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Justice News

Department of Justice
U.S. Attorney’s Office
Central District of California

FOR IMMEDIATE RELEASE
Monday, October 4, 2021

Beverlywood Man Pleads Guilty to Securities Fraud, Admitting Massive Ponzi that Falsely Claimed to License Foreign Film Rights

          LOS ANGELES – A Los Angeles man pleaded guilty this afternoon to a federal securities fraud charge and admitted operating a Ponzi scheme that raised at least $650 million with bogus claims that investor money would be used to acquire licensing rights to films that HBO and Netflix purportedly had agreed to distribute abroad.

          Zachary Joseph Horwitz, 34, who resides in the Beverlywood neighborhood of Los Angeles, admitted his fraudulent scheme has caused more than $230 million in losses.

          Horwitz pleaded guilty before United States District Judge Mark C. Scarsi, who scheduled a sentencing hearing for January 3, 2022. When he is sentenced, Horwitz will face a statutory maximum sentence of 20 years in federal prison.

          Over the course of about five years, Horwitz used his company – 1inMM Capital LLC, which purported to be a film distribution company – to solicit investors with false claims their money would be used to purchase regional distribution rights to films and then would generate profits by licensing the rights to online platforms such as Netflix and HBO.

          The scheme began in 2014, when groups of private investors began entering into hundreds of six- and 12-month promissory notes with 1inMM Capital based on Horwitz’s statements. The funds supplied under each note were supposed to provide money for 1inMM Capital to acquire the rights to a specific film. The promissory notes guaranteed a specified payment on a specified maturity date, as well as the specified amount to be paid at maturity, which included investment returns ranging from 25 percent to 45 percent.

          “However, as [he] then knew, his representations concerning 1inMM Capital’s business activities and the promissory notes themselves were false and deceptive because 1inMM Capital generally did not and would not acquire or possess the film distribution rights for the films specified as collateral in the promissory notes, and 1inMM Capital did not and would not enter into any distribution agreements with the online streaming platforms for these specified films…and the purported copies of the distribution agreements were fake,” Horwitz admitted in his plea agreement.

          Instead of using the funds to acquire films and arrange distribution deals, Horwitz operated 1inMM Capital as a Ponzi scheme, using victims’ money to repay earlier investors and to fund his own lifestyle, including the purchase of his $6 million Beverlywood residence.

          Investors started to complain after 1inMM Capital began defaulting on notes in 2019, court documents states. In response, Horwitz “falsely reassured investors that any missed payments on promissory notes were caused by the actions of the online streaming platforms, and that payment on the notes would resume,” he admitted in the plea agreement. To support these false claims, Horwitz sent the investors emails and text messages he falsely claimed had been sent to him by representatives of the online streaming platforms.

          Horwitz defrauded five major groups of private investors, but these entities derived funds from more than 250 sub-investors. By late 2019, 1inMM Capital began defaulting on all of its outstanding promissory notes, according to the plea agreement, in which Horwitz admits that he owes investors more than $230 million and that his scheme has caused substantial financial hardship to at least five investors.

          The FBI is investigating this matter. The U.S. Securities and Exchange Commission provided substantial assistance.

          Assistant United States Attorneys Alexander B. Schwab and David H. Chao of the Major Frauds Section are prosecuting this case.

Topic(s): 
Securities, Commodities, & Investment Fraud
Contact: 
Thom Mrozek Director of Media Relations thom.mrozek@usdoj.gov (213) 894-6947
Press Release Number: 
21-207
Updated October 4, 2021