A former Carroll High School student who moved to California to pursue a career in films was sentenced Feb. 14 to 240 months in federal prison for operating a Ponzi scheme that raised at least $650 million. The scheme used bogus claims that investor money would be used to acquire licensing rights to films that HBO and Netflix purportedly had agreed to distribute abroad, according to a statement from the Department of Justice.
The classmates.com website shows a photo of Zachary Horwitz as a junior in the 2004 Carroll yearbook. And a Wikipedia entry on him says his parents split when he was 10 years old, and he moved from Tampa, Florida, to Fort Wayne, where he lived with his mother and stepfather.
He attended Indiana University where he played football until an injury ended his NFL hopes.
Horwitz, 35, eventually moved to California to pursue a career in acting and used the stage name Zach Avery. The IMDb website lists his work as “Last Moment of Clarity’ (2020), “The White Crow” (2018) and “Farming” (2018). “The White Crow,” based on the life of ballet dancer and choreographer Rudolf Nureyev, starred and was directed by Ralph Fiennes. “Farming” had Kate Beckinsale listed in the cast.
United States District Judge Mark C. Scarsi ordered Horwitz to pay over $230 million in restitution to his victims. Horwitz pleaded guilty in October to one count of securities fraud.
On April 6, the Department of Justice U.S. Attorney’s Office, Central District of California, issued a news release saying Horwitz had been arrested “on a federal criminal complaint alleging that victims put $227 million – investment principal that has yet to be repaid – into a scheme based on false claims their money would be used to acquire licensing rights to films that HBO and Netflix had agreed to distribute abroad, particularly in Latin America.”
The criminal complaint filed April 5 charged Horwitz with wire fraud, a crime that carries a statutory maximum penalty of 20 years in prison.
According to the affidavit in support of the complaint, over the course of about five years, Horwitz solicited investors to invest in his company – 1inMM Capital LLC – which he claimed would use the funds to purchase regional distribution rights to films and then license the rights to online platforms such as Netflix and HBO. Horwitz provided promotional materials to investors that claimed 1inMM Capital offered “safe” investments because “we receive confirmation from each of our outputs indicating their desire to acquire the rights to any title we purchase PRIOR to us releasing funds for the film.”
According to the 2021 news release, “instead of using the funds to acquire films and forge distribution deals, Horwitz allegedly 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.”
“Defendant Zachary Horwitz portrayed himself as a Hollywood success story,” prosecutors argued in a sentencing memorandum. “He branded himself as an industry player, who, through his company … leveraged his relationships with online streaming platforms like HBO and Netflix to sell them foreign film distribution rights at a steady premium … But, as his victims came to learn, (Horwitz) was not a successful businessman or Hollywood insider. He just played one in real life.”
For more than five years, Horwitz raised millions of dollars from investors, many of whom were personal friends, based on false claims that their money would be used to acquire film distribution rights, which then would be profitably licensed to online platforms such as Netflix and HBO.
“But the whole business was a lie,” according to the Justice Department. “In reality, Horwitz’s company neither acquired film rights nor entered into any distribution agreements with HBO or Netflix. The purported copies of film licensing agreements and distribution agreements were fake.”
The scheme began in 2014, when investment firms began entering into 6-month or 12-month promissory notes with 1inMM Capital based on Horwitz’s statements. The funds were supposed to provide money for 1inMM Capital to acquire the rights to a specific film. To convince investors he was legitimate, the affidavit states, Horwitz provided investors with fake license agreements, as well as fake distribution agreements with Netflix and HBO, all of which contained forged or fictional signatures. Representatives for Netflix and HBO have denied that their companies engaged in any business with Horwitz or 1inMM Capital, the affidavit states.
Investors started to complain after 1inMM Capital began defaulting on notes in 2019, the affidavit states. To prolong the scheme in the wake of mounting defaults, Horwitz provided excuses that were purportedly given by Netflix and HBO, forwarding to investors correspondence with Netflix and HBO in which Horwitz again fraudulently used the identities of Netflix or HBO employees.
The FBI investigated the case. The U.S. Securities and Exchange Commission provided assistance.
Assistant United States Attorneys Alexander B. Schwab and David H. Chao of the Major Frauds Section prosecuted the case.