(AllHipHop News) The SEC recently uncovered a scam that could easily be featured on an episode of “American Greed.”
Investigators claim two promoters raised over $30 million dollars through a Ponzi scheme using big-name hip-hop acts like Kanye West, Jay-Z, and Pitbull without their knowledge.
The SEC contends that from 2015 through 2017 two individuals named Andres Fernandez and Edison Denizard raised millions from over 60 investors in an unregistered fraudulent securities offering.
The pair allegedly ran their scam through two companies, Kadaae Entertainment and AOTG.
Eager investors signed agreements with Kadaae or AOTG, which stated they would be financing business ventures related to “music entertainment events.”
Most of the agreements were for two-to-three-month terms, after which investors would earn their principal back plus a purported return on investment ranging from 20% to 60%.
Andres Fernandez and Edison Denizard even gave certain investors VIP access to various concerts to give their victims a false sense of security.
Unfortunately for investors, the whole thing was a big Ponzi scheme.
In addition to Kanye West and Pitbull, Fernandez and Denizard allegedly fabricated their connections to Enrique Iglesias, Ricky Martin, and even Ice-T and Mickey Bentson’s Art Of Rap Tour.
“Although the [companies] promoted a handful of concert events for a few lesser-known artists at small Orlando-area venues, they did not produce concerts for any of the major recording artists identified to investors and they had no involvement in the Art of Rap Tour,” said the SEC’s lead lawyer, Andrew Schiff.
The SEC claims the VIP treatment showered on the investors was all smoke and mirrors – the duo just bought tickets from Ticketmaster and StubHub.
To make matters worse, Fernandez and Denizard allegedly blew at least $2,000,000 on themselves in addition to paying investors back with their own money.
The SEC charged Andres Fernandez with being the leader of the scam and hit him with seven charges: four counts of violating the Securities Act and three counts of violating the Exchange Act.
Fernandez recently pleaded guilty and he faces up to 20 years in prison when he is sentenced in January of 2020.
