The man behind some of Australia’s biggest concerts speaks to us from his Miami jail cell


Posted

April 06, 2019 08:51:55

If you went to a major concert or music festival in the early-2000s, there’s a good chance you went to a gig financed by a man who is now sitting in a Miami jail cell.

Key Points

  • Jack Utsick is responsible for an international Ponzi scheme and used the money to fund concert tours to Australia during the 2000s.
  • Utsick has been sentenced to 18 years’ jail and is in a minimum-security facility near Miami.
  • Documents he shared with Background Briefing show the questionable tactics used by concert promoters during the heyday of live music in Australia.

Jack Utsick helped pay to bring some of the biggest names in entertainment to Australia, from international pop stars like Robbie Williams and the Red Hot Chilli Peppers to punk bands like Pennywise and The Vandals and even legendary nostalgia artists like Elton John and The Who.

“They all came down there and I was the funder for the acts,” he told me. “I saw that vision for Australia. I said ‘this place is going to be big’.”

I’ve been speaking to Utsick for around 2 years from his cell in a minimum security jail 40 minutes south of Miami Beach.

From the inside he’s given me an insider’s view of the tactics and schemes sometimes used to prop up live music in Australia.

Whenever we spoke his voice was distant and the line was crackly, and using the prison phone system means the phone cuts out after 15 minutes.

At age 76 and only a few years into an 18-year sentence, it’s possible he will never leave prison after being convicted of perpetrating a massive Ponzi scheme.

This scheme was used to finance international superstars coming to Australia.

From his cell, Utsick provided Background Briefing with documents that chart his partnerships with Australian industry heavyweights like Michael Chugg, Glenn Wheatley and AJ Maddah as the Ponzi scheme spiralled out of control.

His Australian partners had no idea where Utsick’s money was coming from or that they were actually using money generated by fraud.

How to convince an artist to cut their fee.

Music promoters are notorious for employing questionable tactics to keep the show on the road, and Utsick’s documents shed light on this unsavoury side of the music business.

The documents reveal one such example during the 2002 tour of Anna Vissi, who was hyped as the Greek Madonna. Utsick was told she’d be a hit in the Australian market.

Background Briefing

Live music’s dirty secret

If you went to a gig in Australia in the 2000s, there’s a chance it was funded by an elaborate Ponzi scheme. So which artists were ensnared?

“Every Greek would come to see her because they all loved her. She was the biggest star in Greece and she would have a tremendous following in Australia,” said Utsick.

He teamed up with his frequent business partner, and legendary Australian music promoter, Michael Chugg to bring Vissi to Australia.

But the concert bombed. Two thirds of seats at Melbourne’s Rod Laver Arena were empty and in Sydney, just over half the tickets were sold. Utsick and Chugg were more than a million dollars out of pocket.

In an urgent fax to Utsick, Chugg labelled the concert a “Greek Tragedy”.

Chugg told Utsick he had brought in a fixer to cut costs — fellow concert promoter Aresh “AJ” Maddah. Maddah had swiftly delivered an ultimatum to Anna Vissi.

“AJ negotiated a further $200,000 off the artist’s fee by explaining that he was there to cut costs and it would either come via a break in the guaranteed fee or by […] filling the spare seats full of homeless people to boo her after every song,” Chugg related in the email.

Today, AJ Maddah says he remembers the incident.

“I actually did that, thankfully they didn’t question how I was going to round up all those homeless people in a matter of 24 hours,” he said.

“That was a very unique case and it’s not something that’s ever been repeated or done before that or done after,” he said. “It was more of a jest thing.”

Chugg declined to respond to questions about the concert.

Australian Idol added to woes

Jack Utsick promised double-digit returns to investors in his promotions business, which organised over 100 tours to Australia over 7 years. But when tours underperformed, he used money from new investors to pay out old investors.

One underperforming tour was the 2005 Australian Idol tour.

Utsick teamed up with Michael Chugg again, as well as manager Glenn Wheatley, to organise the tour headlined by series winner Casey Donovan.

“I did the American Idol tour in America and I was familiar with the players, but somebody screwed it up in Australia,” Utsick recalls.

The idol tour was a commercial disaster and the US funders were furious, threatening to sue partners in the concert.

Talent manager Glenn Wheatley wrote an email trying to convince his financial backers to back off, and blaming the headline act — 16-year-old Casey Donovan.

“Australia voted for the wrong idol. It’s a fact that Casey Donovan got over the line with the SMS vote from young western suburbs teenage girls but [they] did not want to pay the money to see her in concert,” he said in the 2005 email.

He said the loss on the tour was more than he could afford and if he was pursued for the money, “bankruptcy is probably my only alternative”.

Faced with poor attendance numbers, he said he employed sleight of hand to keep up the appearances of a successful tour.

“With less than half houses, we curtained them off, massaged the seating configuration, and made the venues look full,” he said.

We don’t know whether his partners — including Michael Chugg — had any idea.

Glenn Wheatley told the ABC the loss was a “one-off” and denies he almost went bankrupt. He also says he didn’t change seating plans or curtain off venues to make them look full.

He describes the tour as “a rare loss” but also a big loss, which, together with Michael Chugg, he took on the chin.

Utsick lends a helping hand to Michael Chugg

In 2005, with the idol tour behind them, Utsick and Chugg decided to formalise their relationship with a joint venture. A slew of upcoming concerts were on the horizon including Keith Urban, Elton John, Radiohead and the Dixie Chicks.

There was only one catch — Michael Chugg didn’t have the money. And worse still, he owed Utsick more than a million dollars.

In the weeks before Christmas 2005, Chugg and his people pleaded with Utsick to stick with Chugg and not pull out of the joint venture.

“I know from a pure accounting perspective it makes perfect sense to wind up [my company] Michael Chugg Entertainment,” Chugg wrote in an email.

“But we are promoters, so if we ran our lives from purely an accounting angle we would never make any money.”

Utsick was owed money but says he didn’t call in his debt at the time because he considered Chugg a friend, and believed 2006 would be a profitable year.

“I wanted to save his ass because I knew, I knew his forecast for 2006 was huge!

“2006 was the biggest year ever in that business and guys like Michael Chugg from Australia, they reaped the benefits of everything.”

As Chugg pleaded for more time he was unaware that Utisck was facing his own problems.

US authorities were beginning to close in on Utsick’s Ponzi scheme. Months after he received the email from Chugg, the Securities and Exchange Commission (SEC) charged Utsick with fraudulently raising more than $300 million.

The downfall of Jack Utsick

The SEC appointed Florida lawyer Michael Goldberg to chase down and secure Utsick’s money.

Goldberg forensically followed the money trail and found investor money had been spent to prop up Utsick’s lavish lifestyle including cars, restaurants, his credit-card bills, and even a yacht.

“Jack used the company as his personal piggy bank,” Goldberg says.

“Even such things as Victoria’s Secret lingerie for his girlfriend and flowers — all of that was paid directly with investor money.”

Goldberg, who specialises in large-scale Ponzi schemes, believes Utsick never set out to be a fraudster.

“It’s not that anyone starts off to commit a Ponzi scheme and I don’t think Jack did, but it turned into a Ponzi scheme and he didn’t stop it,” he says.

“He kept it going and kept the lies going and kept the losses going and hurt many, many more victims for a lot more money.”

Utsick left the United States for Brazil. US authorities tried to have Utsick returned to the US, but mistakenly said he was wanted on child-molestation charges, later put down to a clerical error.

He says the mistake led to his incarceration in a maximum security prison where he was abused.

“They were punching me and spitting on me, kicking me, everything, trying to get at me, to kill me,” he says.

In October 2016, Utsick pled guilty to fraud and was sentenced to 18 years in jail. The judge said Utsick showed little remorse.

Utsick says he remembers the day he was sentenced.

“I was crying my heart out, my daughter was crying her heart out. They said I wasn’t remorseful — Jesus Christ I was remorseful.”

“I went through almost 12 years of crying every night for these poor people,” he claimed. “I said I’m sorry and I said I’m sorry to some of the people who got screwed.”

From jail, Utsick has been trying to raise money to fund an appeal and has reached out to former business partners including Chugg.

In 2014, Chugg responded to Utsick’s plea for funds, via email to one of Utsick’s children.

“I believe I have more than repaid your father, I nearly lost my company and my livelihood thanks to him. I had thought us mates but he misled me all along about where the money was coming [from],” he said in the email.

“I wish you no ill and would never have wanted your father to end up this way but he is where he is because of what he’s done and not what has been done to him.”

Chugg declined to be interviewed, citing a confidential settlement he reached with Michael Goldberg.

Topics:

music-industry,

carnivals-and-festivals,

pop,

rock,

fraud-and-corporate-crime,

events,

australia



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