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Licensing Law: Actor Gets 20 Years For Licensing Ponzi scheme

February 16, 2022

Zach Horwitz Sentenced For $230 Million Fraud Based On False Claims of Licensing Deals With Netflix and HBO Max

By Gary Symons

TLL Editor in Chief

For most of his adult life, 35-year-old Zachary Horwitz (aka Zach Avery) was an actor in a number of low-budget horror flicks.

But his big role came when he starred as the central character in an equally terrifying, $230 million Ponzi scheme centered around the licensing of film properties.

This week the story came to its inevitable climax, as Horwitz was sentenced to a daunting 20 years in prison for fraud, and ordered to pay $230 million in restitution.

In response, Horwitz told U.S District Court Judge Mark Scarsi, ” I lost my way,” and described himself as a “flawed and broken man.”

As previously reported in The Licensing Letter, Horwitz was charged in May this year on allegations he defrauded multiple high worth investors in what has been described by authorities as a phony licensing scheme. This week, as part of a plea deal that dropped other charges such as wire fraud and identity theft, Horwitz admitted to duping investors into giving him $650 million.

During a sentencing hearing in October, 2021, a prosecutor read through an agreed-upon statement of facts. It outlined how Horwitz promised the investment funds would be used to buy regional distribution rights for TV and film projects, which would in turn be licensed to streaming platforms like Netflix and HBO Max. In a classic example of how Ponzi schemes work, Horwitz used some of the money to pay out some early investors, but other funds were used to pay for a lavish Hollywood lifestyle and to keep the scam going.

Among many other purchases, Horwitz admitted to using the stolen funds to buy a luxury home in the Beverlywood neighborhood of Los Angeles, with a swimming pool, home gym and a private screening room.

Horwitz admitted he swindled at least five investors out of $230 million, and the plea agreement included examples of how the scam worked. For example, Horwitz told authorities he convinced an Illinois investor into sending him more than $1.4 million in December 2018. He promised that investor the money would be used to license the international distribution rights to Active Measures, a documentary about the alleged collusion between the Trump campaign and Russia.

As is common with Ponzi schemes, at some point the investment stream ran out of steam, and Horwitz began defaulting on payments to his investors around the end of 2019. At that point, Horwitz admits he began fabricating emails that purported to be from major streaming companies, and had addresses like @netflix.com and @hbo.com. For a short time investors were lulled into thinking their money was safely invested, and payment would come as the licensing deals were finally closed.

Of course, those licensing deals didn’t exist, and over time investors realized the funds were never coming. At that point, some of the investors contacted police.

Horwitz’s lawyers had asked the judge for leniency in the case, saying Horwitz suffers from bipolar disorder and addiction issues. However, Scarsi levied the maximum 20-year sentence for fraud, causing one woman sitting with Horwitz’s family to burst into loud sobs.

Scarsi did agree to one request, allowing Horwitz, who has two young sons, to remain free until March 14 before he surrenders to prison officials.

While Scarsi ordered Horwitz to pay back the $230 million lost by investors, it appears unlikely that will happen. As is common in Ponzi schemes, that money is likely to have disappeared. Prosecutors say Horwitz used the money to fuel a luxurious Hollywood lifestyle filled with private jet and yacht rentals, parties in Vegas, luxury cars, and the purchase of a $5.7 million mansion with a swimming pool, home gym, and private screening room on the outskirts of Beverly Hills. According to an affidavit, Horwitz spent more than $6.9 million on American Express credit card bills, more than $345,000 on chartered planes and boats and more than $604,000 on Merceds-Benz and Audi vehicles.

“Defendant ran the largest known Ponzi scheme in the history of this district,” prosecutors wrote in a court filing. “He burned through a fortune, living a life of extravagance while sticking his victims — including some who once believed him to be their friend — with a $230 million bill that has left many of them financially broken and personally devastated.”

One of those victims was Robert Henny, a screenwriter who testified to losing $1.8 million in the scheme which he described as a devastating “unending nightmare.”

Another retired victim, who was not identified publicly, testified he had to return to work after losing much of his life’s savings.

“I have had to return to work to afford food and shelter,” he said. “I will never be able to earn that amount of money back by working. Part of that money was an inheritance from my mother’s passing. I am emotionally distraught. I cry every day and have stopped seeing friends or family because of the shame of this financial loss and have a now severe distrust of other human beings. If it was not for my spiritual beliefs, I would have committed suicide.”

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Filed Under: Editorial, Open Content, Licensing Law, TLL, Recent Headlines, Other, Archive, Articles, News & Trends, Featured Tagged With: Licensing Law, Licensing fraud, Zach Avery Fraud, Zach Horwitz fraud

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