Yesterday’s federal indictment of two men for scamming UH out of $200,000 finally identified the identity of the prime mover behind the fraud.
Marc Hubbard, a North Carolina resident, is accused of masterminding the scheme to cheat promoter Bob Peyton and the university by claiming links with Stevie Wonder’s management that he said would allow them to obtain the entertainer at a discount price for a benefit concert in Manoa.
The indictment charges that those involved “knowingly devised and intended to devise a scheme and artifice to defraud, and to obtain money from others, by means of materially false and fraudulent pretenses and representations, provisions, and omissions….”
In other words, this wasn’t a failed concert. It was a scam from the start.
During the special Senate hearings probing the concert, several senators expressed skepticism when UH President Greenwood described the university as the victim of a sophisticated fraud, instead suggesting the university had violated its contract by unilaterally cancelling the concert and, therefore, had forfeited the initial payment. That was apparently an argument put forward by those involved in the scam as they tried to buy additional time by “cooling the mark out.”
Hubbard was recently indicted in South Carolina for an investment scam in which he sold promissory notes with the promise to pay 30 percent returns by using the funds to put on a series of concerts over a three year period.
As reported by Pollstar.com:
According to documents from the state’s Securities Commissioner, Hubbard and his company, Sports Dimension, Inc., began sending unsolicited mailings to potential investors outside the state in 2009, offering people promissory notes that “would yield 30% annually.”
The materials said sales from the notes would be used to book “up to three major North American tours in each of the next three years” and represented SDI as a “regional company specializing in the concert business” that had 12 years of experience in the field.
SDI reportedly collected as much as $1.8 million from promissory note sales – even after a number of states including California, North Carolina and Nevada sent cease and desist letters to bar Hubbard from soliciting investments.
Hubbard and his company, Sports Dimensions Inc., were hit with several civil suits in 2008 and 2010 alleging fraud.
Pacifico v. Hubbard et al
Filed: September 30, 2010 as 6:2010mc00128
Plaintiff: Marci Pacifico
Defendants: Marc Hubbard and SDI Sports Dimensions Inc
Court: Fourth Circuit > South Carolina > District Court
Type: Other Statutes > OtherSPENCE v. SPORTS DIMENSIONS, INC. et al
Filed: June 28, 2010 as 2:2010cv03120
Plaintiff: MICHAEL SPENCE
Defendants: SPORTS DIMENSIONS, INC. and MARC HUBBARD
Cause Of Action: Diversity-Fraud
Court: Third Circuit > Pennsylvania > Eastern District Court
Type: Torts – Property > Other FraudWhitaker et al v. Sports Dimensions, Inc. et al
Filed: April 22, 2010 as 3:2010cv00814
Plaintiffs: R Byron Whitaker and Easy Financial & Software Solutions
Defendants: Sports Dimensions, Inc. and Marc Hubbard
Judge: Barbara M. G. Lynn
Cause Of Action: Fed. Question
Court: Fifth Circuit > Texas > Northern District Court
Type: Torts – Property > Other FraudPACIFICO v. HUBBARD et al
Filed: January 21, 2010 as 2:2010cv00271
Plaintiff: MARCI PACIFICO
Defendants: MARC HUBBARD and SDI SPORTS DIMENSIONS INC
Cause Of Action: Fed. Question
Court: Third Circuit > Pennsylvania > Eastern District Court
Type: Contract > Other ContractWhitaker et al v. Sports Dimension Inc. et al
Filed: November 7, 2008 as 3:2008cv01989
Plaintiffs: R Byron Whitaker and Easy Financial & Software Solutions
Defendants: Sports Dimension Inc., Marc Hubbard, Leonard Rowe, Rowe Entertainment, International Underwriters and others
Cause Of Action: Federal Question
Court: Fifth Circuit > Texas > Northern District Court
Type: Torts – Property > Other Fraud
He has also previously been cited by the North Carolina Securities Division.
On January 2, 2007 , the North Carolina Secretary of State’s Securities Division issued a Summary Order to Cease and Desist to Sports Dimensions, Inc. and Marc Hubbard . The Summary Order ordered Sports Dimensions , Inc. and Marc Hubbard to immediately cease and desist from offering for sale, soliciting offers to purchase, or selling securities in the form of investment contracts and promissory notes or selling any securities of any issuer in violation of §§78A-24, and 78A-36 of the North Carolina Securities Act.
Click here to see the Order.On March 5, 2007 , the North Carolina Secretary of State’s Securities Division issued a Final Order to Cease and Desist to Sports Dimensions, Inc. and Marc Hubbard . The Summary Order ordered Sports Dimensions , Inc. and Marc Hubbard to cease and desist immediately from offering for sale, soliciting offers to purchase, or selling securities in the form of investment contracts and promissory notes or selling any securities of any issuer in violation of §§78A-24, and 78A-36 of the North Carolina Securities Act.
Click here to see the Order
And last year, Hubbard sued JP Morgan Chase Bank claiming to have been the victim in a convoluted scheme involving a home he purchased for $1.3 million.
The least little search of PACER by any of the UH folks involved in this would have revealed these scams. So maybe UH wasn’t engaged in fraud, but it certainly should have egg on its face for incompetence. Was no one charged with doing any due diligence before signing away a couple hundred grand? Is there such a thing as criminal bone-headedness?
I agree. This has nothing to do with what legislators were speculating about. This has to do will wiring money without checking to see if it was a legitimate escrow account.
I love it! Maybe it should be suggested to Donna Kim that one of the recommendations of her committee should be that a bill be introduced to make criminal boneheadedness a class C felony. That should fill up the jails in a hurry.
Still no word on who — if anyone will be held accountable in the UH fiscal office (Howard Todo?) or General Counsel’s office (Darolyn Lendio?).
MEanwhile, I was struck by this statement nmade by the FBI Special Agent in Charge: “”In fact, the university officials we spoke to during this investigation were open, honest, and available to us — without precondition — throughout our investigation.”
Yet, when called to account by ther public, press, and state Senate, UH spent tens of thousands of dollars on lawyers to avoid giving meaningful answers to any questions, including what action would be taken against UH personnel that let this happen.
I say, cut $200,000 from UH’s budget next year and let THEM recoup it from the personnel involved.
The comment about simple use of the PACER system is absolutely correct. The rows of attorneys at UH could have done a simple check, they could have had a legal assistant run a simple check, or they could have hired a PI to run a simple check on the litigation history of the players. That, is, of course, if they had insisted on knowing who all the players were. Pacer fees are next to nothing. They could have even hired an outside attorney and have them choose an investigator and conduct due diligence.
Instead, we have millions of dollars in legal fees to pay for and the UH President talking about hiring a lawyer to “interpret” the situation for the FBI who incidentally require no translation assistance in practice. If I were them I’d be offended, but they know the ropes and the drill and the game that is played.
It all comes down to a litigation check a child could have done.