Actor Zachary Horwitz Arrested Over Alleged $690 Million Hollywood Ponzi Scheme -- 2nd Update
April 07 2021 - 5:07PM
Dow Jones News
By Dave Michaels
WASHINGTON -- 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.
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 Pictures is set as distributor.
Netflix declined to comment. HBO and Lions Gate didn't
immediately respond to requests for comment.
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.
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.
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 e-mail 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."
R.T. Watson in Los Angeles contributed to this article.
Write to Dave Michaels at dave.michaels@wsj.com
(END) Dow Jones Newswires
April 07, 2021 16:52 ET (20:52 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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