ORLANDO, Fla. — The chance to invest in concerts by big-name rappers such as Kendrick Lamar, Kanye West, Pitbull and Jay-Z with the promise of huge profits was the bait two Orlando men used for years to rope in investors to their business, a federal lawsuit says.
Andres Fernandez, 38, was indicted earlier this year and in August pleaded guilty to charges of wire fraud involving his company, Kadaae Entertainment. From 2015 to 2017, the company raised about $20.7 million from at least 56 investors who were told their money would be used to “produce and promote concerts at major venues by prominent musicians.”
Edison Denizard, 39, was an early investor in Fernandez’s enterprise and began raising money for Kadaee Entertainment, about $10.4 million from another 78 investors. Denizard was not indicted as part of the scheme but was named in a lawsuit filed by the Securities and Exchange Commission last week in U.S. District Court in Orlando.
They promised investors that in just a few months they would receive their principal investment back plus up to 60% in profits. Investors got free tickets from Fernandez to the shows they believed they were investing in.
Fernandez also claimed to be helping produce the “Art of Rap,” a nationwide tour created by Ice-T as a spin-off from his documentary Something from Nothing: The Art of Rap and music festival of the same name in California, with shows from Public Enemy, Naughty by Nature, Mobb Deep and Sugarhill Gang, among others.
You have free articles remaining.
Investors were told the company was promoting concerts for other major recording artists, including Ricky Martin, Enrique Iglesias, Kanye West, Pitbull, Jay-Z, Snoop Dog and Kendrick Lamar.
But according to the SEC, Kadaae Entertainment didn’t produce concerts for any of those artists and had no involvement in the Art of Rap tour. The free tickets they gave to investors were purchased from Ticketmaster and StubHub.
Fernandez did promote a handful of concerts, but for “lesser-known artists at small Orlando-area venues,” court documents state.
The federal government described the way the operation was run as “Ponzi scheme fashion,” with only about $311,000 of investors’ money actually spent on concerts, generating only about $327,000 in revenue. Fernandez and Denizard pocketed or used the remaining money to pay off earlier investors and reward commissions to sales agents.
The SEC has demanded a jury trial and for Fernandez and Denizard to give up any profits they made and pay a civil money penalty.