Pilots and Money

derg

Apparently a "terse" writer
Staff member
Lots of guys, through the years, were crowing about Utsick Investments and how I was a fool if I didn't get in, yadda yadda yadda. It didn't smell right so I didn't get involved.

Short story: Beware of investment advice from pilots. We may be the gods of the cockpit, but that's really about it.

Long story:
Big dreams, big fall: Jack Utsick, the founder of Miami Beach's Worldwide Entertainment, flew high as an airline pilot and then a concert promoter before crash-landing earlier

Aug. 20, 2006 (Knight Ridder/Tribune Business News delivered by Newstex) --
Miami Beach concert promoter mired in financial quagmire

Rolling Stones concerts in China, restaurants in St. Bart's, modeling in South Beach, movies in Hollywood, musicals in London -- Worldwide Entertainment had a finger in it all from its quiet Miami Beach base.

Yet many in the glam-and-glitz entertainment business wondered how the unlikely figure behind Worldwide -- Jack Utsick, a cussing 63-year-old ex-TWA pilot from a small town in Pennsylvania -- had built such a sprawling empire in such a notoriously risky industry.

They got their answer earlier this year when the Securities & Exchange Commission charged Utsick with fleecing 3,300 investors of some $300 million in a Ponzi-type scheme from 1998 to 2005. Worldwide Entertainment is now in court-ordered receivership, with many of its holdings mired in financial and legal quagmires around the globe.

The move ends the checkered career of a dreamer who couldn't let go of an easy path to the big time despite repeated slaps on the wrist and run-ins with the law.

Utsick did make it to the big time. Just last year, his company ranked among the top three independent promoters, with 821 concerts and $112.8 million in gross sales, according to industry sources. And Utsick himself rubbed shoulders with the likes of Paris Hilton and Alicia Keys, and hung out at hot spots such as the Cannes Film Festival and The Forge in South Beach.

Yet behind the big names and numbers, Worldwide was spiraling out of control with a shoddy accounting system and a web of business ventures too far flung to monitor.

"It was a mess," said receiver Michael Goldberg, a lawyer with Fort Lauderdale firm Akerman Senterfitt. "We're going through the corporation's records to figure out exactly where the money is."

Utsick is not giving interviews. But in a statement, he blamed the financial morass on the white-hot pace of his company's expansion and said he will work to pay back investors.

His attorney, Michael Rosen of Miami, noted that Worldwide Entertainment is a legitimate business backed by theaters and arenas in Berlin, Philadelphia, Ybor City and Michigan plus a long portfolio of successful events.

"It's important to note that Jack promoted many concerts and acquired many assets as promised," Rosen said.

BRIGHT PATH

UTSICK TRAINS AS PILOT,

SEES MONEY IN MUSIC

The story of John Paul Utsick starts far from the high-flying world of entertainment wheeling and dealing in Pennsylvania's honeymoon hot spot, the Pocono Mountains, where he was born in the town of Mauch Chunk, now known as Jim Thorpe.

According to his entry in Who's Who in Entertainment, Utsick graduated with a bachelor's of science degree from Northampton College in 1968. This came after stints at the University of Miami and Moravian College in Bethlehem, Pa., as well as marriage and the birth of two daughters.

Northampton Community College in Pennsylvania, which does not offer B.S. degrees, confirmed that Utsick studied there but said he did not graduate.

Utsick went on to train as a pilot and worked for TWA, flying members of the Saudi Arabian royal family from 1974 to 1977.

It was while he was a pilot, living near Portland, Maine, that Utsick started arranging concerts on his downtime. He successfully competed against Boston and Providence promoters to bring marquee acts such as REO Speedwagon, Heart and Ted Nugent to venues such as Portland's Cumberland County Civic Center.

An account from the Portland Press Herald shows that by 1980, Utsick had hit upon the financing modus operandi he would perfect years later -- rounding up money from individuals to finance concerts with promises of hefty returns.

In November that year, Utsick was indicted for allegedly taking $25,000 from a Patrick Mulhern to put on a rock concert that was going to pay 20 percent interest. The indictment accused Utsick of exaggerating the size of his stake in the show.

The charges were dismissed when a key witness did not appear for trial, Maine state records show.

Other Press Herald accounts show that by 1983, Utsick was starting to envision a grander role for himself in the concert business. He presented a project for a 6,000-seat, outdoor amphitheater to town planners in Old Orchard Beach, Maine, in what seems a precursor to a venture years later to build an arena in Auckland, New Zealand.

In 1985 while traveling in Italy, Utsick spied another opportunity to make his fortune -- a baldness treatment called Rixivil, containing minoxidil.

Minoxidil was also the key ingredient in Regaine, a widely publicized hair regrowth formula then still under development by pharmaceutical giant Upjohn.

Utsick -- balding himself -- formed a company called Riahom (Mo' Hair spelled backward), bought the rights to sell Rixivil in the United States and started peddling it for $150.

Upjohn sued on the grounds of unfair trade practices, saying Riahom was falsely touting Rixivil as a patented product and using Regaine in its advertising.

A federal judge ruled in favor of Upjohn. The court mandated a recall of Riahom's product and promotional materials. The decision took the guts out of the fledgling company.

NETWORKING

PROMOTER USES FRIENDS

TO FIND INVESTORS

Utsick, meanwhile, had not lost his interest in the live entertainment industry.

In the mid '90s, he rounded up investors for Worldwide in a separate firm, The Entertainment Group Fund, and enlisted his old pilot friend, Robert Yeager, and his wife, Donna, to find investors. The Yeagers' attorney, Richard Serafini, did not have any comment.

The Yeagers and Utsick soon found a natural pool of candidates -- fellow pilots. They traveled the country, making presentations to pilots' associations, posting pitches on group websites, mailing newsletters and paying finders' fees to those who got others to join in.

In early 1997, Wisconsin regulators found the fund's then-agent, Larry Rodammer, was selling unregistered securities without a license -- promissory notes for at least $10,000 with 10 percent interest. They dispatched a cease-and-desist letter to the fund.

The fact that Utsick and Yeager were former pilots worked in their favor, said Gregg Mattson, one of 33 investors who sued Utsick earlier this year.

"It gave him a certain air of credibility," Mattson said. 'He even did so well that he retired early' -- that was the air he projected. He seemed rather full of himself."

Lured by promises of up to 30 percent returns, people tapped their retirement accounts, life savings and put-asides for their kids' college educations to sink into Utsick's concerts.

Utsick began making a name for himself on the concert promotion scene. He bought up acts for "off dates" in smaller cities that bigger promoters considered risky bets. He also often bid higher for dates than other promoters, rankling his rivals.

Many of the concerts made money, and Utsick was able to repay investors their principal, plus the promised hefty interest. Some impressed investors immediately signed up for a new venture and spread the word.

Mattson, for instance, said he visited Utsick in his Miami Beach office and spoke to about 30 other investors before plunking down his money.

"No one had a bad word to say about the guy," he said. After the first investment was repaid promptly, he rolled over his money.

In 2000, Michigan regulators came down on them for unlicensed brokering.

Some investors began to get nervous. That year, Yeager and Utsick held an investors' meeting in San Francisco to convince people to stay in. Most did.

Utsick and Yeager often argued, but the big money at stake kept the partnership together.

Yeager, who the SEC says made $7 million from commissions, lived large. His assets listed in the receiver's report included: 10 cars, including an Aston Martin, Porsche and Ferrari; six homes, including one in St. Croix; motorcycles; a $300,000 boat; a stamp collection and artwork.

Utsick did not draw a salary but charged his personal living expenses to the company, the report shows. In 1998, he bought two condos in South Beach's swank Portofino Towers in South Pointe in the company's name, now worth about $2 million.

One was an office. He lives in the other with 32-year-old girlfriend Jennifer Homan and a daughter.

Utsick also carried $54.2 million worth of life insurance policies, with annual premiums totaling $514,000.

DOWNWARD SPIRAL

REGULATORS CLAMP

DOWN ON UTSICK

Utsick was riding high until ticket sales in the concert business started dropping several years ago. So he plowed investors' savings into other speculative ventures -- a tract of land near Jacksonville, oil and gas wells in Louisiana, a restaurant in the chic enclave of St. Barts, a show called "Fashion Rocks" with Miami Beach's Michele Pommier modeling agency, a movie starring Paris Hilton called National Lampoon's (AMEX:NLN) Pledge This in which his girlfriend's daughter has a walk-on role.

To try to recoup some of the lost funds quickly, he opened brokerage and options-trading accounts. He lost $15 million to $20 million, according to the receiver's report.

In 2004, Missouri regulators clamped down on Utsick for selling unregistered securities to 30 investors, who anted up $500,000 for a new arena in New Zealand and $2.1 million for a Barbra Streisand-Neil Diamond tour. Returns were promised at 20 to 25 percent.

Utsick repaid the investors' principal, plus interest and a $15,000 fine.

Utsick's empire fell apart earlier this year. In January, Yeager sued Utsick, saying Worldwide owed him and his companies $10 million. Investors also sued him for $2.5 million and the SEC seized the company.

Now Utsick is living on $10,000 a month under order from the SEC, $5,000 less than he had requested.

The receiver has so far amassed a pool of $12 million to be returned to investors and is in the process of selling off assets and settling legal disputes.

He is also tracking down $10 million in investors' IRAs and 401(k)s thought to have made it into the pocket of a third-party administrator.

The receiver envisions shaping two new companies out of the ashes of Worldwide Entertainment: Fiestar, which will expand Worldwide New England's successful rock festival to other locations, and Third Point, which will develop and market live entertainment.

If successful, the two companies should generate several million dollars for the investors, the report states.

Some of those Utsick backed note he never stiffed performers.

"He always came through, he's an honorable guy, a straight shooter," said Jim Camacho, the former lead singer of a local rock band called The Goods Utsick managed in the late '90s. "He's definitely a dreamer. He thinks big, and he goes for it. His dream was to take a band to the top."

But investors say they hold out little hope they'll recover all their money.

"My personal gut feeling is we'll be lucky to see 50 cents on the dollar," Mattson said. "I would not have ever invested with him if I had known the whole story. I hope he goes to prison."
 
HAHA!!! Good call. I know how it is when you get investment advice from friends and they think your just CRAZY for not getting in.
 
Why does this make me think of a company called Global Equity Lending?

I know a few on here have heard of it.

And no, I am not a customer or investor.
 
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