A 34-year-old actor has agreed to plead guilty to defrauding investors of hundreds of millions of dollars through fake film deals, federal prosecutors in Los Angeles announced Wednesday.
Zachary Joseph Horwitz, professionally known as Zach Avery, admitted in a Sept. 1 plea agreement with the L.A. U.S. Attorney’s office that he scammed investors into giving him more than $650 million for sham deals with prestige streamers and television networks like HBO and Netflix.
It was all part of an elaborate Ponzi scheme, authorities have found.
Horwitz, who grew up in Miami Beach and a suburb of Indianapolis, moved to L.A. in 2012 to pursue a career in acting. In the years since, he appeared primarily in low-budget, independent films in supporting and background roles.
Upon arriving in L.A., he befriended two brothers, Julio and Diego Hallivis, a director and producer who reportedly helped him break into the business side of filmmaking.
With the brothers, Horwitz co-founded 1inMM Productions, which made low-end horror and science-fiction movies.
In 2013, the company announced a partnership with a Miami producer to distribute films in Latin America. That producer was a veteran in his field, a former 20th Century Fox vice president for television licensing.
Reportedly, without the knowledge of either Hallivis brother or the Miami producer, Horwitz spun off 1inMM Capital, LLC, a new film rights company affiliated with the production outfit. He began soliciting investors through the new firm and represented to financiers that Julio Hallivis and the Miami producer were “principals” in it.
Both have denied participating in the alleged Ponzi scheme. The FBI has not accused any other parties in connection with it.
According to the plea agreement, Horwitz represented to investors that 1inMM Capital was in the business of purchasing foreign distribution rights to films, then licensing them to Netflix, HBO and other companies to stream online to audiences overseas.
Investors would lend 1inMM Capital between $35,000 and $1.5 million per fictitious film deal, which Horwitz promised to repay within the year on top of a generous 25 to 45 percent return.
In line with how Ponzi schemes typically operate, Horwitz would repay prior investors with funds sourced from new investors.
Horwitz admitted in his plea agreement that all the purported distribution and licensing contracts he showed investors were forged. He also showed them falsified correspondence he claimed to exchange with various studio executives.
The scheme made Horwitz a rich man. In the seven years he was operating the alleged con, he bought a $5.7 million home in Beverlywood, flew in private jets and was a regular courtside ticket holder at Lakers games.
According to a complaint failed against Horwitz by the U.S. Securities and Exchange Commission, the alleged fraudster spent nearly $125,000 on personal trips to Las Vegas, over $1.8 million via American Express credit cards, more than $165,000 on “high end automobiles” and $54,600 on a “luxury watch subscription service.”
The scam began to fall apart in 2019. In a sworn affidavit, an FBI agent tasked with investigating Horwitz alleged he became so strapped for cash that he actually paid back some investors “with their own money”—essentially, taking investments from new financiers, holding them for a period of time, and then repaying the investors with those same funds to create the appearance of healthy returns. The financiers then might be encouraged to advance additional payments to Horwitz.
The illusion eventually shattered, however, and Horwitz found himself unable to pay back some investors. They initiated a lawsuit against the fraudulent film executive, which alerted Netflix lawyers to his use of forged company contracts. They reported Horwitz to federal authorities.
Horwitz was arrested in April, when FBI agents raided his Beverlywood home.
A federal grand jury indicted Horwitz a month later on five counts of securities fraud, six counts of wire fraud and two counts of aggravated identity theft.
Prosecutors alleged more than 250 investors fell for Horwitz’s scam. Among them were some of the actor’s close friends from his days as an undergraduate at Indiana University, along with their relatives, some of whom lost entire retirement savings to the con.
Brian R. Michael, a lawyer for three of Horwitz’s conned college friends, told The Los Angeles Times his clients were happy the alleged Ponzi schemer was “being held accountable for his criminal fraud,” and that they were assisting federal investigators in recovering as much of the lost assets as possible so that victims could “rebuild their lives after the devastating harm he has caused so many people.”
An SEC fraud examiner reported finding four bank accounts connected to 1inMM following Horwitz’s April arrest. There was $3,224 in one of them, $306 in another, $5 in a third. The fourth held nothing.
As part of his deal with prosecutors, if Horwitz proceeds to plead guilty to a single fraud charge, all others will be dismissed. A charge of federal securities fraud may carry a fine calculated based on the amount of money Horwitz stole and a possible maximum incarceration of up to 25 years. A charge of federal wire fraud can carry a maximum prison sentence of up to 20 years, and fines as high as $100,000. A federal identity theft conviction may subject the guilty party to up to 15 years behind bars.
