The U.S. Securities and Exchange Commission obtained an asset freeze to halt an alleged $690 million Ponzi scheme operated by a Los Angeles actor who lied about having deals to sell films to Netflix Inc. and HBO.
Zachary Horwitz and his company, 1inMM Capital LLC, claimed he was raising money to buy movies that he intended to resell, the SEC said in a Tuesday statement. In reality, he had no business relationship with either Netflix or HBO and relied on fabricated contracts and fake emails to swindle investors, according to the regulator.
The U.S. Justice Department separately issued a statement saying the FBI had arrested Horwitz Tuesday. He uses the screen name “Zach Avery” and was criminally charged with raising $227 million that has yet to be repaid as part of a scheme in which he falsely claimed he would acquire rights to films that Netflix and HBO would distribute abroad, according to the statement.
While Horwitz promised investors they would make returns in excess of 35%, he was actually for years relying on money raised from new clients to pay off earlier ones, the SEC said. He used the funds for his personal expenses, including buying a home, trips to Las Vegas and hiring a celebrity interior designer, according to the agency.
A federal court in California has set a hearing for April 19 to determine whether the asset freeze should continue to be enforced as litigation against Horwitz proceeds, the SEC said.