May 8, 2021 00:55

Federal charges for actor who ran massive ponzi scheme defrauding investors of $227M

Michael Finnegan

Los Angeles Times

Zachary J. Horwitz, a small-time actor, was arrested Tuesday in Los Angeles on a federal charge that he ran a massive Ponzi scheme that defrauded investors out of $227 million by touting fictitious film licensing deals with HBO, Netflix and other platforms.

Horwitz, 34, who has appeared in minor films under the stage name Zach Avery, was accused of fabricating emails from HBO and Netflix executives about nonexistent film distribution agreements in an attempt to stave off demands for payment from investors.

In a sworn statement filed in Los Angeles federal court, FBI agent John Verrastro laid out a brazen scheme by Horwitz to persuade investors to pour huge sums of money into his film distribution company, 1inMM Capital LLC.

Horwitz sent bottles of Johnny Walker Blue Label scotch alongside an annual investors report in 2015 that highlighted a “library” of 52 films his company was supposedly distributing in Africa, Australia, New Zealand and South America, according to Verrastro. It included the 2012 horror movie “The Lords of Salem” and the 1989 action film “Kickboxer” with martial arts action star Jean-Claude Van Damme.

In reality, the FBI said, Horwitz had no licensing deals and diverted much of the money for personal benefit.

Horwitz also told investors falsely that he had “strategic partnerships” with HBO, Netflix and other platforms to license the foreign distribution rights. The investors were promised returns as high as 40% within a year.

But since December 2019, Horwitz’s company has defaulted on more than 160 payments due to his investors, according to the FBI. Its largest investor, JJMT Capital, LLC, of Chicago, is owed more than $160 million in principal and about $59 million in investment profits, Verrastro said.

All told, Horwitz owes investors about $227 million in principal alone, according to the FBI.

FBI agents arrested Horwitz on a wire fraud charge Tuesday morning at his home in Beverlywood. They also searched the home for evidence of securities and mail fraud, money laundering and other crimes, according to the FBI affidavit. The home is listed for sale on Zillow for $6.5 million.

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

Horwitz has been acting professionally for more than a decade, but none of his films are well known. As Zach Avery, he appeared in the 2018 sci-fi thriller “Curvature.” A Times review was headlined: “Stylish sci-fi thriller ‘Curvature’ trapped in first dimension.” A Variety critic said the film “wants to get the heart racing and the mind bending simultaneously, but flatlines in both departments.”

Horwitz appeared in court by video Tuesday afternoon from the federal jail in downtown Los Angeles.

“Do you understand what it is the government alleges you’ve done wrong?” U.S. Magistrate Jean P. Rosenbluth asked him.

“Yes I do,” he replied.

Assistant U.S. Attorney Alexander Schwab urged Rosenbluth to keep Horwitz detained until trial, saying he might flee if released.

“The odds that the defendant has some of that money squirreled away are quite high,” he said.

Rosenbluth shared the concern, saying, “There is a lot of money, quote unquote, missing here.”

But she agreed to release Horwitz on a $1-million secured bond.

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