A Long Island stockbroker defrauded the producers of the Broadway musical “Rebecca” with an elaborate scheme that included a fictitious loan and phantom investors who were conjured up as part of a sham plan to rescue the financially ailing show, federal authorities charged in a criminal complaint Monday.  The stockbroker, Mark C. Hotton, collected $60,000 for his efforts before his arrest early Monday by federal authorities, who described the scheme as a complex fraud that was “stranger than fiction.”  Investigators said that in August, as Mr. Hotton was shutting down one scheme by killing off a phony investor whose $2 million he could not produce, he began a second scheme to earn fees from the producers by helping to secure a $1.1 million loan.  When none of the money surfaced, the production collapsed on Sept. 30, one day before rehearsals were to begin, but not before Mr. Hotton had collected his money — including $18,210.88 for a supposed African safari with one phantom investor, “Paul Abrams,” and the investor’s eldest son, the authorities said.  Investigators arrested Mr. Hotton before dawn at his waterfront Long Island home and charged him with two counts of wire fraud, which each carry a maximum prison term of 20 years.  “Mark Hotton perpetrated stranger-than-fiction frauds both on and off Broadway,” Preet Bharara, the United States attorney in Manhattan, said in a news release. “Hotton concocted a cast of characters to invest in a major musical — investors who turned out to be deep-pocketed phantoms. To carry out the alleged fraud, Hotton faked lives, faked companies and even staged a fake death, pretending that one imaginary investor had suddenly died from malaria.” That was Abrams.  One of Mr. Hotton’s lawyers, Evan Lipton, entered a plea of not guilty on Mr. Hotton’s behalf at the arraignment in federal court in Central Islip, N.Y. Magistrate Judge Arlene R. Lindsay ordered Mr. Hotton held without bail after an assistant United States attorney, Burton T. Ryan Jr., charged that he was a flight risk, had lied in a personal bankruptcy filing last year and had been the subject of many complaints from people who said they had lost as much as $15 million to him in other types of frauds.  The Hotton schemes, if proved, would be a rare instance of fraud derailing a big-budget Broadway musical, and the elaborate plot laid out in the criminal complaint rivals the twists in “Rebecca,” based on the gothic mystery novel by Daphne du Maurier.  The lead producers of “Rebecca,” Ben Sprecher and Louise Forlenza, now face significant financial challenges. They have spent at least $6 million on the show from funds raised from real investors and incurred an additional $8 million in debts, according to authorities. They will be liable for the money if the production does not eventually open.  When they met Mr. Hotton last winter, Mr. Sprecher and Ms. Forlenza were struggling to raise several million dollars to stage the show on Broadway after already postponing it once. When Mr. Sprecher failed to interest veteran Broadway investors in “Rebecca,” Ms. Forlenza was put in touch with Mr. Hotton through a mutual business associate, and in early February she and Mr. Sprecher signed an agreement with Mr. Hotton to pay him a $7,500 fee to raise money and an 8 percent commission on any funds raised in excess of $250,000, according to the complaint.  Such commissions were once common on Broadway but are now rare, considered a sign of desperation for producers who need to raise money quickly. In a telephone interview Monday, Mr. Sprecher said he never agreed to pay a commission to Mr. Hotton — but rather a percentage of eventual profits — and added that Mr. Hotton’s total percentage was capped at 8 percent of whatever he raised. No money was paid to him out of capital from the show, Mr. Sprecher said.
Fraud allegations stemming from the Broadway showâs collapse last month were among numerous federal charges that were leveled against Mark C. Hotton.