Chandler Man Arrested in Multi-Million Dollar Entertainment Ponzi Scheme

PHOENIX—A 37-count indictment has been unsealed charging Miko Dion Wady, 34, of Chandler, Ariz., with Wire Fraud and Transactional Money Laundering. Wady was arrested without incident yesterday by federal and local law enforcement officials in Tempe, Ariz. He will make his initial appearance before U.S. Magistrate Judge David K. Duncan at 3:00 p.m. today in federal district court in Phoenix.

According to the indictment, Wady operated and had an ownership interest in various business enterprises that purportedly were engaged in the business of promoting concerts or tours of well known entertainers and artists. The enterprises included Dezert Heat Entertainment, Inc.; Dezert Heat, Inc.; Dezert Heat Worldwide, LLC; NATO Enterprises, LLC; and NATO Entertainment, LLC.

The indictment alleges that Wady and others misled victim investors into believing that Wady entered into performance contracts and other business arrangements with nationally and internationally known entertainers, arranged performance venues throughout the world, and greatly profited by putting on these concert or tour events. The indictment alleges that from 2004 through 2007, Wady claimed to have promoted concerts for The Rolling Stones, U2, Barbara Streisand, Faith Hill, Tim McGraw, Mariah Carey, George Strait, Billy Joel, Jamie Foxx, Jimmy Buffet, Mary J. Blige, Pearl Jam, and at least 30 other well known artists and entertainers. Also according to the indictment, during this period, Wady appears to have actually promoted fewer than 10 concerts, all involving only local or lesser known artists.

According to the indictment, Wady utilized TransCapital, LLC, located in Mesa, Ariz., which was operated by James Cundiff and his two sons, Adam and Jeremiah Cundiff. TransCapital was allegedly established solely to secure “investment” financing for the concerts and tours purportedly being promoted by Wady. The indictment states Wady later used Dezert Heat Worldwide, another joint venture with the Cundiffs, for the same purposes.

The indictment purports that from August 2004 through March 2007, the Cundiffs, through TransCapital or Worldwide, entered into loan and event funding agreements with more than 250 victim investors, and obtained no less than $50 million dollars to finance approximately 150 concerts or concert tours purportedly being promoted by Wady. Allegedly victim investors were typically promised interest rates of four per cent per month for a maximum of six months or 24 per cent for one promoted event.

The indictment alleges that Wady had no association or contractual arrangement with any of the significant concerts or tours, and the investor funds given to Wady from the Cundiffs were never actually used as represented to the victim investors. Most of the funds were instead allegedly returned by Wady to the Cundiffs within a short period of time, typically one or two days, under the guise that these repayments represented the net proceeds from some other concert or tour that was recently completed. It is alleged in the indictment that because no actual investments were used for the represented concerts or tours, new victim investor monies were simply used to repay old victim investors, in what is commonly termed a Ponzi scheme.

The indictment indicates when the Ponzi scheme was discovered and collapsed in 2007, approximately 140 victim investors still had not been repaid their outstanding “investment” loans of approximately $25 million dollars.

It is alleged that between 2004 through March 2007, Wady used no less than $3 million dollars of victim investor funds to pay for a lavish personal lifestyle. During this period, Wady allegedly purchased for himself and others, at least 30 vehicles, including a Lamborghini, a Ferrari and a Bentley. Wady allegedly also purchased a $175,000 luxury 41 foot boat and $800,000 in real estate. All of these purchases were purported to be paid from funds he obtained from victim investors.

A conviction for Wire Fraud carries a maximum penalty of 20 years in federal prison, a $250,000 fine or both. A conviction for Transactional Money Laundering carries a maximum penalty of 10 years in prison, a $250,000 fine or both. An indictment is simply the method by which a person is charged with criminal activity and raises no inference of guilt. An individual is presumed innocent until competent evidence is presented to a jury that establishes guilt beyond a reasonable doubt.

The investigation preceding the indictment was conducted by the Federal Bureau of Investigation, the U.S. Postal Inspection Service and the Criminal Investigation Division of the Internal Revenue Service, with assistance from the Maricopa County Sheriff’s Office and the Mesa Police Department. The prosecution is being handled by Peter Sexton and Frederick A. Battista, Assistant U.S. Attorneys, District of Arizona, Phoenix.

CASE NUMBER: CR-09-1485-PHX-JAT
RELEASE NUMBER: 2010-002(Wady)