First-Time Defendant, Longtime Talker

Are the Feds Blowing Their Ponzi Scheme Case Against Sports Talker Craig Carton?

Carton says he was a victim of the scheme, not its perpetrator. Notably, someone in the prosecutor’s office seems to agree.

Getty/The Daily Beast

“Numbnuts is out sick.”

That’s how Boomer Esiason initially reported his partner’s absence from the Boomer and Carton show on Sept. 6 of last year. Craig Carton, the million-dollar morning mouth of New York and America’s biggest sports talk station, WFAN, had been arrested at his home at 3:45 a.m. that morning. The feds, Esiason and listeners soon learned, had charged him with multiple counts of fraud for running a Ponzi scheme, with the talker facing what could be as long as 45 years in prison and hefty fines.

Since his arrest, the once-madcap Carton has been visibly chastened. He was out of the spotlight and silent for weeks following a single public statement declaring his innocence immediately after his September arrest. He resigned from Boomer and Carton and put his $2.4 million house on the market. Now he’s back on the air, or at least on his own podcast, reviving his long-standing feud with his former WFAN colleague Mike Francesa and even expanding his list of topics to include pointed comments on honesty and resiliency. And last week, Carton tweeted “CONTRACT SIGNED.” A spokesperson for Carton says he will be launching his own channel on Twitch.TV, a platform for gamers to watch and discuss people playing video games and where some gamers make significant money from advertising revenue.

Carton’s new gig comes just after a federal judge agreed earlier this month to let him travel domestically to pursue career opportunities ahead of his March trial date, and amidst signs that the charges against him—in simultaneous criminal complaints from the Securities and Exchange Commission and federal prosecutors alleging he defrauded investors in a scheme to resell A-list concert tickets—may not be as strong as they initially appeared.

On its face, Carton’s case—in which he’s facing as much as 45 years in prison, as well as hefty fines—looks like a straightforward exercise in affinity fraud. The complaints allege investors were promised as much as a 10 percent return on their money. In reality, prosecutors say, he took the cash and used it to pay off earlier investors in the ticket business, gambling debts at various casinos, and personal loans.

Carton was a high-profile radio personality who had equally high-profile connections. He also had the backing of Joseph Meli, a well-known event promoter and Hamptons socialite. Meli was seeking investors through his own company Advance Entertainment Inc., which already had financial support from at least one hedge fund and several wealthy individuals. As the theory goes in these types of cases, it was easy for Carton and Meli to bring in investors because they were known entities who appeared to already have success.

But the relationships in this case are complicated and it’s not immediately clear that prosecutors know which side Carton is on.

Carton has maintained his innocence since his arrest and entered a not guilty plea at his arraignment. In a public statement shortly after he was released on his own recognizance, Carton said he planned to fight to clear his name. Carton’s lawyer, Robert C. Gottlieb of Gottlieb and Janey, LLP maintains that Carton’s ticket resale business was legitimate and had already sold thousands of tickets at the time of his arrest.

“There are many aspects of how Mr. Carton is portrayed in these complaints that are demonstrably false,” Gottlieb told The Daily Beast. “We intend to prove that Mr. Carton was not in significant debt as the complaints say. He had a legitimate business and was gainfully employed.”

Gottlieb also maintains that Carton was a victim of Meli’s fraudulent business dealings and had no indication that investor money was being misappropriated. Notably, someone in the prosecutor’s office seems to agree. Carton and his ticket companies have been sent five separate letters notifying him that he is understood to be a victim of the same Ponzi he’s been charged in.

When contacted by The Daily Beast, a spokesperson for the Southern District seemed surprised that Carton was getting these letters and said they would “look into it.” One letter could be dismissed as a formality, but it’s hard to ignore five.

And the letters aren’t the only issue with the case against Carton. Not all the evidence prosecutors claim to have may make it to the courtroom.

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Michael Wright, a strip club owner and an associate of Carton, who was also arrested in connection with the Ponzi scheme in September, has alleged that law enforcement illegally obtained his cell phone during his arrest. Wright’s then-attorney, Jonathon Marc Davidoff of Davidoff Law Firm PLLC, has sought an injunction to keep the FBI from searching the phone ahead of the trial. In a letter submitted by Davidoff to the court, Wright says that he met the FBI at his front door in nothing but track shorts, and that his phone was later confiscated from his wife after she took it to jail for him along with a change of clothes.

(Davidoff has also stepped back as the attorney of record for Wright and is filing his own civil case as one of the defrauded investors in Meli’s scheme.)

Meli, the Hamptonite event promoter, was arrested in connection with the Ponzi scheme and pleaded guilty. His charges were reduced as part of a deal after his lawyers argued that some of the evidence against him was obtained in ways that violated New York’s Rules of Professional Conduct—potentially meaning that part of the case the feds built against Carton may also be lost.

According to the complaint in Meli’s case, he and associate Steve Simmons created the ticket sale investment scheme to cover personal debts and repay investors in a hedge fund managed by Simmons. Carton allegedly became involved as a ticket seller. Simmons pleaded guilty in a federal court in Manhattan to conspiring to commit securities fraud and wire fraud in conjunction with the Ponzi scheme in October. Daniel Fetterman of Kasowitz Benson Torres LLP, Meli’s attorney, flatly denies that Carton is a victim in this case and called the victim letters from federal prosecutors “boilerplate” in a statement.

As Carton heads toward trial, listeners may be in for a ringside seat if he uses his channel on Twitch.TV and podcast to discuss the circumstance he’s found himself in. The channel launched in beta last Friday with a kickoff event at The Kettle Black in Staten Island, with its official rollout slated for Monday, Jan. 29.