Actor Zachary J. Horwitz was arrested yesterday in Los Angeles on a federal charge that he ran a massive Ponzi scheme that defrauded investors out of $690 million by touting fictitious film licensing deals with HBO, Netflix and other platforms over half a decade.
Horwitz, 34, who has appeared in minor films under the stage name Zach Avery, was accused by federal authorities and the Securities and Exchange Commission of fabricating emails and agreements from HBO and Netflix executives about nonexistent film distribution agreements.
FBI agents arrested Horwitz at his home in Beverlywood, Calif., the Los Angeles Times reported. He appeared in U.S. District Court on a charge of wire fraud, which carries a statutory maximum penalty of 20 years in prison. He was released on a $1 million bond.
The SEC also obtained an asset freeze and other emergency relief in the emergency enforcement action against Horwitz and his company, 1inMM (one in a million) Capital LLC, for allegedly telling investors that they were buying film rights to resell them to Netflix and HBO. “In fact, neither Horwitz nor 1inMM had ever sold any movie rights to, or done any business with, HBO or Netflix,” the SEC said in a statement.
The agency also alleges that Horwitz and 1inMM promised investors returns in excess of 35%, and for many years paid supposed returns on earlier investments using funds from new investments. The complaint further alleges that Horwitz misappropriated investor funds for his personal use, including the purchase of his $6.5 million dollar home in Beverlywood, frequent trips to Las Vegas and the hiring of a celebrity interior designer. The fraud continued from March 2014 until at least December 2019, the SEC alleged.
"We allege that Horwitz promised extremely high returns and made them seem plausible by invoking the names of two well-known entertainment companies and fabricating documents," Michele Wein Layne, director of the SEC’s Los Angeles Regional Office, said. "We obtained an asset freeze on an emergency basis to secure for the benefit of investors what remains of the money raised by Horwitz."
To keep the ruse going, Horwitz sent investors bottles of Johnny Walker Blue Label scotch with the company’s 2015 annual report, which highlighted a “library” of 52 films his company was supposedly distributing in Africa, Australia, New Zealand and South America. The roster of films included the 1989 action film “Kickboxer” with martial arts action star Jean-Claude Van Damme, the Los Angeles Times reported.
Since December 2019, Horwitz’s company has allegedly defaulted on more than 160 payments due to his investors, the SEC said. JJMT Capital LLC of Chicago is owed more than $160 million in principal and about $59 million in investment profits.
The court set a hearing for April 19 to determine if the asset freeze should remain in force for the duration of the litigation. The complaint also seeks a permanent injunction, disgorgement, prejudgment interest, and civil penalties against Horwitz and 1inMM.