choose which investors to repay, often favoring those likely to reinvest.
Sandy Raynor, a spokeswoman for the U.S attorney’s office in Phoenix, declined to comment on the Cundiffs, citing an ongoing investigation.
Attorney Joel Sannes said Gilbert residents Maury Tanner and his son Dallas Tanner lost nearly $1.3 million in the scheme.
“It was just a web of connections,” that brought in investors, Sannes said. “Our connection was another family in Arizona who had been doing business with Mr. Wady and they brought in the Tanners.”
Besides The Stones and Streisand, the indictment said Wady and the others claimed to have promoted concerts for U2, Faith Hill, Tim McGraw, Mariah Carey, George Strait, Billy Joel, Jamie Foxx, Jimmy Buffet, Mary J. Blige, Pearl Jam, and at least 30 other well-known artists and entertainers.
But the indictment says Wady appears to have actually promoted fewer than 10 concerts, all involving local or lesser known artists.
Wady used at least $3 million of the victim’s cash to pay for a lavish personal lifestyle, including buying a Bentley, Ferarri and Lamborghini and dozens of other cars, real estate and a $175,000 luxury 41-foot boat, according to the indictment.
Koelbel said that Wady didn’t actually buy any of the luxury cars.
“They were all leased vehicles and he kept trading in,” Koelbel said. “As part of his concert promotion persona he liked to drive fancy cars.”
Rosemary Shockman, a Phoenix lawyer who represents about 50 people who lost about $7 million in the scheme, said the case left both large and small investors out in the cold.
“These Ponzi schemes hit the sophisticated and the most vulnerable and unsophisticated,” Shockman said. “It’s completely heartbreaking.
“A lot of these were people who were encouraged to borrow on their homes to invest or to take it out of their retirement savings,” Shockman said. “One fellow retired early, puts the retirement money into this, and now he has nothing and he can’t go back and get another job that pays near what he made before.”
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On The Net:
http://www.usdoj.gov/usao/az/
www.usdoj.gov/usao/az