Zachary Joseph Horwitz LA based actor sentenced to 20 years jail in $650 million Ponzi scheme that bilked investors. The world of make believe.
An actor’s guide to playing a movie mogul producer in real life until the stage lights are turned back on….
A Los Angeles actor starring in a string of low budget films on Monday was sentenced to 20 years in federal prison after pleaded guilty to scamming investors out of an estimated $650 million in an ongoing Ponzi scheme.
As part of his sentencing, Zachary Joseph Horwitz also known by his stage name, Zach Avery as was obligated to pay bilked investors $230,361,884 that the ‘fake producer’ illicitly obtained from the fraudulent scheme according to the U.S. attorney’s office in LA.
Prosecutors said Horwitz would use loans from one group of investors to repay the others, while taking millions of dollars to pay for his opulent lifestyle.
Horwitz persuaded five investor groups and more than 250 people to lend him cash by claiming he could buy movie rights from producers and sell them to HBO, Netflix and Sony Pictures Entertainment at a large profit as the platforms seized on global consumers’ shift to streaming, prosecutors said.
Taking advantage of media’s rush to new content forums
Horwitz promised returns of as much as 45 percent and displayed fraudulent documents, including agreements giving his firm those rights, they said. Except those agreements never existed in the first place.
Horwitz scheme fed off media giants rapidly acquiring web based content in the later half of the 2010’s as new content forums opened up, as vendors sought to stock up rights to titles, including those in the little regulated emerging foreign market online, in what has been described as the ‘streaming wars.’
Federal prosecutors, narrowed the case to one count of securities fraud after Horwitz agreed to plead guilty last year. Upon receiving funds from one group of investors, the would be movie mogul would used part of his newest investment cash to make promised payments, with interest, to earlier investors, along with using part of the proceeds to fund his lavish Hollywood lifestyle.
Some of the splurges included Horwitz paying a celebrity interior designer $700,000 to remodel his $5.7 million home in Beverlywood, California.
Horwitz also used some of the funds to finance low-budget films he appeared in, including ‘Gateway’ and ‘The White Crow,’ (see below) according to court documents.
In 2013 the scheming would be movie mogul set up a firm called 1inMM Capital LLC, ostensibly to buy the rights to English-language movies and sell them to major media companies for streaming in Latin America, FBI Special Agent John Verrastro said in an affidavit last year.
The scam started the next year, prosecutors said.
Hollywood success story – only in illusion
Horwitz pitched his targets on a single title, sometimes getting $1 million or more from each victim and then later updating victims on its progress, Verrastro said.
Prosecutors said the actor relied on his personal relationships and ‘word-of-mouth’ referrals to secure investors, while assuring them he had experience in the media content distribution industry.
‘Defendant Zachary Horwitz portrayed himself as a Hollywood success story,’ prosecutors said in a court affidavit. ‘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.’
Horwitz later claimed to have expanded his rights-flipping strategy to other foreign markets, including Australia and New Zealand, Verrastro said. The boundless profits Horwitz promised investors never resulted.