Tuesday, April 13, 2021

Hollywood actor charged with running film-delivery Ponzi scheme

The 2017 film “Bitter Harvest” would not be considered successful by many definitions.

“This is a bad sign when Prarthana in this film is also naïve,” observed a reviewer, who contributed to the film 15 percent critic rating On rotten tomatoes.

Pulled in less than $ 600,000 In the United States. But this did not mean that it was still unlikely to have funds abroad. All investors needed to help buy the rights to distribute it and many other films in Latin America, Africa and New Zealand. Major distribution deals with HBO and Netflix were on the verge of being formalized, he was told. Once they fell, investors would get returns of at least 35 percent.

This is the essence that the Securities and Exchange Commission and federal prosecutor are calling a Ponzi scheme run by Zachary J. Horwitz, not a particularly famous actor Rather extraordinary House. Mr. Horwitz, known as Zach Avery’s stage, was arrested on Tuesday on wire fraud charges. He is accused of defrauding investors of at least $ 227 million and forging his company’s business ties with HBO and Netflix.

“We allege Horwitz promised extremely high returns and made him admirable by writing the names of two well-known entertainment companies and forging documents,” said Michelle Wayne Layne, director of the SEC’s Los Angeles Regional Office. News released on tuesday.

Prosecutors said the correspondence forwarded to customers by Mr. Horwitz, which had HBO and Netflix email addresses, was fictitious as his subject Most recent film, Horror film “Freaks down“(Rotten Tomato Critic Score: 0 percent). According to Thom Mirzek, a spokesman for the US Attorney’s Office in Los Angeles, Mr. Horwitz had not acted in any of the 50 or so films.

Mr. Horwitz was in jail on Wednesday, Mr. Mrozek said. One Million Productions attempts to reach out to other employees of One, whose website has the tag line “When Odds Are One in a Million”. Be one, “he failed. (Later on Wednesday afternoon, the site was removed.)

Mr. Horwitz’s attorney, Anthony Pacheco, did not respond to a request for comment.

The Ponzi scheme started when an investor returned the money in 2019 and could not receive it, Mr. Mrozek said.

For several years, 1inMM – as the company puts its name – found ways to pay investors, according to SEC court documents not listing all of the films that investors thought they bought the rights to Has helped, but the complaint includes the image of 1inMM “Library”; the 1989 Jean-Claude van Damme film “Kickboxer“And the 2013 romantic comedy” The Magnificent “are now included.

The way money can be made in the world of film distribution is that, “I’ll give you $ 100,000 for Latin America rights,” for example, Mr. Mogurek said, “I go to HBO or who And say, “Give me $ 200,000 to show the film. ”

It is possible that the company was successful in purchasing international distribution rights for a handful of films, or even that it started with good intentions, Mr. Mogra said. But what it did not have was the relationship with HBO and Netflix that Mr. Horwitz told investors. This was the relationship they said essentially guaranteed them returns of 35 percent or more within six months or a year.

“I believed if HBO was involved, my investment was safe,” one investor told the SEC

First, Mr. Horwitz was able to live up to his promises. In typical Ponzi scheme fashion, earlier investors used to get money from new investors, Mr. Mrozek said. His customers could believe that investing in the scene of “The Kickboxer” in New Zealand and Latin America was too smart.

But at some point, not enough money was flowing to maintain the illusion – even Johnny Walker was sent to the principal with the help of Mr. Horwitt, a Blue Label Scotch, according to FBI agent John Verstro, who in a complaint The plan was outlined. . Mr. Horwitz also improperly used investor funds for a $ 5.7 million house and a celebrity interior designer at $ 700,000 in fees, According to the SEC.

According to court documents, since December 2019, 1inMM has defaulted on more than 160 payments. An investor in Chicago, who owed more than $ 160 million in principal and $ 59 million in profits, wanted his returns and could not get them, Mr. Mrozek said. The investor contacted the authorities.

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