Auckland arena investor charged with $470m fraud in US

Problems plaguing Auckland's new indoor arena have taken another twist with news that a Miami-based investor in the project, Jack Utsick, has been charged in the United States with defrauding investors of $470 million.

This follows cost blowouts, late delivery, structural problems with the main curved roof truss, material problems, labour shortages and hostility between the builder and operator on the country's first big public-private partnership.

The United States' Securities and Exchange Commission has charged Mr Utsick with fleecing 3300 investors from 1998 to 2005 to finance dozens of events, some featuring stars such as Elton John and Shania Twain.

Instead of concerts, investor funds went in part to finance two multi-million-dollar condominiums in Miami Beach and a "lavish lifestyle" for Mr Utsick, according to the Miami Herald.

The commission said it had reached a settlement with Mr Utsick and two other music promoters, who had agreed to freeze assets, repay investors and pay penalties. The agreement was made without the defendants admitting or denying the allegations of the complaint and came after the commission filed an action in the District Court for the Southern District of Florida seeking to appoint a receiver to take over the defendants' assets.

The case has raised alarm bells at the Auckland City Council, which has sought an explanation from the private sector joint venture that will operate the 12,200-seat Vector Arena about any implications for the $80 million project. Arts, community and recreation general manager Dr Jill McPherson said the council had learned that Worldwide Entertainment, run by Mr Utsick, had been placed in liquidation and the shares passed to a court in Florida.

Worldwide Entertainment owns 25 per cent in Quay Park Arena Management, which signed a contract with the council in May 2004 to build, own and run the arena for 40 years.

Sydney-based Jacobsen Venue Management owns the other 75 per cent of Quay Park shares.

Under the contract, the council paid $68.2 million and Quay Park invested $11 million.

"The development agreement requires us to be informed of any change in shareholding and we believe this is a change in shareholding," Dr McPherson said.

"My understanding is the shares in effect have passed to the Florida court.

"What we don't understand, and have the lawyers looking at, is what that means for a shareholding in a New Zealand registered company."

When completed, the arena will be the country's largest indoor sporting and entertainment venue.


Slow job

* The $80 million, 12,200-seat Vector Arena in downtown Auckland has design issues, building difficulties, labour shortages, cost over-runs and is way behind schedule.
* It was due to be finished six months ago. Latest estimate is August 31 but problems with the roof may push that back.