Hollywood Ponzi Scheme Ripped-Off Actor’s College Buddies

(Bloomberg) -- Zachary Horwitz, the former actor allegedly behind a massive Hollywood Ponzi scheme, duped his old college friends and their families out of tens of millions of dollars, according to recently released court documents.

Three of Horwitz’s buddies from Indiana University said he tricked them into providing him with hundreds of millions of dollars in loans to fund bogus Latin American licensing deals with Netflix Inc. and HBO.

Their claims, outlined in legal documents released by U.S. prosecutors and the Securities and Exchange Commission this week, fit with a wider pattern of deception alleged in filings by Horwitz’s investors, who say he claimed to have long-standing relationships with the two entertainment networks for licensing and distribution deals – something denied by representatives of both firms.

Read more: Actor in Hollywood Ponzi Scheme Sent Scotch With Annual Reports

The documents shed new light on the actions of Horwitz, 34, who the SEC has accused of issuing false promissory notes to friends and investors, convincing them to put up money to acquire the fictitious rights to movies that would be sold to Netflix and HBO for distribution in Latin America, Australia, New Zealand and other locations.

Ryan Hedges, Horwitz’s attorney, didn’t respond to a request for comment.

In the declarations, Joseph deAlteris, Matthew Schweinzger and Jacob Wunderlin said that Horwitz first approached them about the business opportunity in 2014, a few years after they graduated from Indiana.

Financial Backing

Horwitz, who’d had a number of roles in low-budget thrillers and horror movies, convinced them he was well-connected in the content-distribution industry. He alledgedly told them he had financial backing from former Starbucks Corp. Chief Executive Officer Howard Schultz and investment banker Dan Levitan from his time working for venture capital firm Maveron.

Over the next year, Horwitz talked them into lending his company, 1inMM Capital, a total of more than $1 million in exchange for fictitious promissory notes to finance and facilitate the licensing of content, according to the declarations. Those loans were repaid on time, in full and with interest, laying the groundwork for deAlteris, Schweinzger and Wunderlin to approve hundreds of millions of dollars in loans to Horwitz over the next few years.

From mid 2015 to late 2019, their company, JJMT Capital, provided financing to 1inMM in exchange for promissory notes with a total principal value of “approximately $485 million,” according to the documents. They say that Horwitz’s company still owes them around $165 million before interest – including more than $42 million of their own money.

The claims of business relationships with the media companies were also bogus, according to prosecutors, with a Netflix executive going so far as to send a cease-and-desist order to Horwitz and his attorney in February. Meanwhile, a litigator at HBO’s parent company, Warner Media LLC, insisted in his declaration that HBO “has not licensed content” from either 1inMM Capital, or its sister company 1inMM Productions.

Horwitz, who went by the screen name “Zach Avery,” was arrested Tuesday and the SEC won a court order to freeze his assets. 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, according to the SEC.

Horwitz’s most recent film credit is “The Devil Below,” according to website IMDB. It’s about a group of adventurers who try to find out the cause behind a mysterious coal mine fire in the Appalachian Mountains.

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