LOS ANGELES (CNS) - A Beverlywood man is set to be arraigned today for allegedly operating a $230 million Ponzi scheme based on false claims that investor money would be used to acquire licensing rights to films that HBO and Netflix had agreed to distribute overseas.
Zachary Horwitz, 34, who used the screen name “Zach Avery” when acting in usually obscure films, was charged by a federal grand jury with multiple counts of securities fraud, wire fraud and aggravated identity theft, according to the U.S. Attorney's Office.
Horwitz was arrested April 6 and initially held on a $1 million bond before his release.
According to the indictment, Horwitz solicited investors to invest in his company -- 1inMM Capital -- which he claimed would use the funds to purchase distribution rights to films and then license the rights to online platforms such as Netflix and HBO for further distribution outside the United States.
To entice victim-investors, Horwitz allegedly offered to sell them promissory notes issued by 1inMM Capital that he guaranteed would generate a specified return on a specified maturity date, the indictment states.
However, instead of using the funds to acquire films and forge distribution deals, Horwitz operated 1inMM Capital as a Ponzi scheme, using victims' money to repay earlier investors and to fund an “opulent” lifestyle, including the purchase of a $6 million Beverlywood home, federal prosecutors allege.
The scheme allegedly began in October 2014, when investment firms began entering into a series of six- or 12-month promissory notes with 1inMM Capital based on Horwitz's statements.
The funds supplied under each note were supposed to provide money for 1inMM Capital to acquire the rights to a specific film, according to court papers.
Prosecutors allege that to persuade investors he was legitimate, Horwitz provided fake license agreements, as well as fake distribution agreements with Netflix and HBO, all of which allegedly contained forged or fictional signatures.
Despite Horwitz's claim of “solid relationships” with online platforms, representatives for Netflix and HBO deny their companies engaged in any business with Horwitz or 1inMM Capital, prosecutors said.