The US Securities and Exchange Commission (SEC) obtained an asset freezing order during an emergency enforcement action against Los Angeles-based actor Zachary Horwitz and his company 1inMM Capital.
The regulator alleges that Horwitz and his firm ran a Ponzi scheme which raised more than $690m (£500m, €580m) by telling investors they were buying film rights to then resell them to Netflix and HBO.
But 1inMM had no business relationship with either company, the SEC added.
According to the watchdog’s complaint, Horwitz – whose screen name is Zach Avery – claimed to have a track record of successfully selling movie rights to the two entertainment giants, when neither he nor his company had ever sold any or done any business with the two companies.
He allegedly showed investors fabricated agreements and emails regarding the deals with Netflix and HBO, promising clients returns in excess of 35% and for many years paid “supposed returns on earlier investments using funds from new investments”, the SEC said.
Additionally, the complaint alleges that Horwitz misappropriated the funds raised through the scheme for his personal use including purchasing a multi-million-dollar home, trips to Las Vegas and to pay a celebrity interior designer.
Up to 20 years’ imprisonment
“We allege that Horwitz promised extremely high returns and made them seem plausible by invoking the names of two well-known entertainment companies and fabricating documents,” said Michele Wein Layne, director of the SEC’s Los Angeles regional office. “We obtained an asset freeze on an emergency basis to secure for the benefit of investors what remains of the money raised by Horwitz.”
Horwitz – better known for his roles in Last Moment of Clarity, The White Crow, and Farming according to his IMDB page – is now facing charges of wire fraud, a crime that carries a maximum penalty of 20 years in prison, according to the US Attorney’s office.
The regulator is also seeking a permanent injunction, disgorgement, prejudgement interest and civil penalties against the actor and his firm.
A court hearing will take place on 19 April 2021 to determine whether the emergency freezing order should stay in place for the duration of the litigation.
