The 2017 film “Bitter Harvest” would not, by many definitions, be considered a success.
“It’s a bad sign even though the prayers in this movie are crap,” observed one reviewer, who contributed to the film’s 15% review rating on Rotten Tomatoes.
It grossed less than $ 600,000 in the United States. But that didn’t mean he didn’t have the potential to make money overseas yet. All the 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 about to be formalized, they were told. Once these are in place, investors would get returns of at least 35%.
This is the essence of what the Securities and Exchange Commission and federal prosecutors are calling a Ponzi scheme run by Zachary J. Horwitz, a not particularly famous actor with a rather extravagant house. Mr Horwitz, who was called Zach Avery, was arrested Tuesday on charges of wire fraud. He is accused of defrauding investors of at least $ 227 million and forging his company’s business relationship with HBO and Netflix.
“We claim that Horwitz promised extremely high returns and made them plausible by citing the names of two well-known entertainment companies and fabricating documents,” Bureau director Michele Wein Layne said in a press release Tuesday. SEC regional office in Los Angeles. .
Prosecutors said the correspondence Mr. Horwitz forwarded to clients, which included HBO and Netflix email addresses, was as fictitious as the subject of his latest film, the horror film “The Devil Below” (score Rotten Tomatoes review: 0%). Mr Horwitz has not starred in any of the 50 or so films he has promised to make millions for investors, according to Thom Mrozek, spokesperson for the US attorney’s office in Los Angeles.
Mr Horwitz was in prison on Wednesday, Mr Mrozek said. Attempts to reach other employees of One in a Million Productions, whose website has the slogan “When Odds Are One in a Million.” Be that one, ”failed. (By Wednesday afternoon, the site had been dismantled.)
Mr Horwitz’s lawyer, Anthony Pacheco, did not respond to a request for comment.
The Ponzi scheme began to crumble when an investor wanted the money returned in 2019 and couldn’t get it, Mrozek said.
For several years, 1inMM – as the company gives its name – has found ways to pay investors, according to the SEC, court documents do not list all of the films that investors thought they helped buy rights to, but the complaint presents an image of 1inMM’s. a library “; Jean-Claude Van Damme’s 1989 film” The Kickboxer “and the 2013 romantic comedy” The Spectacular Now “are included.
The way the money can be made in the film distribution world is to say, “I’m going to give you $ 100,000 for Latin American rights,” for example, Mr. Mrozek said, adding: “ I go to HBO or whoever it is and say, ‘Give me $ 200,000 to show the movie. “”
It is possible that the company managed to buy the international distribution rights for a handful of films or even started with good intentions, Mrozek said. But what he didn’t have was the relationship with HBO and Netflix that Mr. Horwitz had told investors. It was this relationship that he said essentially guaranteed them returns of 35% or more in six months or a year.
“I thought if HBO was involved my investment was safe,” SEC investor told
At first, Mr. Horwitz was able to keep his promises. According to Mrozek, in typical Ponzi scheme fashion, early investors received money from new investors. His clients could continue to believe that investing in “The Kickboxer” screenings in New Zealand and Latin America was wise.
But at one point there wasn’t enough money to keep the illusion going – even with the help of the Johnny Walker Blue Label scotch Mr. Horwitz sent to directors, according to FBI agent John Verrastro. , who described the scheme in a complaint. . According to the SEC, Mr. Horwitz was also inappropriately using investor funds for a $ 5.7 million home and $ 700,000 in fees for a famous interior designer.
As of December 2019, 1inMM has defaulted on more than 160 payments, according to court documents. An investor in Chicago, who owed more than $ 160 million in principal and $ 59 million in profit, wanted his returns and couldn’t get them, Mrozek said. This investor contacted the authorities.