Zach Avery: SEC Alleges the Actor Involved in $690 Million Fraud

Actor Zach Avery, whose real name is Zach Horwitz, has run into major trouble with the SEC. The SEC has frozen Zachary Horwitz’s assets, as well as the assets of his company, One in a Million Capital LLC. (One in a Million Capital is referred to in marketing materials as “1inMM.”) The SEC alleges in their complaint that 1inMM is a Ponzi scheme that raised over $690 million by selling fraudulent promissory notes. Horwitz has also been arrested and charged with wire fraud. If convicted, Horwitz could face a 20-year prison sentence.

How Did the Alleged Ponzi Scheme Work?

Horwitz allegedly told investors that their investments would help acquire Latin American movies for future distribution on Netflix and HBO. He allegedly represented that the platforms were willing to pay out of a desperate need for new content.1inMM would purportedly make money by retaining distribution rights for the films.

According to the SEC, Horwitz lied about having business relationships with Netflix and HBO. Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office, said in a statement: “Horwitz promised extremely high returns and made them seem plausible by invoking the names of two well-known entertainment companies and fabricating documents.”

The SEC complaint states that Horwitz told his clients that he had successfully sold movie rights to the streaming services in the past, which the SEC alleges was not true. Horwitz allegedly showed investors fabricated agreements regarding the supposed deals to distribute the films. Horwitz also allegedly predicted returns of 35% to 43%. When he began to default on payments to investors, Horwitz allegedly provided fabricated emails from Netflix and HBO explaining the defaults.

The SEC alleges that Horwitz operated his company as a classic Ponzi scheme, using new investments to pay off earlier investors. He also allegedly misappropriated money from investors and spent it on his multi-million-dollar home, trips to Las Vegas, and to pay for the services of a celebrity interior designer.

How Can I Avoid This Type of Fraud?

Investors should always be wary of investments that promise excellent returns with a low degree of risk. Horwitz allegedly projected returns as high as 43%. For comparison, Goldman Sachs reports that the average stock market return over a 10-year period is 9.2%. His promotional materials stated, “We receive confirmation from each of our outputs indicating their desire to acquire the rights to any title we purchase PRIOR to us releasing funds for the film,” suggesting that the film distributions were a done deal and that the investments were all but guaranteed. The SEC advises that extremely high returns and low risk often signal fraud. High returns always come with a high level of risk.

What Can I Do if I Lost Money with Promissory Notes?

If you have worked with a financial advisor who recommended you purchase 1inMM promissory notes, you should contact a securities attorney to discuss your options.