Actor Zachary J. Horwitz, best known under his stage name Zach Avery, was arrested Tuesday in Los Angeles on charges stemming from orchestrating a massive Hollywood Ponzi scheme, which authorities say defrauded investors out of more than $227 million. Avery is accused of fabricating licensing deals with Netflix, HBO and other platforms to secure funding for his film distribution company, 1inMM Capital LLC, the FBI says.
In an affidavit filed in Los Angeles federal court, FBI agent John Verrastro said Avery, who is best known for movies like Last Moment of Clarity and The White Crow (as well as being an extra in Brad Pitt's Fury), used the funds for "personal benefit" and to make payments to previous investors "in the style of a classic Ponzi scheme." The FBI alleges that Avery founded the Los Angeles-based 1inMM Capital LLC in 2013, claiming to distribute English films to the Latin American market through partnerships with HBO and Netflix.
Avery is facing wire fraud charges. He appeared in court on Tuesday via teleconference. Assistant U.S. Attorney Alexander Schwab reportedly urged the judge to keep Avery detained until trial, saying he is a flight risk, the Los Angeles Times reports. "The odds that the defendant has some of that money squirreled away are quite high," he said, according to the Times.
The judge set Avery's bond at $1 million, but he will remain in custody until the bond is approved. An arraignment has been set for May 13 to discuss the matter, the U.S. Attorney's Office said.
In 2015, Avery allegedly sent investors bottles of Johnny Walker Blue Label scotch, along with an annual report that said the company had "acquired and successfully distributed 49 films through the 1inMM Capital banner without incurring a single loss in the process." He also allegedly claimed to have expanded his partnership with HBO and Netflix to distribute films in Australia and New Zealand.
"With this growth, we have the ability to safely and profitably distribute more than 25 additional films per year, creating ample opportunity for investment and substantial growth of our thriving feature film library," the annual report read, according to Verrastro. He also said that investors were promised a return of up to 40% within a year.0comments
Avery allegedly fabricated email correspondence with Netflix and HBO executives to justify delays as payments were due. But "in reality, neither Horwitz [Avery] nor 1inMM Capital ever engaged in email correspondence with Netflix or HBO, nor did Horwitz [Avery] or 1inMM Capital ever have any business relationship with Netflix or HBO at all."
The affidavit also states that since December 2019, Avery has defaulted on more than 160 payments and owes investors $227 million in principal alone. Each of the payments was allegedly tied to a single film that Avery and 1inMM Capital claimed to hold distribution rights to and had licensed to HBO or Netflix.