Utsick sued in connection with fraudulent offering.

The Securities and Exchange Commission (SEC) filed a civil lawsuit in the U.S. District Court for the Southern District of Florida on Monday charging promoter Jack Utsick and his Worldwide Entertainment, Inc., and Entertainment Group Fund, and American Enterprises, Inc. and Entertainment Funds, Inc. and their principals Robert Yeager and Donna Yeager, in connection with a fraudulent offering that raised over $300 million from over 3,300 investors nationwide.

Utsick and the other defendants, without admitting or denying the allegations of the complaint, have consented to a permanent injunction, an asset freeze, repatriation order, repayment of amounts they received, and penalties.

“The case is partially settled,” Teresa Verges, assistant regional director for the SEC in Miami tells Billboard.biz. “Everything except the penalities and the amount of money they have to pay back, which is called disgorgement. Essentially, it’s their ill-gotten gains.”

The SEC alleges Utsick et al told prospective investors that their investments would earn annual returns ranging from 15% to 25% and, in some in instances, an additional 3% of the profits generated by Jack Utsick and his companies.

Last year, Utsick was involved at some level in 821 concerts that grossed $112.8 million, fourth among all promotion companies, according to Billboard Boxscore. Utsick’s projects include theatrical productions and concerts for such acts as Shania Twain, Van Halen, Elton John, Santana, the Pretenders and Aerosmith.

The SEC reports that Utsick and his companies paid earlier investors with funds raised from new investors because most of the concerts lost money. Verges says the case demonstrates that fraud can exist “even though the business was going, because he did in fact produce the concerts he said he would produce. But nevertheless, as we’ve alleged in our complaint, he lied to investors about the profitability of those shows and the returns, because most of the projects in fact lost money. How do you possibly pay back investers 15-25% plus their principle if the projects are losing money?”

Verges says there was also several incidents of diversion of funds. “He traided an options account (which the SEC says lost $17 million), he bought luxury condominiums, he paid commissions that were never disclosed,” she says. “To the contrary, the offering materials advised investors that commissions weren’t going to be paid. There were a lot of problems, and as a result we brought suit because they are Securities violations.”

Jack Utsick could not be reached for comment.