Actor Zach Avery Busted for Masterminding Multi-Million Dollar Ponzi Scheme
Hollywood celebrities can be the focus of myriad kinds of investigations. Big name arrests in the city of angels is
Hollywood celebrities can be the focus of myriad kinds of investigations. Big name arrests in the city of angels is not uncommon. However, one of Hollywood’s most recent arrests is a little unusual. Actor Zach Avery—whose real name is Zachary J. Horwitz—was arrested on suspicion of running a ponzi scheme. This crime, usually what you’d expect to find in D.C. or New York, netted the actor and his associates millions of dollars through a film distribution scheme.
What Zach Did
Horwitz is a small-time actor in Hollywood. His career includes billing in “Trespassers” and “You’re Not Alone.” Horwitz constructed his ploy on a mountain of promises. According to The New York Times, Horwitz convinced his marks to invest nearly $227 million on the premise that he had a deal with Netflix and HBO that would bring them a whopping quick 35 percent return. Per the NYT; “The 2017 film ‘Bitter Harvest’ would not, by many definitions, be considered a success.
‘It’s a bad sign when even the prayers in this movie are crappy,’ observed one reviewer, who contributed to the film’s 15 percent critic rating on Rotten Tomatoes.
It pulled in less than $600,000 in the United States. But that did not mean it did not still have moneymaking potential abroad. All investors needed to do was help buy the rights to distribute it and a number of other films in Latin America, Africa and New Zealand. Major distribution deals with HBO and Netflix were on the cusp of being formalized, they were told. Once those fell into place, the investors would get returns of at least 35 percent.”
Of course, the deals weren’t going to bring investors 35 percent as promised, because there was no deal.
The BBC adds, “From 2015, he promised investors that his company, 1inMM Capital LLC, would use their funds to buy the rights to distribute films in Latin America, Africa and New Zealand.
Distribution deals had been struck with Netflix and HBO, Mr Horwitz allegedly told investors. Through these deals, backers were promised returns of at least 35 percent within a year. But in reality, 1inMM had no business relationship with either company, prosecutors say. Mr Horwitz allegedly showed investors fabricated agreements and emails regarding the purported deals with HBO and Netflix.
‘I believed that if HBO was involved, my investment was safe,’ one investor was quoted as saying in the criminal complaint. At some points, Mr Horwitz was able to pay some investors, using funds raised from other investors to do so. But prosecutors say the scheme collapsed in 2019 when 1inMM Capital began defaulting on payments.”
How it All Unraveled
Once the defaulting in payments started, the questions flew. Horwitz’s promises couldn’t hold up under scrutiny; after all, they had been entirely concocted. An investor sought a refund on his investment and the company couldn’t provide. Up until then, they had been finding ways to provide some payouts to the original investors from the wallets of new investors. But most of it was going straight to Horwitz, who was living large on his investors’ cash.
NYT shares how it all came to light; “Since December 2019, 1inMM has defaulted on more than 160 payments, according to court documents. One investor in Chicago, who was owed more than $160 million in principal and $59 million in profits, wanted his returns and could not get them, [L.A. US Attorney Spokesman Thom] Mrozek said. That investor contacted the authorities.”
What’s Next for the Investigation?
Horwitz is in jail for now. The site for 1inMM has been taken down, and Horwitz’ attorney, Anthony Pacheco, is not speaking to media on behalf of his client yet.
While the investigation is still gathering information, it’s a classic ponzi scheme; using new cash to pay off the people you made promises to first, pocketing the rest, and letting it collapse when the cash flow can no longer sustain itself. According to reports, the entire scheme involved approximately $690 million.
Horwitz was arrested on suspicion of wire fraud, for defrauding his investors. CNN shares, “The Department of Justice alleges he is ‘in default to investors on a total outstanding principal of approximately $227 million.’ In a hearing Tuesday afternoon, Horwitz’s bond was set at $1 million, but he won’t be released until the bond is approved, according to the DOJ. An arraignment is set for May 13. There is also a hearing set for April 19 to determine if the SEC’s asset freeze should stay in place, the agency’s statement said.”