Sports talk radio star Craig Carton was arrested in a fake discount ticket business that the government says was more like a Ponzi scheme, according to a court document unsealed in the case.
Carton and two other individuals, one of whom was also charged, solicited investors for money to buy blocks of tickets to shows and other live events and then resell them at a profit. But instead, the investor money was used to pay millions of dollars in personal debts and to reimburse prior investors, authorities said.
In a separate civil case unveiled on Wednesday, the Securities and Exchange Commission said Carton had racked up millions of dollars in gambling debts to casinos and others by the time he began soliciting investors in the ticket scheme, in which he told investors he had access to millions of dollars worth of tickets to concerts by Katy Perry, Justin Bieber, Adele and other performers.
Carton negotiated for $10 million in financing from an unnamed hedge fund to help purchase tickets in return for a cut of the profit from the resale of the tickets, according to the government's complaint dated Tuesday and filed at the federal court in Manhattan. But they planned to use the financing to pay back debt instead.
The government said the fraud took place from September through December last year, and it charged a second man, Michael Wright, in the scheme as well. Wright is identified as an associate of Canton's.
The complaint details emails and text messages in which the men tried to figure out how to juggle debts with incoming investor money.
In a September email, Wright discussed with Carton and a third unnamed individual more than $1 million in debt shortly coming due: "Run to Costa Rica, change name, and start life all over again -- may not be an option."
"As you know it's a game," Wright told Carton in an October email, according to the government's complaint.
The hedge fund, though unnamed by the government, was described as a "global investment management firm based in New York."
In its separate case, the SEC named Carton and another individual, Joseph Meli, who allegedly had access to a bank account that received investor money from the hedge fund.
The FBI arrested Carton early Wednesday at his Manhattan home, according to NBC New York, which first reported the story.
Carton, who has co-hosted WFAN's morning show "Boomer & Carton" with Boomer Esiason since 2007, could not be reached for comment by CNBC. A spokesman for CBS Radio, which owns WFAN, said, " We are aware of the situation and are cooperating with authorities."
Jim Forkin contributed to this report.