SEC Accuses Actor of $690 Million Fraud Based on Fake Netflix Deal
(Bloomberg) -- Zachary Horwitz never made it big on the Sunset Strip -- there was the uncredited part in Brad Pitt’s “Fury” and a host of roles in low-budget thrillers and horror flicks. But federal charges suggest he had acting talent, duping several financial firms out of hundreds of millions of dollars and enabling him to live the Hollywood dream after all.
That meant chartered flights and a $6 million mansion -- replete with wine cellar and home gym. Horwitz even included a bottle of Johnnie Walker Blue Label, which retails for more than $200, as a gift to investors along with his company’s “annual report.”
The claims are outlined in legal documents that U.S. prosecutors and the Securities and Exchange Commission released this week alleging Horwitz, 34, was running a massive Ponzi scheme. His scam: a made-up story that he had exclusive deals to sell films to Netflix Inc. and HBO. Dating back to 2014, the SEC said he raised a shocking $690 million in fraudulent funds. On Tuesday, Horwitz was arrested.
Horwitz, who went by the screen name “Zach Avery,” used fabricated contracts and fake emails to swindle at least five firms, according to the government. Investors were issued promissory notes through his firm 1inMM Capital to acquire the rights to movies that would be sold to Netflix and HBO for distribution in Latin America, Australia, New Zealand and other locations.
The claims of business relationships with the media companies were bogus, according to prosecutors, with a Netflix executive going so far as to send a cease-and-desist order to Horwitz and his attorney in February.
While Horwitz promised returns in excess of 35%, he was actually relying on new investors to pay off old ones, according to the SEC, which won a court order to freeze his assets. Ryan Hedges, Horwitz’s attorney, didn’t respond to requests for comment.
Horwitz’s most recent film credit, according to IMDB, is this year’s “The Devil Below.” It’s about a group of adventurers who try to find out the cause behind a mysterious coal mine fire in the Appalachian Mountains.
A federal court in California has set a hearing for April 19 to determine whether the asset freeze should continue to be enforced as litigation against Horwitz proceeds, the SEC said.
Even as the feds closed in, he kept trying to reassure clients that his business was real. In a March 12 email to his biggest investor, Horwitz claimed he had sorted things out with HBO and that 1inMM and its backers would be paid in full without the need for litigation, according to the Justice Department’s criminal complaint. But he added that “Netflix is a real problem at the moment.”
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