Entertainment

Actor who bilked film investors out of $650 million gets 20 years

Dennis Romero
WATCH LIVE
Horror-film actor Zachary Horwitz, 35, flanked by attorneys Ryan Hedges, left, and Anthony Pacheco, was sentenced to a maximum of 20-years by a federal judge for running what prosecutors say is the biggest Ponzi scheme in Hollywood history, as he exitis the U.S. District Court on Monday, Feb. 14, 2022 in Los Angeles, CA.
Gary Coronado | Los Angeles Times | Getty Images

Low-budget film actor Zachary Joseph Horwitz was sentenced Monday to 20 years in federal prison after he pleaded guilty to scamming investors out of an estimated $650 million.

U.S. District Judge Mark C. Scarsi meted out the sentence in Los Angeles and added that Horwitz is obligated to pay $230,361,884 he kept from the scheme, the U.S. attorney's office in Los Angeles said.

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.

Horwitz promised returns of as much as 45 percent and displayed fraudulent documents, including agreements giving his firm those rights, they said.

As his scam was underway in the latter half of the 2010s, media giants were racing to stock up on web-based content, gobbling up the rights to titles, many for the emerging foreign market online, in what has been described as the "streaming wars."

Federal prosecutors, who narrowed the case to one count of securities fraud after Horwitz agreed to plead guilty last year, described it as a Ponzi scheme: He used his newest investment cash to make promised payments, with interest, to earlier investors.

In 2013 he 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.

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.

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Horwitz later claimed to have expanded his rights-flipping strategy to other foreign markets, including Australia and New Zealand, Verrastro said.

Horwitz, who had referred to himself as an entrepreneur, sent a pricey bottle of Johnnie Walker Blue Label blended Scotch whisky alongside copies of his 2015 annual report to some investors, according to the affidavit.

Horwitz claimed that not a single licensing deal lost money and that "strategic partnerships" with the streaming giants were in place, the document said.

It came to a pressure point in 2019 when some investors claimed that Horwitz was defaulting on payments that were due after six- or 12-month terms, prosecutors said. Horwitz responded by sending fake emails from the likes of HBO with reasons for cash flow issues, including updated "payment cycles," the affidavit said.

The scheme was shut down in April when Horwitz was arrested. His attorneys did not immediately respond to a request for his response to the sentence.

One investment group alone is owed $160 million, Verrastro said. A law firm said in a media release last year that it had filed a class-action complaint against Horwitz on behalf of bilked investors.

Horwitz used his gains to purchase a home in Beverlywood, south of Beverly Hills, for nearly $6 million, as well as luxury cars, travel by private jet and luxury furnishings, according to prosecutors and court documents.

Verrastro's filing described the home's amenities. Just a block from Ranch Park Golf Course and within walking distance of the Fox Studio Lot, it includes a gym, a wine cellar and a home theater.