On Monday, Oct. 4, an up-and-coming actor pleaded guilty to conducting a massive Ponzi scheme that generated at least $650 million from investors in phony Hollywood film licensing deals.
Zachary Horwitz, 34, known professionally as Zach Avery, was arrested in April after the Securities and Exchange Commission (SEC) charged him with running a Ponzi scheme that owes investors $277 million in fraudulently acquired funds.
Horwitz reportedly obtained hundreds of millions of dollars in loans for his film company, 1inMM Capital LLC, between 2014 and 2019, by falsely claiming the money would be used to buy distribution rights to movies that would then be licensed for distribution to streaming platforms like Netflix and HBO, prosecutors said, USA Today reported.
However, the SEC said 1inMM had no ties to HBO or Netflix as Horwitz had claimed.
Horwitz used some of the money to repay earlier investors in a classic Ponzi scheme and bought a $6 million mansion.
“Instead of using the funds to acquire films and arrange distribution deals, Horwitz operated 1inMM Capital as a Ponzi scheme, using victims’ money to repay earlier investors and to fund his own lifestyle, including the purchase of his $6 million Beverlywood residence,” the U.S. Attorney’s Office for the Central District of California said in a statement according to The Hill.
“Horwitz defrauded five major groups of private investors, but these entities derived funds from more than 250 sub-investors. By late 2019, 1inMM Capital began defaulting on all of its outstanding promissory notes, according to the plea agreement, in which Horwitz admits that he owes investors more than $230 million and that his scheme has caused substantial financial hardship to at least five investors,” the attorney’s office added.
Documents filed in the U.S. District Court for the Central District of California showed that Horwitz finally agreed to plead guilty and pay any criminal debts as ordered by the court. Horwitz will be ordered to “pay full restitution” to the victims of his alleged scheme and may face up to 20 years in prison.
“Mr. Horwitz has accepted responsibility for his actions, and today’s plea is an important step in that process,” said his attorney, Ryan S. Hedges.
Authorities claim that more than 200 investors lost $230 million, including three of Horwitz’s closest college friends and their families.