Friday, September 17, 2021

Actor Zachary Horwitz arrested for running a $690 million Ponzi scheme


A Los Angeles actor was the mastermind of a $690 million Ponzi scheme that bilked investors who thought their money would finance distribution rights for movies that would run on HBO and Netflix, according to authorities.

Zachary Joseph Horwitz, who went by Zach Avery as an actor, was arrested Monday and charged with wire fraud, according to the Los Angeles U.S. attorney’s office. The Securities and Exchange Commission also sued Mr. Horwitz and his firm, 1inMM Capital LLC, in civil court over the alleged scam, which it says involved an elaborate plan to portray efforts to sell film-licensing rights, primarily in Latin American markets.

- Advertisement -

Mr. Horwitz’s LinkedIn profile states he is managing partner of 1inMM. He didn’t respond to a request for comment sent through LinkedIn. Court records on Wednesday didn’t list a lawyer for him.

The 34-year-old actor has a profile on IMDb, the online movie database, where he is credited for roles in a handful of low-budget films. His most recent credits include a still-unreleased, higher-profile movie called “Gateway,” starring Olivia Munn and Frank Grillo. Hollywood studio Lions Gate Entertainment Corp.’s specialty label Grindstone Entertainment is set as distributor.

Netflix declined to comment. HBO and Lions Gate didn’t immediately respond to requests for comment.

- Advertisement -

Mr. Horwitz told investors that he had acquired and distributed dozens of films including titles such as “Active Measures,” “Lucia’s Grace” and “Blood Quantum.” He doctored fake contracts signed by fictional HBO or Netflix executives, which made it look like he was doing business with the streaming platforms, according to a Federal Bureau of Investigation affidavit. For a while, Mr. Horwitz paid investors their purported returns using proceeds generated by new investors, the hallmark of a Ponzi scheme, according to authorities.

But in late 2019, he began defaulting on nearly every payment due to investors and blamed the problem on HBO and Netflix Inc. refusing to pay for movies they had licensed from his company, according to the SEC. Mr. Horwitz even sent emails to investors that supposedly showed him discussing the status of his agreements with employees of Netflix and HBO, the FBI said.

In total, he defaulted on about $227 million in payments anticipated by investors, according to the FBI. He also used investor funds to pay in cash for a $5.7 million home in Los Angeles’s Beverlywood neighborhood, the SEC said.

Mr. Horwitz’s investors included personal contacts and people who knew other investors who had given him money. He promised returns in excess of 35% on the movie projects, according to the SEC’s federal-court complaint.

- Advertisement -

The alleged scheme victimized five main groups of investors, according to an FBI affidavit. The largest source of funds came from a private firm whose principals live in the Chicago area, JJMT Capital LLC, which received an annual report that portrayed Mr. Horwitz’s success in the film-distribution business, along with a bottle of Johnnie Walker Blue Label scotch, according to the FBI affidavit.

Mr. Horwitz knew JJMT’s founders from their days together as undergraduates at Indiana University, according to people familiar with the matter. JJMT’s principals were duped by Mr. Horwitz and cooperated with federal investigators, one of the people said.

Hollywood publicist Nedda Soltani said she was once assigned by the company Entertainment Fusion Group to help boost Mr. Horwitz’s profile as an actor but knew nothing of any alleged efforts to defraud investors. Ms. Soltani said she was aware that her client, whom she said she knew only as Zach Avery, split his time between acting and a “financial startup situation where he invests in emerging brands and companies.”

Entertainment Fusion Group didn’t immediately respond to a request for comment.

According to IMDb, Mr. Horwitz appears to have got his start appearing in a handful of short films, including 2009’s “G.E.D.,” where he is credited as playing the character called “Thug.”

Ivan Parron, a lawyer for Cess Silvera, the director of “G.E.D.” said by email that his client has never heard of the actor Zach Avery and doesn’t understand “why this individual claims he was in this film and appears on the IMDb profile.”


Get our daily notification on the latest financial crimes news around the World



This Week