1 00:00:00,000 --> 00:00:06,960 In this episode of American Greed, Mike the Situation Sorrentino makes his 2 00:00:06,960 --> 00:00:11,840 mark starring in the notoriously over -the -top reality TV show Jersey Shore. 3 00:00:12,780 --> 00:00:16,560 Virtually overnight, he morphs from musclehead to millionaire. 4 00:00:17,020 --> 00:00:18,540 You saw me like, oh, I got this Ferrari. 5 00:00:18,880 --> 00:00:22,400 I was buying stuff, buying lots of stuff. He was like a rap star all of a 6 00:00:22,400 --> 00:00:25,500 sudden. Sorrentino's character is a walking hyperbole. 7 00:00:25,820 --> 00:00:28,060 100 % bad boy. 8 00:00:28,260 --> 00:00:31,440 Sometimes when I think of Jersey Shore, I remember it as an animated show 9 00:00:31,440 --> 00:00:33,920 because it had a lot of that aesthetic to it. 10 00:00:35,530 --> 00:00:40,730 But when Sorrentino applies that reality TV swagger to real life and fails to 11 00:00:40,730 --> 00:00:47,590 pay taxes on nearly $9 million of income, much of it in cash, the 12 00:00:47,590 --> 00:00:49,510 real, real bad. 13 00:00:50,270 --> 00:00:56,390 Well, in 2011, I can tell you that he did not file a tax return at all. 14 00:00:56,390 --> 00:00:58,310 nothing wrong with being paid in cash. 15 00:00:58,530 --> 00:01:01,790 What's wrong is if you don't report your income to the IRS and pay your fair 16 00:01:01,790 --> 00:01:03,350 share. And later. 17 00:01:04,300 --> 00:01:09,220 Joe Mellie says he's the guy with tickets to all the hottest shows. He 18 00:01:09,220 --> 00:01:12,820 events that everyone wanted to go to and that were very hard to get tickets to. 19 00:01:13,200 --> 00:01:16,840 Hamilton. You couldn't get a ticket to Hamilton in this city. 20 00:01:17,480 --> 00:01:23,260 Mellie straddles two worlds, Wall Street and the music business, and tells 21 00:01:23,260 --> 00:01:27,760 investors that he has special relationships with famous artists and 22 00:01:28,440 --> 00:01:32,560 He was the guy who could get... 23 00:01:33,290 --> 00:01:37,610 you know, Billy Joel on the phone or could get a deal with the producer of 24 00:01:37,610 --> 00:01:40,790 Hamilton or could get a meeting with the people at Harry Potter. 25 00:01:41,390 --> 00:01:47,730 Investors will lose nearly $60 million because while Mellie may dress in cheap 26 00:01:47,730 --> 00:01:53,150 clothing, he confesses the truth about himself when he writes, the wolf is on 27 00:01:53,150 --> 00:01:54,150 the way. 28 00:02:08,490 --> 00:02:15,350 In September 2014, a notorious reality TV bad boy heads to court. Former 29 00:02:15,350 --> 00:02:20,550 Jersey Shore reality star Mike The Situation Sorrentino is out on bail 30 00:02:20,550 --> 00:02:22,610 arrest on federal tax fraud charges. 31 00:02:23,010 --> 00:02:28,510 The Situation and his older brother pled not guilty in federal court today for 32 00:02:28,510 --> 00:02:30,110 filing bogus tax return. 33 00:02:30,910 --> 00:02:34,850 on nearly $9 million in income. 34 00:02:35,050 --> 00:02:38,130 He made a lot of money, and apparently Uncle Sam wants his cut. 35 00:02:38,530 --> 00:02:44,770 Mike, the situation Sorrentino, is a character viewers love to hate. So the 36 00:02:44,770 --> 00:02:48,050 schadenfreude is laid on thicker than his hair gel. 37 00:02:48,370 --> 00:02:51,370 When the situation was asked about the case, he responded, quote, 38 00:02:54,320 --> 00:03:00,780 The seeds of Sorrentino's downfall 39 00:03:00,780 --> 00:03:04,880 are sown long before anyone has ever heard of the situation. 40 00:03:08,900 --> 00:03:13,660 Seaside Heights, New Jersey is a classic American beach town with a boardwalk, a 41 00:03:13,660 --> 00:03:19,560 Ferris wheel, and giant fiberglass statues that seem eerie once the crowds 42 00:03:19,560 --> 00:03:20,560 gone. 43 00:03:21,980 --> 00:03:25,540 One store stays open on the boardwalk year -round. 44 00:03:26,780 --> 00:03:32,400 It's a t -shirt shop run by Danny Merck, whose life is about to change with an 45 00:03:32,400 --> 00:03:33,620 unexpected visit. 46 00:03:33,960 --> 00:03:38,240 Some big guy knocked on my door early in the morning and said, would you be 47 00:03:38,240 --> 00:03:41,600 interested in renting out your house for a reality TV show? They said there's 48 00:03:41,600 --> 00:03:45,300 going to be a reality show about a bunch of Italian kids. They're going to rent 49 00:03:45,300 --> 00:03:46,159 a house. 50 00:03:46,160 --> 00:03:47,360 for the Jersey Shore for the summertime. 51 00:03:47,640 --> 00:03:51,320 They said, could you get all your stuff out in a span of 24 hours and gave me a 52 00:03:51,320 --> 00:03:52,580 check. And I was like, no problem. 53 00:03:53,420 --> 00:03:55,880 And TV history was made. 54 00:03:57,660 --> 00:04:00,460 The premise for Jersey Shore is simple. 55 00:04:00,900 --> 00:04:07,220 Take eight 20 -somethings who love to party, rent them this beach house, and 56 00:04:07,220 --> 00:04:10,640 encourage them to let loose their animal instincts. 57 00:04:12,650 --> 00:04:18,269 I always considered Jersey Shore kind of like what it would be if you had humans 58 00:04:18,269 --> 00:04:19,269 in a zoo. 59 00:04:20,070 --> 00:04:25,050 Robert Thompson is a distinguished professor of television history at 60 00:04:25,050 --> 00:04:26,050 University. 61 00:04:26,390 --> 00:04:32,270 Today, he is hosting a luncheon screening of Jersey Shore ten years 62 00:04:32,270 --> 00:04:38,190 premiere. I'm starting with what I consider the definitive Jersey Shore. 63 00:04:39,100 --> 00:04:42,740 The situation goes out to a club. That's pretty much what they do all the time. 64 00:04:43,000 --> 00:04:49,820 He finds an attractive young woman. And it's like, you know, you're coming home 65 00:04:49,820 --> 00:04:50,579 with me. 66 00:04:50,580 --> 00:04:52,280 He takes her home to the house. 67 00:04:52,780 --> 00:04:55,940 He situates her in his bed, in his bedroom. 68 00:04:56,500 --> 00:05:00,460 He leaves her there, and he goes and has a full meal. 69 00:05:01,580 --> 00:05:05,220 And then when they're done having sex, he says, I ordered you a cab. 70 00:05:06,440 --> 00:05:10,920 And he kicks her to the curb. And then he does a fist bump kind of thing when 71 00:05:10,920 --> 00:05:11,920 comes back up. 72 00:05:13,160 --> 00:05:18,500 What's so fascinating is we're seeing people who don't let the constraints of 73 00:05:18,500 --> 00:05:23,700 civilization determine what they can and can't do. It's like we've taken human 74 00:05:23,700 --> 00:05:27,580 life and we've stripped it of all those rules. And when you think of it that 75 00:05:27,580 --> 00:05:29,320 way, it's kind of fascinating to watch. 76 00:05:31,150 --> 00:05:37,030 When the first episode of Jersey Shore premieres on December 3rd, 2009, it 77 00:05:37,030 --> 00:05:43,090 in an impressive 1 .3 million viewers and also a maelstrom of controversy. 78 00:05:43,350 --> 00:05:48,190 Much of it from Italian -Americans offended by the use of the term guido. 79 00:05:48,450 --> 00:05:51,470 Guido applications accepted over here. 80 00:05:51,870 --> 00:05:55,230 We're either mafioso or with this we're bimbos and buffoons. 81 00:05:55,740 --> 00:06:01,820 Despite the blowback, within a few weeks, MTV has a bona fide hit. And 82 00:06:01,820 --> 00:06:06,880 soar after the notorious fifth episode in which Nicole Snooki Polizzi gets 83 00:06:06,880 --> 00:06:08,040 punched in the face. 84 00:06:08,880 --> 00:06:13,420 I don't mean to downplay people hitting each other, but you also notice the 85 00:06:13,420 --> 00:06:17,840 manipulative dramaturgy going on here. How many times have we heard the word 86 00:06:17,840 --> 00:06:21,760 blood? And her mouth was bleeding and blood was all over me. There's all this 87 00:06:21,760 --> 00:06:24,740 blood. There's all this blood. How much blood have you actually seen so far? 88 00:06:25,340 --> 00:06:26,339 Like none. 89 00:06:26,340 --> 00:06:32,360 Ratings grow. And by the next episode, 3 .2 million viewers tune in. For a basic 90 00:06:32,360 --> 00:06:35,540 cable show, that's a big, big audience. 91 00:06:35,800 --> 00:06:39,720 There are a couple things going on in the world. There's like, you know, the 92 00:06:39,720 --> 00:06:44,400 in the Middle East. You know, there's the economy and then there's the shore. 93 00:06:44,580 --> 00:06:45,559 You know what I'm saying? 94 00:06:45,560 --> 00:06:46,700 It's fascinating. 95 00:06:46,920 --> 00:06:50,400 It is a pop culture phenomenon. It really is. There were two ways people 96 00:06:50,400 --> 00:06:51,400 generally responded. 97 00:06:51,880 --> 00:06:55,980 They made fun of it and they embraced it with an ironic, kitschy delight. 98 00:06:56,240 --> 00:07:01,800 The other way to respond to it was to be outraged that this was a mark that we 99 00:07:01,800 --> 00:07:05,200 were truly at the end of civilization as we knew it. 100 00:07:05,560 --> 00:07:10,500 But in both cases, audience members were watching. There was a certain pleasure 101 00:07:10,500 --> 00:07:14,700 in watching something so outrageously idiotic. 102 00:07:15,420 --> 00:07:20,700 Mike, the situation Sorrentino becomes one of Jersey Shore's breakout stars. 103 00:07:21,690 --> 00:07:26,170 Though born on Staten Island, New York, Sorrentino is raised in the Garden 104 00:07:26,170 --> 00:07:32,090 State. After graduating from Manalapan High, Sorrentino goes to work in a gym. 105 00:07:33,680 --> 00:07:39,320 Thor Lentino will later tell his humble origin story to NBC's Today Show. I 106 00:07:39,320 --> 00:07:42,940 started sending in pictures to New York City pretty much in my underwear. 107 00:07:43,840 --> 00:07:50,320 And eventually I got a call back for a pilot and I got that pilot role and we 108 00:07:50,320 --> 00:07:54,440 did the pilot. And I actually had to wait six or eight months for that pilot 109 00:07:54,440 --> 00:07:56,100 even get approved. 110 00:07:56,560 --> 00:08:01,980 So imagine hanging on to like a dream for six to eight months and you don't 111 00:08:01,980 --> 00:08:06,280 know it. You don't even know once you actually get that show for D andB popular. 112 00:08:09,160 --> 00:08:12,440 This is the kitchen where all the partying happens. Everyone pregame here. 113 00:08:12,820 --> 00:08:14,340 Mike was actually a good cook. 114 00:08:14,600 --> 00:08:18,980 Danny Merck plays the boss at the T -shirt shop where the Jersey Shore cast 115 00:08:18,980 --> 00:08:19,980 members work. 116 00:08:20,560 --> 00:08:23,100 That's where everyone would square off and also argue, you know. 117 00:08:23,870 --> 00:08:25,570 Tammy and Jenny had their big fight here. 118 00:08:25,810 --> 00:08:29,410 He also owns the house they stay in during the show. 119 00:08:29,750 --> 00:08:31,730 Well, I met Mike by accident beforehand. 120 00:08:32,070 --> 00:08:35,730 Mike thought I was a producer, and he leaned over to me and says, I want you 121 00:08:35,730 --> 00:08:36,730 call me The Situation. 122 00:08:37,010 --> 00:08:40,070 I was like, who is this guy? He wants me to call The Situation? What a dumb 123 00:08:40,070 --> 00:08:41,029 thing to be called. 124 00:08:41,030 --> 00:08:45,470 But honestly, what genius. He branded himself, marketed himself, and he's been 125 00:08:45,470 --> 00:08:46,590 known as The Situation forever. 126 00:08:47,170 --> 00:08:51,630 Sorrentino claims his nickname comes from his chiseled abdominal muscles. 127 00:08:52,720 --> 00:08:58,040 One summer day, he says, a woman is so mesmerized by his abs that she leaves 128 00:08:58,040 --> 00:09:02,240 boyfriend for him, creating a situation on the beach. 129 00:09:02,660 --> 00:09:05,600 I don't know if this is show and inside he's insecure or something like that 130 00:09:05,600 --> 00:09:08,480 because, you know, he's working out all the time. He's got big arms, a six pack. 131 00:09:08,700 --> 00:09:11,760 You know, he always looks like Rambo and stuff. So, you know, maybe he's 132 00:09:11,760 --> 00:09:16,040 insecure inside, but he was very self -confident and very full of himself all 133 00:09:16,040 --> 00:09:18,020 the time and thought every girl loved him. 134 00:09:18,490 --> 00:09:22,410 The most important part of his personality was that he was a 135 00:09:22,850 --> 00:09:26,410 You can hate on me all you want to, but what can you possibly say to somebody 136 00:09:26,410 --> 00:09:28,190 that looks like Rambo pretty much when he's turtle? 137 00:09:28,890 --> 00:09:34,310 I mean, he was like Narcissus, the Greek god, in that he absolutely was in love 138 00:09:34,310 --> 00:09:35,590 with his own image. 139 00:09:35,830 --> 00:09:39,090 And millions of Americans are in love with the show. 140 00:09:39,630 --> 00:09:43,570 Season 1's final episode reels in nearly 5 million viewers. 141 00:09:44,320 --> 00:09:48,380 And it's clear that Jersey Shore is more than just a hit show. 142 00:09:48,680 --> 00:09:51,760 I couldn't believe it. You know, it was unreal. People were, like, crawling at 143 00:09:51,760 --> 00:09:55,160 the doors, clawing at it, trying to get inside the house, knocking, screaming, 144 00:09:55,280 --> 00:09:58,700 thinking that the cast still lived at the house. I couldn't live there 145 00:09:58,860 --> 00:10:02,480 It was doors rattling all the time, people banging on the windows. 146 00:10:02,900 --> 00:10:06,920 It penetrated the culture in major ways. Most people knew about Jersey Shore 147 00:10:06,920 --> 00:10:08,560 whether or not they'd ever seen it. 148 00:10:08,990 --> 00:10:14,250 the cultural penetration of that show way outweighed the actual number of 149 00:10:14,250 --> 00:10:15,250 watching it. 150 00:10:15,350 --> 00:10:19,570 Nothing says fame like the president giving a shout -out at the White House 151 00:10:19,570 --> 00:10:23,970 Correspondents' Dinner, pretending he's announcing a break on a new tax on 152 00:10:23,970 --> 00:10:25,270 tanning salons. 153 00:10:25,510 --> 00:10:29,410 The following individual shall be excluded from the indoor tanning tax 154 00:10:29,410 --> 00:10:30,410 this bill. 155 00:10:31,150 --> 00:10:34,850 Snooki, JWoww, The Situation. 156 00:10:36,590 --> 00:10:41,150 In season one, Jersey Shore cast members reportedly are paid peanuts. 157 00:10:41,470 --> 00:10:44,730 They make about $200 a week from working at the Shore store. 158 00:10:45,150 --> 00:10:50,630 In season two, each cast member gets a raise to $10 ,000 an episode. 159 00:10:51,490 --> 00:10:57,650 And by season three, the real money comes in. The number is reportedly $30 160 00:10:57,650 --> 00:10:58,650 per episode. 161 00:10:58,870 --> 00:11:05,190 And it soars to the $100 ,000 per episode range by the final season. 162 00:11:05,820 --> 00:11:08,460 It's very interesting to watch them also progress. You know, their attitudes 163 00:11:08,460 --> 00:11:13,740 change from also, you know, Mike begging to bump $10 off me for a cigarette, and 164 00:11:13,740 --> 00:11:16,900 then all of a sudden now he's buying a new Rolex every day, you know? Things 165 00:11:16,900 --> 00:11:18,480 change real quick. 166 00:11:21,360 --> 00:11:26,140 Mike Sorrentino sees an opportunity to make money not just through Jersey 167 00:11:26,420 --> 00:11:32,000 but by seizing the day and turning his 15 minutes of fame into a brand. 168 00:11:33,130 --> 00:11:37,890 I think the wise thing for all eight of them would be to say, this is not going 169 00:11:37,890 --> 00:11:44,450 to last forever, and however I can monetize it and, you know, do it while I 170 00:11:44,450 --> 00:11:46,190 would be a wise thing to do. 171 00:11:46,950 --> 00:11:51,050 And I think that's certainly what the situation did. 172 00:11:52,330 --> 00:11:56,610 Up next on American Greed, from gym rat to millionaire. 173 00:11:57,090 --> 00:11:59,750 But where is the situation's money going? 174 00:11:59,970 --> 00:12:02,290 Or more importantly, not going? 175 00:12:13,040 --> 00:12:15,900 Oh, my God. Thank you so much for having me. 176 00:12:16,180 --> 00:12:21,280 Well, you're a hit. I mean, you have become iconic in our landscape. I'm 177 00:12:21,280 --> 00:12:26,460 flattered. Thank you. Mike, the Situation Sorrentino, becomes a 178 00:12:26,460 --> 00:12:29,140 almost as soon as Jersey Shore hits the air. 179 00:12:29,800 --> 00:12:32,520 But he wants to become a lifestyle brand. 180 00:12:33,440 --> 00:12:38,100 He takes one tried and true step by publishing an autobiography. 181 00:12:39,340 --> 00:12:43,160 And now that star is out with his first book, aptly titled Here's a Situation, A 182 00:12:43,160 --> 00:12:48,680 Guide to Creeping on Jicks, Avoiding Grenades, and Getting in Your GTL on the 183 00:12:48,680 --> 00:12:49,439 Jersey Shore. 184 00:12:49,440 --> 00:12:50,580 What a title, babe. 185 00:12:51,540 --> 00:12:55,320 GTL stands for Jim Tan Laundry. 186 00:12:55,560 --> 00:12:59,380 A bit on the show that Sorrentino parlays into a lifestyle mantra. 187 00:13:00,980 --> 00:13:02,660 GTL, baby. Jim Tan Laundry. 188 00:13:02,920 --> 00:13:04,440 Do you have this body throughout? 189 00:13:04,760 --> 00:13:07,100 Was the body the whole ticket? You think about a celebrity, you think about 190 00:13:07,100 --> 00:13:08,100 their attributes. 191 00:13:08,620 --> 00:13:12,140 Cardi boy, ladies man, good looking without a shirt, good looking with a 192 00:13:12,260 --> 00:13:14,520 People want to be where the situation is. 193 00:13:14,800 --> 00:13:18,900 Robert Strand is an expert in celebrity branding and licensing. 194 00:13:19,300 --> 00:13:22,800 By 2010, when he was coming into the height of his popularity, that's when 195 00:13:22,800 --> 00:13:26,020 was the height of activity, trying to license Mike the situation. 196 00:13:26,500 --> 00:13:31,500 He says Mike Sorrentino makes some straightforward deals, including 197 00:13:31,500 --> 00:13:34,800 endorsements. in which he is paid to promote a product. 198 00:13:35,060 --> 00:13:39,380 Usually the endorsement deals are in the six -figure range. The vitamin water 199 00:13:39,380 --> 00:13:44,900 commercial was pretty funny. I don't know that it created any longevity for 200 00:13:44,900 --> 00:13:48,180 people wanting to drink vitamin water. I would safely bet that it probably 201 00:13:48,180 --> 00:13:49,260 failed at that time. 202 00:13:50,680 --> 00:13:53,900 Now, this was Mike's reel for all five pieces. 203 00:13:54,720 --> 00:14:00,200 Danny Merck, who plays the boss, sees a Cinderella -like transformation in 204 00:14:00,200 --> 00:14:01,200 Sorrentino. 205 00:14:02,000 --> 00:14:04,560 Mike never really liked to work that much, but he always wanted money and 206 00:14:04,560 --> 00:14:07,720 stuff, and he was always, like, kind of, like, scratching. He was waiting for 207 00:14:07,720 --> 00:14:10,980 the next paycheck all the time. Then the next year he came back, you know, these 208 00:14:10,980 --> 00:14:13,800 guys were making appearances on nightclubs and stuff like that. 209 00:14:15,040 --> 00:14:19,760 According to the Hollywood Reporter, Sorrentino commands $10 ,000, $20 ,000, 210 00:14:20,140 --> 00:14:25,760 sometimes even $50 ,000 for a single appearance at a bar or nightclub like 211 00:14:25,760 --> 00:14:28,240 one. They all of a sudden were coming into money, and people were giving them 212 00:14:28,240 --> 00:14:29,240 stuff all the time. 213 00:14:29,340 --> 00:14:33,100 I remember sitting inside the house and a box full of, you know, clothes showed 214 00:14:33,100 --> 00:14:34,100 up, designer clothes. 215 00:14:34,220 --> 00:14:35,600 Just wanted them to wear that stuff. 216 00:14:36,480 --> 00:14:41,360 And it was different. I saw a change from ashy to classy. 217 00:14:42,600 --> 00:14:47,340 Sorrentino also strikes licensing deals in which he sells rights to his name and 218 00:14:47,340 --> 00:14:49,980 image in exchange for the percentage of revenue. 219 00:14:51,150 --> 00:14:57,090 One such deal is for Devotion Vodka, which Sorrentino promotes at this party 220 00:14:57,090 --> 00:14:58,029 Las Vegas. 221 00:14:58,030 --> 00:15:04,010 And I think 222 00:15:04,010 --> 00:15:10,990 that that deal had a significant impact 223 00:15:10,990 --> 00:15:16,470 on Devotion's brand. I think they went from being a small player in the 224 00:15:16,470 --> 00:15:19,890 to a $30 to $50 million brand with that endorsement. 225 00:15:20,680 --> 00:15:26,300 Once the situation becomes a bankable asset, he is managed by his older 226 00:15:26,460 --> 00:15:32,280 Mark Sorrentino. When the money started rolling in, Mike and his brother Mark 227 00:15:32,280 --> 00:15:37,600 formed a few different business entities to receive income from the various 228 00:15:37,600 --> 00:15:38,720 business ventures. 229 00:15:39,000 --> 00:15:45,680 One of them was MPS, which is initial, and that was a partnership, and it was 230 00:15:45,680 --> 00:15:48,080 formed jointly with his brother, Mark Sorrentino. 231 00:15:48,700 --> 00:15:53,740 Then there was Situation Nation, which is an 1120S. It's an S corporation. 232 00:15:54,500 --> 00:16:01,420 And the money keeps rolling in. The Situation has his own workout video, a 233 00:16:01,420 --> 00:16:08,320 nutritional supplement at GNC, a line of Situation -branded formal wear, and 234 00:16:08,320 --> 00:16:10,440 a comic book character is in the works. 235 00:16:11,870 --> 00:16:18,470 From 2010 through 2012 alone, Mike Sorrentino received approximately $8 236 00:16:18,470 --> 00:16:21,870 .9 million in gross income. 237 00:16:22,090 --> 00:16:25,690 So it was a pretty fast, pretty lucrative time in his life. 238 00:16:26,150 --> 00:16:29,830 I was like, this guy's got everything with his name on it, GTL and Mike 239 00:16:29,830 --> 00:16:33,530 situation and all that stuff. So he was definitely making money every which way. 240 00:16:35,640 --> 00:16:38,100 He was also spending every which way. He was showing me, like, oh, I got this 241 00:16:38,100 --> 00:16:42,220 Ferrari. I was buying stuff, buying lots of stuff. He was like a rap star all of 242 00:16:42,220 --> 00:16:43,220 a sudden. 243 00:16:43,380 --> 00:16:47,820 Though he has big guns, he's got no ammo when it comes to financing. 244 00:16:49,640 --> 00:16:53,920 Sorrentino's assets are the kind that lose value as soon as you drive them off 245 00:16:53,920 --> 00:16:54,919 the lot. 246 00:16:54,920 --> 00:16:58,580 Mike and his brother Mark would keep these luxury cars outside of their 247 00:16:58,580 --> 00:17:02,360 townhouses. They lived near each other, and the parking lot was just filled with 248 00:17:02,360 --> 00:17:06,160 Ferraris and Lamborghinis and all kinds of other luxury cars. 249 00:17:06,560 --> 00:17:11,880 Pictures of it, it's a riot. It's like Lamborghini in his driveway, Porsches 250 00:17:11,880 --> 00:17:14,780 here, a Bentley here, a Jeep here. 251 00:17:15,560 --> 00:17:17,880 The neighbors could not have been happy. 252 00:17:18,670 --> 00:17:23,589 Sorrentino, or at least the persona he creates on the show, may act as though 253 00:17:23,589 --> 00:17:24,930 he's above the law. 254 00:17:25,790 --> 00:17:27,609 But the feds beg to differ. 255 00:17:28,870 --> 00:17:31,910 Up next, a question of fairness. 256 00:17:32,550 --> 00:17:33,770 That's absolutely insane. 257 00:17:34,670 --> 00:17:38,490 Listen, I'm making less than $100 ,000 a year, and if I can pay my taxes, 258 00:17:38,630 --> 00:17:40,370 somebody like that should be able to pay their taxes. 259 00:17:40,570 --> 00:17:41,570 Crazy. 260 00:17:56,170 --> 00:18:01,330 Along the Jersey Shore in Asbury Park, Corey Tequila tends bar. 261 00:18:01,690 --> 00:18:04,050 Yep, you heard that last name right. 262 00:18:04,410 --> 00:18:06,750 It's pronounced Tequila. And I'm a bartender. 263 00:18:07,990 --> 00:18:12,470 Being able to talk to so many different faces and getting to know your customers 264 00:18:12,470 --> 00:18:16,230 and what everybody does and the stories that they have to tell you, it's just a 265 00:18:16,230 --> 00:18:17,230 really fun experience. 266 00:18:18,850 --> 00:18:23,990 I am paid hourly, which would be, I believe it's $2 .13 an hour. 267 00:18:24,560 --> 00:18:26,920 And I also get paid in tips. 268 00:18:27,800 --> 00:18:32,760 Tequila says at the end of every shift, he records his tips in the bar's point 269 00:18:32,760 --> 00:18:33,760 -of -sale system. 270 00:18:33,780 --> 00:18:38,340 And over the course of a year, he has to make sure he's saving enough to pay 271 00:18:38,340 --> 00:18:40,420 Uncle Sam a tax day. 272 00:18:40,960 --> 00:18:45,640 Come April, when we need to pay X amount of money, if you don't have that, like, 273 00:18:45,640 --> 00:18:48,460 you spent it all in a bad situation, you know. 274 00:18:50,670 --> 00:18:52,470 Speaking of a bad situation, 275 00:18:53,270 --> 00:18:55,750 Mike Sorrentino also gets paid in cash. 276 00:18:56,450 --> 00:18:57,450 Lots of it. 277 00:18:57,630 --> 00:19:01,510 There were a significant amount of payments made to him in cash. 278 00:19:01,730 --> 00:19:05,570 And those cash payments came primarily from his personal appearances. 279 00:19:05,890 --> 00:19:10,390 50 % of the appearance fee would be paid up front in the form of a check. 280 00:19:10,630 --> 00:19:15,090 And the remaining 50 % would be paid at the time of the appearance. And that 281 00:19:15,090 --> 00:19:17,050 payment would be made in cash. 282 00:19:17,480 --> 00:19:22,920 At one appearance, the Sorrentinos would receive as much as $10 ,000 in cash for 283 00:19:22,920 --> 00:19:26,260 a single night. And there's nothing wrong with being paid in cash. 284 00:19:27,040 --> 00:19:30,560 What's wrong is if you don't report your income to the IRS and pay your fair 285 00:19:30,560 --> 00:19:31,560 share. 286 00:19:31,800 --> 00:19:36,280 The U .S. Attorney's Office and the Internal Revenue Service will not reveal 287 00:19:36,280 --> 00:19:41,060 they begin to suspect that Mike and Mark Sorrentino are not paying their fair 288 00:19:41,060 --> 00:19:46,140 share. But when they open an investigation, they see many red flags. 289 00:19:46,580 --> 00:19:53,180 Well, in 2011, I can tell you that he did not file a tax return at all. And 290 00:19:53,180 --> 00:19:55,160 the years 2010 and 2012, 291 00:19:55,940 --> 00:20:01,180 IRS agent Cheryl Matajica finds that the Sorrentino brothers drastically 292 00:20:01,180 --> 00:20:03,440 underreport their income. 293 00:20:04,200 --> 00:20:09,200 What we alleged to be false for 2010 was that he only reported, and he being 294 00:20:09,200 --> 00:20:14,460 Michael Sorrentino, a little over $200 ,000 in income from the business. 295 00:20:14,700 --> 00:20:16,720 So that would have been for MPS. 296 00:20:17,500 --> 00:20:21,000 And in 2011, he didn't file, so that would be zero. 297 00:20:21,320 --> 00:20:26,120 And then in 2012, it was a little over $100 ,000, and that would have been 298 00:20:26,120 --> 00:20:27,740 completely from Situation Nation. 299 00:20:28,480 --> 00:20:32,840 Three years, $300 ,000 of income reported. 300 00:20:33,280 --> 00:20:39,040 The problem is Sorrentino's actual income in that time period is $8 .9 301 00:20:39,620 --> 00:20:40,700 That's absolutely insane. 302 00:20:40,940 --> 00:20:44,720 Listen, I'm making less than $100 ,000 a year, and if I could pay my taxes, 303 00:20:44,880 --> 00:20:46,560 somebody like that should be able to pay their taxes. 304 00:20:46,760 --> 00:20:47,760 It's crazy. 305 00:20:47,900 --> 00:20:52,820 The $8 .9 million in income does not include deductions for business 306 00:20:53,360 --> 00:20:57,820 But the Sorrentinos run afoul of the law here, too, according to the U .S. 307 00:20:57,820 --> 00:20:58,820 Attorney's Office. 308 00:20:59,340 --> 00:21:04,910 Well, what happened was the accountant that they worked with, was essentially 309 00:21:04,910 --> 00:21:11,230 writing off personal expenses as legitimate business expenses, expenses 310 00:21:11,230 --> 00:21:17,470 luxury car payments, payments for clothing, payments for grooming 311 00:21:17,470 --> 00:21:23,950 had, at one point, three Ferraris, two Lamborghinis, a Porsche, two 312 00:21:23,950 --> 00:21:29,350 BMWs. They had matching Bentleys for Mark and Mike. 313 00:21:29,920 --> 00:21:34,380 and a few other various cars that they would drive around and claim as business 314 00:21:34,380 --> 00:21:36,780 deductions on their taxes. 315 00:21:37,640 --> 00:21:41,200 Fans of the sitch might argue that it was an honest mistake. 316 00:21:41,800 --> 00:21:45,840 After all, he's never claimed to be the world's most savvy businessman. 317 00:21:47,100 --> 00:21:51,940 But Agent Madagika says the evidence shows that Mike Sorrentino knew what he 318 00:21:51,940 --> 00:21:56,840 doing, that he was deliberate and calculated in his tax evasion scheme. 319 00:21:58,030 --> 00:22:03,870 When he received the cash, we see him going to the bank, going up to the 320 00:22:03,870 --> 00:22:06,330 and actually making the cash deposit into the account. 321 00:22:06,710 --> 00:22:11,270 And it was normally more than one account to thread out the cash deposit. 322 00:22:11,570 --> 00:22:16,310 Cash deposits of more than $10 ,000 trigger a federal currency transaction 323 00:22:16,310 --> 00:22:18,050 report known as... 324 00:22:18,670 --> 00:22:23,370 CTR. It's nothing negative. It just tracks the large cash deposits and 325 00:22:23,370 --> 00:22:28,450 withdrawals. And a lot of people will try to avoid this because they are 326 00:22:28,450 --> 00:22:31,850 trying to hide their income from the IRS or somebody else. 327 00:22:32,170 --> 00:22:35,390 And so they think that by splitting their deposits. 328 00:22:36,120 --> 00:22:39,980 into multiple accounts, as long as they keep each individual deposit into the 329 00:22:39,980 --> 00:22:43,240 account under $10 ,000, that it won't generate the CPR. 330 00:22:43,780 --> 00:22:48,800 Making multiple deposits to avoid triggering a currency transaction report 331 00:22:48,800 --> 00:22:55,400 federal crime known as structuring. And the feds say the situation did a lot of 332 00:22:55,400 --> 00:22:59,000 structuring, tooling around New Jersey in one of his Lambos. 333 00:22:59,420 --> 00:23:04,620 So March 28th, he goes into the bank and he makes four deposits. 334 00:23:05,280 --> 00:23:06,860 into four different accounts. 335 00:23:07,240 --> 00:23:11,960 And as you can see here, three of those four accounts are just under the $10 336 00:23:11,960 --> 00:23:12,960 ,000 mark. 337 00:23:13,240 --> 00:23:18,300 And then the total deposits in general were $36 ,000 and change. 338 00:23:18,820 --> 00:23:22,280 It's a pattern Sorrentino repeats many times. 339 00:23:22,580 --> 00:23:28,620 Call it GTLS, Jim Tan Laundry Structuring. 340 00:23:29,280 --> 00:23:33,460 When you consistently do it over a period of time, that's what forms a 341 00:23:33,600 --> 00:23:35,720 and that's how we prove our structure in cases. 342 00:23:36,140 --> 00:23:37,620 In September 2014, 343 00:23:38,660 --> 00:23:42,920 Mike and Mark Sorrentino are charged with conspiracy to defraud the United 344 00:23:42,920 --> 00:23:46,140 States government and filing false tax returns. 345 00:23:46,600 --> 00:23:51,920 For Professor Thompson at Syracuse, it's more evidence that reality is very 346 00:23:51,920 --> 00:23:54,940 different from this reality TV show. 347 00:23:55,160 --> 00:23:56,600 The situation getting arrested. 348 00:23:57,180 --> 00:24:00,680 We would have expected him to get arrested for some bad boy thing. 349 00:24:00,960 --> 00:24:04,940 He got arrested for tax evasion, which is like the wimpiest thing to get 350 00:24:04,940 --> 00:24:09,380 arrested. What we saw and what we made of these characters is, of course, not 351 00:24:09,380 --> 00:24:15,400 what they really were. On the show, the situation shamelessly revels in bad 352 00:24:15,400 --> 00:24:20,320 behavior. But in real life, the Sorrentinos try to cover up their 353 00:24:27,020 --> 00:24:30,560 financial records that were saved in QuickBooks program. 354 00:24:30,760 --> 00:24:36,980 After the grand jury subpoenas had been served on the Sorrentinos, Mark 355 00:24:36,980 --> 00:24:41,960 Sorrentino had gone into the QuickBooks records and altered the records. 356 00:24:42,480 --> 00:24:48,460 Mark Sorrentino reclassifies taxable income as loans or other non -taxable 357 00:24:48,460 --> 00:24:52,640 income. He did this so the QuickBooks records would be... 358 00:24:53,720 --> 00:24:57,060 similar to the information he filed in his tax returns. 359 00:24:57,540 --> 00:25:02,220 Mark Sorrentino apparently doesn't realize it, but just like the ubiquitous 360 00:25:02,220 --> 00:25:06,040 cameras of Jersey Shore, everything is being recorded. 361 00:25:06,320 --> 00:25:10,240 In QuickBooks, there is something called an audit trail function where you can 362 00:25:10,240 --> 00:25:14,080 see all the changes and modifications that have been made to a file. When the 363 00:25:14,080 --> 00:25:19,360 agents looked at it, they saw down to the timestamp every single thing that he 364 00:25:19,360 --> 00:25:20,360 changed. 365 00:25:21,040 --> 00:25:22,040 That was that. 366 00:25:23,480 --> 00:25:28,820 In April 2017, additional charges of structuring and falsifying records are 367 00:25:28,820 --> 00:25:35,200 added. After months of pretrial wrangling, Mike Sorrentino pleads guilty 368 00:25:35,200 --> 00:25:36,400 count of tax evasion. 369 00:25:37,040 --> 00:25:41,580 And Mark Sorrentino pleads guilty to one count of aiding in the filing of a 370 00:25:41,580 --> 00:25:42,720 fraudulent tax return. 371 00:25:43,340 --> 00:25:45,580 Mike is sentenced to eight months. 372 00:25:45,980 --> 00:25:49,300 And Mark is sentenced to 24 months in prison. 373 00:25:49,900 --> 00:25:54,640 The judge cites Mark's attempt to cover his tracks as a reason for a longer 374 00:25:54,640 --> 00:25:55,640 sentence. 375 00:25:55,780 --> 00:26:00,640 The man who made a fortune acting like the rules don't apply to him learns the 376 00:26:00,640 --> 00:26:02,160 hard way that they do. 377 00:26:03,820 --> 00:26:08,820 As he live streams his ride to prison for the Jersey Shore reboot Family 378 00:26:08,820 --> 00:26:13,560 Vacation, the situation seems to have lost some of his swagger. 379 00:26:13,780 --> 00:26:14,840 He's not looking happy. 380 00:26:15,780 --> 00:26:18,080 He looks like he's scared. 381 00:26:18,760 --> 00:26:24,040 He serves his time at Otisville Prison and gets out on September 12, 2019. 382 00:26:25,300 --> 00:26:29,020 Mike Sorrentino declines to speak with American Greed. 383 00:26:29,220 --> 00:26:34,780 If the situation has a second act, it's a safe bet the feds will be taking notes 384 00:26:34,780 --> 00:26:39,040 and hoping Sorrentino has learned how to pay his fair share. 385 00:26:39,770 --> 00:26:43,750 The government is definitely one of the victims and the taxpayers because we all 386 00:26:43,750 --> 00:26:48,530 pay tax and none of us want to, but we have to. It's what makes the system 387 00:26:52,450 --> 00:26:58,070 Next, Joseph Mellie offers prime seat for the next big investment opportunity. 388 00:26:58,470 --> 00:27:03,870 Ticket world is consolidating. Big money interest, want a piece of it, and he's 389 00:27:03,870 --> 00:27:05,610 the guy to take them there. 390 00:27:06,080 --> 00:27:10,800 But when his investors go looking for their returns, they may find the box 391 00:27:10,800 --> 00:27:12,020 office is closed. 392 00:27:12,440 --> 00:27:15,100 I was looking at the numbers and I said, this math doesn't work. 393 00:27:35,630 --> 00:27:41,490 On Broadway in New York City, one show has led the way to a rebirth of musical 394 00:27:41,490 --> 00:27:42,490 theater. 395 00:27:42,950 --> 00:27:49,770 With more than $600 million in revenue and still growing, Hamilton has 396 00:27:49,770 --> 00:27:50,910 box office records. 397 00:27:52,230 --> 00:27:57,870 And four years after its premiere, the hip -hop musical about the $10 founding 398 00:27:57,870 --> 00:28:01,590 father still draws theatergoers from around the world. 399 00:28:02,360 --> 00:28:05,940 She had been bugging us to fly all the way here. We're from the Philippines, by 400 00:28:05,940 --> 00:28:06,559 the way. 401 00:28:06,560 --> 00:28:09,200 Yeah, we came all the way here to watch Hamilton. 402 00:28:10,120 --> 00:28:13,360 I'm most excited to hear the song, My Shot. 403 00:28:13,600 --> 00:28:15,480 I wouldn't let her see it till now. 404 00:28:15,820 --> 00:28:20,040 She just turned 10, so it was a 10th birthday present from her grandfather. 405 00:28:21,740 --> 00:28:28,460 With tickets ranging from $200 to well over $1 ,000, going to see 406 00:28:28,460 --> 00:28:31,160 Hamilton for many people is a milestone event. 407 00:28:32,720 --> 00:28:37,220 It's a celebration of her birthday, 10th birthday, probably 11th birthday, 408 00:28:37,280 --> 00:28:38,660 probably 12th birthday as well. 409 00:28:39,620 --> 00:28:40,780 Is it hard to get tickets? 410 00:28:41,200 --> 00:28:42,200 Yes. 411 00:28:42,520 --> 00:28:44,500 Very, very, very. 412 00:28:44,860 --> 00:28:45,960 And it helps to know people. 413 00:28:46,880 --> 00:28:49,940 That's what I took. I took an inside connection kind of. You got it. 414 00:28:50,560 --> 00:28:51,560 Hot tickets. 415 00:28:51,840 --> 00:28:53,100 Got high prices. 416 00:28:53,340 --> 00:28:58,660 The conditions are right for a con man to leash onto a popular show and satisfy 417 00:28:58,660 --> 00:29:00,040 his own greed. 418 00:29:03,720 --> 00:29:10,400 Joseph Mellie is born in New York City, grows up in the Midwest, but 419 00:29:10,400 --> 00:29:15,220 returns to the bright lights where he makes a career first in banking and then 420 00:29:15,220 --> 00:29:16,220 in show business. 421 00:29:18,140 --> 00:29:22,780 Dave Brooks, a journalist who writes about the music industry, says Mellie 422 00:29:22,780 --> 00:29:24,820 styles himself as a power player. 423 00:29:25,280 --> 00:29:29,420 He was the guy who could get... 424 00:29:30,120 --> 00:29:34,580 Billy Joel on the phone, or could get a deal with the producer of Hamilton, or 425 00:29:34,580 --> 00:29:37,120 could get a meeting with the people at Harry Potter. 426 00:29:38,600 --> 00:29:43,720 Millie is owner and CEO of Bulldog Entertainment, whose claim to fame is a 427 00:29:43,720 --> 00:29:48,700 concert series in East Hampton, New York, which Millie calls Hampton Social 428 00:29:48,700 --> 00:29:55,040 Ross. His idea is to bring A -list artists, including Billy Joel, Tom 429 00:29:55,140 --> 00:29:57,040 Dave Matthews, and Prince. 430 00:29:57,550 --> 00:30:00,510 to an audience of about 1 ,000 people. 431 00:30:01,390 --> 00:30:05,270 These are small, intimate events, like it's outdoors in the summertime in the 432 00:30:05,270 --> 00:30:10,110 Hamptons. There's celebrity chefs supposedly making food. David Blaine is, 433 00:30:10,130 --> 00:30:11,130 doing magic tricks. 434 00:30:11,510 --> 00:30:15,110 It's kind of like what a poor guy would think rich people, like, really wanted, 435 00:30:15,230 --> 00:30:16,230 right? 436 00:30:16,410 --> 00:30:18,250 Welcome to Social Atlas. 437 00:30:18,650 --> 00:30:23,710 Melly gets many celebrities to attend and has his picture taken with Billy 438 00:30:24,090 --> 00:30:28,920 Alec Baldwin, And Renee Zellweger. Yeah, I love France. This is great. 439 00:30:29,500 --> 00:30:32,660 Tickets to each show cost $3 ,000. 440 00:30:33,700 --> 00:30:40,160 It's this exclusivity. It's like you can only be part of the show that no one 441 00:30:40,160 --> 00:30:44,840 else can be a part of, and you're going to pay for the experience. 442 00:30:45,680 --> 00:30:46,920 The show goes on. 443 00:30:47,500 --> 00:30:51,760 And the star -studded lineup performs well -received concerts for small crowds 444 00:30:51,760 --> 00:30:55,960 in the Hamptons. But Hampton's socialite Ross fails to make money. 445 00:30:56,200 --> 00:30:59,060 I think what he misunderstood, though, was, like, the demand. 446 00:30:59,400 --> 00:31:05,700 Sure, you know, I could find a dozen guys to pay $3 ,000 a ticket, but when 447 00:31:05,700 --> 00:31:10,060 need to find one or 2 ,000 to pay that much money, it's really difficult. 448 00:31:10,880 --> 00:31:17,180 It could never come close to break even because it was too costly and it was 449 00:31:17,180 --> 00:31:18,960 just too small of a customer base. 450 00:31:19,760 --> 00:31:25,320 Hampton's Soccer Let Ross loses millions and shuts down after its first and only 451 00:31:25,320 --> 00:31:31,180 season. But Joe Melle quickly dusts himself off and rewrites his role in the 452 00:31:31,180 --> 00:31:32,180 music industry. 453 00:31:32,380 --> 00:31:35,020 Rather than be an event promoter... 454 00:31:35,420 --> 00:31:36,820 He'll be a ticket broker. 455 00:31:37,200 --> 00:31:42,880 He'll buy and sell large blocks of tickets to premium events and reap big 456 00:31:42,880 --> 00:31:48,840 profits. Joe Mellie, he sees a key moment where the ticket world is 457 00:31:48,840 --> 00:31:54,300 consolidating. Big money interests, hedge funds, investment banks want a 458 00:31:54,300 --> 00:31:57,560 of it, and he's the guy to take him there. 459 00:31:58,060 --> 00:32:04,100 Up next, Mellie acts like he's extremely well -connected, but is he just blowing 460 00:32:04,100 --> 00:32:05,100 smoke? 461 00:32:11,360 --> 00:32:16,380 In Manhattan, Joe Melly is the straw that stirs the drink. 462 00:32:16,860 --> 00:32:22,360 You know, he seems like really generous and really gregarious and who loves like 463 00:32:22,360 --> 00:32:24,480 long dinners and partying. 464 00:32:24,860 --> 00:32:27,080 Yeah, he seems to just know everybody. 465 00:32:27,860 --> 00:32:31,020 He was the kind of guy that said he had everyone's contact on his cell phone, 466 00:32:31,100 --> 00:32:33,280 wanted everyone to know that he had contacts as well. 467 00:32:34,120 --> 00:32:39,420 call somebody, get somebody on speakerphone, and take you to, like, the 468 00:32:39,420 --> 00:32:42,220 restaurants in New York and, like, the best nights out. 469 00:32:42,620 --> 00:32:47,260 Melly was born behind the velvet rope, or so it seems. 470 00:32:47,760 --> 00:32:53,220 In the pitch materials he shows to investors, Melly claims he has long 471 00:32:53,220 --> 00:32:57,820 relationships with an incredibly diverse range of the world's best -known 472 00:32:57,820 --> 00:33:03,080 musicians, from the Rolling Stones to Barbra Streisand to Jay -Z. 473 00:33:03,980 --> 00:33:09,260 He tells investors that his new company, Advance Entertainment, has exclusive 474 00:33:09,260 --> 00:33:12,640 access to the producers of some of the hottest shows. 475 00:33:13,200 --> 00:33:17,220 He picked events that everyone wanted to go to and that were very hard to get 476 00:33:17,220 --> 00:33:18,219 tickets to. 477 00:33:18,220 --> 00:33:19,500 Like Hamilton. 478 00:33:19,780 --> 00:33:22,520 You couldn't get a ticket to Hamilton in the city. 479 00:33:24,060 --> 00:33:28,280 Mellie says his connections will allow him to buy large blocks of premium 480 00:33:28,280 --> 00:33:29,740 tickets at face value. 481 00:33:30,600 --> 00:33:34,140 But he doesn't have enough cash by himself to make the purchase. 482 00:33:35,900 --> 00:33:37,920 That's where the investors come in. 483 00:33:38,140 --> 00:33:40,880 The upside, he says, is enormous. 484 00:33:42,680 --> 00:33:47,960 They were being sold for thousands of dollars apiece, well over what the face 485 00:33:47,960 --> 00:33:53,260 price was. So people knew that these were very in -demand tickets. So they 486 00:33:53,260 --> 00:33:54,300 buying into it based off that. 487 00:33:54,860 --> 00:34:00,000 Melly's pitch dovetails into many people's preconceived notions about the 488 00:34:00,000 --> 00:34:01,000 event business. 489 00:34:01,400 --> 00:34:07,280 Everybody is used to going to try to buy tickets for Adele or Beyonce or 490 00:34:07,280 --> 00:34:12,260 Metallica. And immediately after logging in, they're all gone. 491 00:34:12,480 --> 00:34:16,900 And you go to StubHub and they're selling for double and triple value. 492 00:34:17,300 --> 00:34:21,960 It is always a sense that, like, something nefarious was at play. 493 00:34:22,620 --> 00:34:26,139 Joe was kind of reinforcing what people already believed. 494 00:34:26,659 --> 00:34:32,760 A friend of mine from college was pitched an opportunity to invest in what 495 00:34:32,760 --> 00:34:35,420 to be the Grateful Dead's last tour. 496 00:34:36,040 --> 00:34:39,780 Jonathan Davidoff is a criminal defense attorney in New York. 497 00:34:40,520 --> 00:34:45,659 He says he's not a Grateful Dead fan, but when he hears about the band's long 498 00:34:45,659 --> 00:34:49,280 -awaited reunion tour, he smells something in the air. 499 00:34:49,940 --> 00:34:50,940 Money. 500 00:34:52,350 --> 00:34:58,750 presented to me was that all the premium seats for all the dead concerts on the 501 00:34:58,750 --> 00:35:00,730 tour was provided to advance. 502 00:35:01,050 --> 00:35:05,490 And they were getting the tickets at face value because the dead needed money 503 00:35:05,490 --> 00:35:07,050 fund the tour. 504 00:35:07,270 --> 00:35:13,130 Mellie's deal, he says, allows performers to get paid in advance, and 505 00:35:13,130 --> 00:35:14,850 investors to make huge profits. 506 00:35:15,370 --> 00:35:22,230 As seen here in pitch materials, Mellie guarantees a 10 % return as an absolute 507 00:35:22,230 --> 00:35:23,230 floor. 508 00:35:23,770 --> 00:35:29,850 Profits above that 10 % return will be split 50 -50, he says, between Advance 509 00:35:29,850 --> 00:35:32,290 Entertainment and the individual investors. 510 00:35:32,850 --> 00:35:34,650 But there's one important rule. 511 00:35:34,950 --> 00:35:38,330 Keep quiet and don't dare contact the producers. 512 00:35:39,500 --> 00:35:43,100 You know, I'm the guy dealing with the producer, like, not you. 513 00:35:43,320 --> 00:35:49,360 And if this producer for Hamilton or for Metallica feels like there's all these 514 00:35:49,360 --> 00:35:51,700 different people involved, like, they'll just walk away. 515 00:35:52,240 --> 00:35:53,740 I don't have access to Adele. 516 00:35:54,120 --> 00:35:55,860 I don't have access to the Grateful Dead. 517 00:35:56,260 --> 00:36:01,840 They were the ones with the access, and that's why they were getting a nice 518 00:36:01,840 --> 00:36:02,840 piece of the upside. 519 00:36:03,720 --> 00:36:07,260 David Off puts $50 ,000 into the Grateful Dead deal. 520 00:36:08,140 --> 00:36:12,800 But many people think much more, according to Jud Grossman, who 521 00:36:12,800 --> 00:36:16,360 group of people who thought they were investing in Hamilton tickets. 522 00:36:16,840 --> 00:36:21,120 One of our clients introduced the investment to another client and so on 523 00:36:21,120 --> 00:36:26,340 forth. These individuals collectively invested and lost approximately $6 524 00:36:26,340 --> 00:36:27,299 million. 525 00:36:27,300 --> 00:36:32,140 Despite Joe Melle's promises, the investors' money isn't being used to buy 526 00:36:32,140 --> 00:36:33,140 tickets to Hamilton. 527 00:36:33,530 --> 00:36:34,870 or any other show. 528 00:36:35,130 --> 00:36:38,470 There was about $3 million that came in from a single investor. 529 00:36:39,530 --> 00:36:44,750 And within a couple of days, that money directly went out to buy a house in the 530 00:36:44,750 --> 00:36:49,610 Hamptons for Mr. Mellie. It was kind of a direct, you know, money in, money out 531 00:36:49,610 --> 00:36:53,470 within a handful of days. That investor bought him a very nice house out in the 532 00:36:53,470 --> 00:36:54,470 Hamptons. 533 00:36:54,510 --> 00:36:59,570 According to the government sentencing memo, Mellie uses investor money to buy 534 00:36:59,570 --> 00:37:00,570 Porsche 911. 535 00:37:01,130 --> 00:37:04,210 And he spends lavishly on jewelry for his wife. 536 00:37:04,570 --> 00:37:08,070 In fact, in a single month in January 2017, 537 00:37:08,850 --> 00:37:11,590 Mellie spends $10 .3 million. 538 00:37:12,490 --> 00:37:17,410 Some of that goes back to investors to feed the illusion that there are real 539 00:37:17,410 --> 00:37:20,070 returns. But Mellie also treats himself. 540 00:37:20,330 --> 00:37:27,310 He spends $44 ,000 on wine, $53 ,000 on clothing, and $20 ,000 541 00:37:27,310 --> 00:37:28,310 on hotel. 542 00:37:29,450 --> 00:37:35,010 He even uses investor money to pay for a $2 ,500 parking ticket. 543 00:37:36,090 --> 00:37:40,510 Up next, what does Mellie mean by this cryptic email? 544 00:37:40,810 --> 00:37:42,770 Rest peacefully, young prince. 545 00:37:43,030 --> 00:37:44,810 The wolf is on the way. 546 00:37:56,590 --> 00:38:02,670 As the Grateful Dead takes a bow on its 2015 tour, Jonathan Davidoff, defense 547 00:38:02,670 --> 00:38:08,050 attorney and Grateful Dead ticket investor, gets the news that his ship 548 00:38:08,050 --> 00:38:09,029 in. 549 00:38:09,030 --> 00:38:15,790 So the return was 32%, even though it wasn't the 200%, 300 % return we were 550 00:38:15,790 --> 00:38:18,210 hoping for, it was still a really good return. 551 00:38:18,750 --> 00:38:22,070 Then comes Joe Melle's next investment opportunity. 552 00:38:22,370 --> 00:38:25,070 He's one of the brightest stars performing today. 553 00:38:25,880 --> 00:38:31,820 Adele. Frankly, I think the opinion of all the individuals that invested in our 554 00:38:31,820 --> 00:38:35,620 group was that Adele is a bigger name than the Grateful Dead. 555 00:38:36,160 --> 00:38:41,400 Davidoff says he takes the profits from his Grateful Dead investment in cash and 556 00:38:41,400 --> 00:38:46,980 rolls his original $50 ,000 investment into buying premium seats to Adele's 557 00:38:46,980 --> 00:38:47,980 upcoming tour. 558 00:38:48,910 --> 00:38:53,870 Three miles south in Tribeca, the name Joe Melle first pops up on the radar 559 00:38:53,870 --> 00:38:56,750 screen of FBI Special Agent Paul Roberts. 560 00:38:57,190 --> 00:39:01,690 This was a spinoff from another investigation with someone else who was 561 00:39:01,690 --> 00:39:05,870 trouble and told us about the scheme that Mr. Melle was involved in as well. 562 00:39:06,460 --> 00:39:10,080 Joe Mellie helped him kind of recoup some of the money to pay out some of the 563 00:39:10,080 --> 00:39:11,080 investors. 564 00:39:11,160 --> 00:39:16,640 According to the government's sentencing memo, Mellie wires $3 .75 million 565 00:39:16,640 --> 00:39:22,640 stolen from an investor to a friend who is running his own unrelated investment 566 00:39:22,640 --> 00:39:26,480 scheme and needs money to keep his investors quiet. 567 00:39:26,940 --> 00:39:31,900 In one email to his friend, Mellie writes, Rest peacefully, young prince. 568 00:39:31,900 --> 00:39:33,120 wolf is on the way. 569 00:39:33,740 --> 00:39:36,400 But the wolf is about to become prey. 570 00:39:37,000 --> 00:39:40,940 There was a cooperating witness who made some recordings with Mr. Mellie. Some 571 00:39:40,940 --> 00:39:43,780 of the things Mr. Mellie was saying were pretty blatant. 572 00:39:44,300 --> 00:39:48,760 He talked about running a shell game, about the fraudulent ticket scam. He 573 00:39:48,760 --> 00:39:52,580 said no one would ever know about this unless you or I were speaking to the 574 00:39:52,580 --> 00:39:55,620 authorities. Pretty explicit and blatant in what he was saying. 575 00:39:56,560 --> 00:40:00,220 Next, the FBI does what no investor ever did. 576 00:40:00,570 --> 00:40:05,470 They contact show producers and ask if they actually have deals with Joe 577 00:40:07,050 --> 00:40:11,710 Nope. There were no contracts to buy the tickets, as Mr. Mellon was stating, and 578 00:40:11,710 --> 00:40:13,650 therefore it wasn't a legitimate transaction. 579 00:40:14,070 --> 00:40:19,910 There's no evidence that Joe bought any tickets directly from any show 580 00:40:19,910 --> 00:40:22,310 producers. I mean, it was all a lie. 581 00:40:22,710 --> 00:40:26,910 Though Mellon shows documents to investors that purport to be agreements 582 00:40:26,910 --> 00:40:29,170 show producers, it's all made up. 583 00:40:29,610 --> 00:40:34,010 The government says Mellie even forges the signature of the managing partner of 584 00:40:34,010 --> 00:40:35,610 the production company for Hamilton. 585 00:40:35,930 --> 00:40:40,030 They weren't even close to what an original signature would be. As the FBI 586 00:40:40,030 --> 00:40:44,090 prepares for a takedown, Joe Mellie keeps rocking on. 587 00:40:44,570 --> 00:40:48,890 When the Broadway opportunity for Harry Potter came, I was looking at the 588 00:40:48,890 --> 00:40:52,590 numbers and I said, this math doesn't work. Just get me my Adele money back. 589 00:40:52,870 --> 00:40:53,870 I'm going to be done. 590 00:40:54,190 --> 00:40:56,310 But there is no Adele money. 591 00:40:56,920 --> 00:41:03,140 And on January 27, 2017, Joe Mellie is arrested at his home near Manhattan's 592 00:41:03,140 --> 00:41:04,140 High Line. 593 00:41:04,200 --> 00:41:09,800 Hundreds of investors, who collectively lose just under $60 million, are left 594 00:41:09,800 --> 00:41:11,680 standing when the music stops. 595 00:41:12,120 --> 00:41:13,760 That's a very distressing event. 596 00:41:14,020 --> 00:41:19,360 You've been taken advantage of, you've been lied to, and you feel very 597 00:41:19,360 --> 00:41:22,900 vulnerable. On top of that, of course, you've lost money. 598 00:41:23,390 --> 00:41:28,650 Joe Melle pleads guilty to securities fraud and is sentenced to six and a half 599 00:41:28,650 --> 00:41:29,710 years in prison. 600 00:41:30,090 --> 00:41:34,810 It's a lot of money, but it's not life -changing money. And, you know, you can 601 00:41:34,810 --> 00:41:35,810 learn your lesson. 602 00:41:35,910 --> 00:41:37,310 Trust, but verify. 603 00:41:38,050 --> 00:41:40,410 Do not just take the word of one person. 604 00:41:40,710 --> 00:41:42,150 Get third -party verification. 605 00:41:42,590 --> 00:41:43,590 Do your digging. 606 00:41:44,830 --> 00:41:48,210 Trust, but verify to ensure that you're not being defrauded. 607 00:41:48,650 --> 00:41:53,390 None of the artists or shows mentioned in this program had any part in Melly's 608 00:41:53,390 --> 00:41:54,390 fraud. 609 00:41:55,210 --> 00:42:01,090 Their name, their fame, and their success was exploited by Melly without 610 00:42:01,090 --> 00:42:02,090 knowledge. 611 00:42:02,810 --> 00:42:07,710 Joe Melly did not respond to requests to speak with American Greed. 612 00:42:09,030 --> 00:42:10,670 So why did he do it? 613 00:42:11,570 --> 00:42:15,690 Special Agent Roberts says the answer is written in Melly's checkbook. 614 00:42:16,490 --> 00:42:17,490 Great. 615 00:42:18,549 --> 00:42:22,910 He was a cocky, arrogant guy, and he wanted to live a certain lifestyle, and 616 00:42:22,910 --> 00:42:24,750 did this to get the funds to live that lifestyle.