Into Thin Air: The Evaporation of the Xclusive Companies

Report from Jim Moriarty

Our continuing investigation of the Olympics ticket scam took us to London where I represented defrauded consumer creditors, including myself, at the Sept. 9 meeting that commenced the liquidation of the Xclusive Leisure & Hospitality Limited and Xclusive Tickets Limited companies.

Insolvency practitioner Lane Bednash, of Valentine & Co., in London, led the two-hour meeting. After a presentation of a Director’s Report and Statement of Affairs, Bednash introduced Alan Thomas Scott, the sole director of the Xclusive companies.

Scott, a 55-year-old Londoner who has been in the ticket reselling business for “many years,” claimed that he could not recall many details of Xclusive finances without having records before him. According to the Bednash report, the companies were formed in mid-2006, generated about $18.5 million in net revenue in two years, and ceased trading in July 2008 with “over 4,329 creditors.”

Scott conceded that the Xclusive companies had failed to deliver more than $6 million worth of Beijing Olympics tickets. In fact, he admitted, the company did not deliver a single Olympics ticket to a buyer. The reason? Scott said Xclusive provided about $3.7 million in cash in at least 50 transactions to a purported ticket supplier, Richard “Ricky” Smith, the “boss” of Peter’s Ticketing, a company “we are unable to trace” and whose London offices have been vacated.

By day’s end, we concluded that the liquidations of the Xclusive companies appear unlikely to produce financial recoveries for defrauded consumers and credit card companies, but I will stay involved as a member of the creditors’ committee and will provide updates as developments occur.

While in London, we also developed investigative leads and contacts for filing criminal charges against the perpetrators of this global fraud. While we determine whether civil claims can be pursued, we urge you to consider filing complaints with the Internet Crime Complaint Center (IC3) of the U.S. Federal Bureau of Investiga-tion (FBI) and the National White Collar Crime Center (NW3C); the U.K. Serious Fraud Office and the U.S. Federal Trade Commission.

Other developments from the Xclusive liquidation meeting:

• No apologies. “Not much I can say by way of apology,” Scott replied when asked if he had anything to say to defrauded consumers. With time, he said, “I’m quite sure they will under-stand” why Xclusive collapsed. He refused to admit that consumers were defrauded. “I wouldn’t say “duped,’” he said. “I won’t have the word ‘cheated’ thrown against me.”

• All in for the company. Scott claimed he sold mortgaged apartment properties and other possessions last year to invest hundreds of thousands of dollars in the ticketing enterprise because he thought he could “provide a better service, a more efficient service.” He now claims to be living in a rented flat and driving a rented car. “Quite frankly,” he said, “I’m a big loser in the company.” He stated in the Bednash report that the Xclusive companies owe him about $377,000. (A representative for a credit card company, which is suing Xclusive in civil court, stated that Scott has been ordered by a UK court to produce evidence of his assets, but so far has ignored the order.)

• “Best in the world at what he does.” Scott said he paid Terence Shepherd, who has been barred from serving as a director of UK corporations, as a “consultant” and that he had “borrowed” tens of thousands of dollars from and repaid Shepherd’s wife, Margaret Canty Shepherd. Scott said he last saw Shepherd “not so long ago” and that “he wished me luck with all that’s going on.” Scott said he “can’t pinpoint” how much money had been paid to Shepherd. Scott said Shepherd “is the “best in the world at what he does.” (See earlier Updates on Terence Shepherd and his relation to ticketing scams here and here.)

• “Not a front guy.” Asked whether he was fronting for others who actually controlled the Xclusive companies, Scott said, “I can’t answer that question. I can just give you an assurance that I’m not a front guy for anybody.” He added that any suggestion that he has “done something to cover Terry Shepherd’s tracks” is “totally wrong.” Scott said Shepherd, Smith and others previously associated with the Xclusive companies “no doubt” know each other.

• Where is Ricky? According to Scott, he has “no idea” where Ricky Smith, his “friend” and longtime source of tickets, can be found. “If he was in London, someone would have seen him,” he said. Told that creditors would be “going after” anyone responsible for the fraud, including Smith if he is shown to be a perpetrator of the fraud, Scott said, “Good. Any information I could supply I would.”

• No need for the police. Scott claimed that he waited two weeks to report the missing $3.7 million in cash to police but called Smith “every day” and checked with “various people.” Scott said he believed Smith – who had “never let me down before” -- was in China and would resurface with the missing cash or Olympics tickets. Scott said that he had not bothered to go to Smith’s home. To do so, he said, would be asking for “trouble. “ Asked whether he was scared of Smith, Scott said, “I’m not scared.” As for why he did not go to the police sooner, Scott said, “I’m not the sort of guy who normally goes to the police.”

• ”Gray area.” Scott said ticket resellers operate in the “gray area” in the UK (because ticket reselling is illegal) and that 90 percent of the transactions in secondary ticket market are cash. Scott conceded that he had no receipts for the missing cash or contracts with Smith’s Peter’s Ticketing. He did produce letters purported to be confirmations of agreements with Peter’s Ticketing.

• Where is Muhammad Ali Nasir? Scott dismissed the role of Muhammad Ali Nasir, the self-proclaimed Internet whiz behind the Xclusive’s Olympics tickets web sites. Scott said, “I wouldn’t say it was him personally, but the whole team would have contributed.” He added, “I can’t say he was the main man.” According to Scott, Nasir recently returned to his native Pakistan.

• Blame the defrauded. Scott suggested that credit card companies shared blame in the collapse of the Xclusive companies. “You stayed with us two years,” he said. Had the companies released hundreds of thousands of dollars held after “chargebacks” increased (due to consumers not receiving purchased tickets, according to the companies), “we could have made best efforts to honor tickets,” Scott said.

• Previous incidents. Scott claimed that he has supplied tens of thousands of event tickets since September 2007 with “no problems.” After credit card company representatives disputed that assertion, Scott conceded that the company had “major problems” in Paris and that police had visited the company “a dozen” times. He said he was “unaware” that an Xclusive representative required police protection in Dublin to keep him from an angry group of people who paid for and did not receive event tickets.

• Looking ahead. Scott said he is not employed at this time, but plans to get back in the ticketing business if he can raise the money to do so. Asked whether he has plans to sell tickets for the Vancouver and London Olympics, Scott said, “Not at this time.”

• Beware of dogs. For those hoping for rough justice in the Xclusive matter, we noticed that Scott showed up for the meeting with his right wrist in a splint. He claimed he was injured when “attacked” by a credit card company’s process server’s dog(s). The credit card company representative then stated that a videotape of the incident would serve as a more accurate portrayal of what happened when Scott was served with litigation papers.