UPDATED, 7:29 AM: Actor Zachary Horwitz has pleaded guilty in a Ponzi scheme that cost investors more than $227 million with fake promises of licensing rights to films by WarnerMedia-owned HBO and Netflix in Latin America.
Horwitz, who has gone by the screen name Zach Avery, entered his plea to one count of securities fraud Monday in Los Angeles, the U.S. Attorney’s Office for the Central District of California said in a statement. He faces up to 20 years in prison if convicted.
Horwitz used some of the stolen money to buy a $6 million house in the Beverlywood area of Los Angeles and paid off more than $300,000 in credit card debt, prosecutors said. He is scheduled to be sentenced January 2.
PREVIOUSLY, April 7: In a real-life scheme that could easily make up the plot of a network procedural or streaming limited series, HBO and Netflix helped the feds bring to justice a Hollywood wannabe who scammed investors out of hundreds of millions of dollars.
Zachary Horwitz, who has gone by the screen name Zach Avery, was taken into custody by the FBI Tuesday on criminal charges of allegedly defaulting on more than $227 million from backers who thought they were going to cash in with licensing right to films by the WarnerMedia-owned cabler and the streamer in Latin America.
“In reality, neither HORWITZ nor 1inMM Capital ever engaged in email correspondence with Netflix or HBO, nor did HORWITZ or 1inMM Capital ever have any business relationship with Netflix or HBO at all,” declares an April 5 affidavit from FBI Special Agent John Verrastro of The Devil Below actor and his film distribution shingle formed in 2013. “The email exchanges and licensing agreements were fake,” Verrastro adds (read the affidavit here).
Fake as they may be, the high-living Horwitz had the scam running quite successfully for a number of years, with few questions asked by his avaricious investors. By taking funds from Paul to pay Peter, so to speak, Horwitz was able to bilk more backers and to float the scheme’s promised return of 25% to the likes of Chicago-based JJMT Capital, LLC. Over more than five years, the sleight of hand provided a mirage of financial triumph and allowed Horwitz to snag a $6 million Beverlywood spread and other baubles.
In late 2019, however, 1inMM began to default on its promissory notes, with claims of time-consuming audits and corporate restructuring at Netflix and HBO.
“To prolong the scheme and maintain the illusion that 1inMM Capital was a legitimate business in the wake of these mounting defaults, HORWITZ falsely represented to JJMT that the online platforms had refused to pay on time for the distribution rights as obligated, and provided excuses that were purportedly given by Netflix and HBO,” Verrastro’s affidavit continues.
“To support these claims, HORWITZ repeatedly sent JJMT emails in which he forwarded purported email correspondence with employees of Netflix and HBO, respectively, discussing the underlying licensing agreements,” the paperwork goes on to say of the elaborate and clearly faked ends Horwitz went to keep the good times rolling.
As with any good drama, there are some pretty choice cameos here too.
Obviously working with the feds in their probe, Melinda LeMoine, Netflix’s Director of Content Litigation, and WarnerMedia’s Senior Litigation Administrator Patrick Younan make pivotal appearances in the affidavit. Both executives gave signed declarations to the FBI on the matter and the fact that neither of their organizations had any relationship with Horwitz and 1inMM.
“In fact, on February 12, 2021, Ms. LeMoine sent a cease-and-desist letter to HORWITZ both via his LinkedIn account and through his attorney,” the filed affidavit notes.
“The letter stated that Netflix learned HORWITZ and his company 1inMM Capital had used forged documents to represent to third parties that 1inMM Capital had licensing agreements with Netflix, but that, in fact, Netflix had no such agreements with 1inMM Capital or HORWITZ,” the FBI special agent’s document states. “The letter further stated that HORWITZ has used fabricated emails purportedly exchanged with a Netflix employee to represent to others that he anticipates receiving funds from Netflix, and that those emails are also fraudulent. The letter demands that HORWITZ stop making misrepresentations regarding his agreements with Netflix.”
Neither Netflix nor HBO had a comment on the case today when contacted by Deadline.
On April 6, Horwitz appeared in U.S. District Court to face the music from prosecutors Assistant United States Attorneys Alexander Schwab and David Chao of the Major Frauds Section.
With the criminal complaint against him now unsealed, the “self-described Hollywood entrepreneur” faces up to 20-years behind bars if found guilty of the wire fraud charges. The presiding judge set Horwitz’s bond at $1 million, and he was released late Tuesday after the matter of coming up with that cash was figured out.
Right now, an arraignment is on the court calendar for May 13 in the case.
Who knows, an adaption of this wild ride might be in development by then.
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