He has been accused of thread fraud after allegedly boasting about important matters in Hollywood and promising investors that his company, 1inMM Capital LLC, would acquire and license film rights through agreements with Netflix and HBO (CNN and HBO parent company WarnerMedia) when it in fact, according to the Ministry of Justice, no such agreements existed. If Horwitz is convicted, he could face up to 20 years in prison.
A criminal lawsuit filed by the DOJ on Monday alleges that Horwitz, through 1inMM, has defaulted on issued bonds to private investors in return for $ 227 million raised since the end of 2018. And a separate complaint filed by the SEC claims that Horwitz and 1inMM of capital also raised more than $ 690 million from investors as part of the scheme from 2014 to 2019.
No legal representatives for Horwitz were listed in court documents as of Wednesday. Anthony Pacheco, who was appointed by The Guardian as Horwitz’s lawyer, did not immediately return a CNN request for comment.
Alleged ‘invoking the names of two well-known entertainment companies and fabricating documents’
The SEC on Tuesday achieved a freeze on assets against Horwitz “to secure investors the remaining amount from Horwitz,” Michele Wein Layne, director of the SEC’s Los Angeles Regional Office, said in a statement, adding that “we claim that Horwitz promised extremely high returns and made them seem plausible by relying on the names of two well-known entertainment companies and fabricating documents. “
The SEC’s complaint says the scheme began around March 2014, when Horwitz reportedly began raising investor funds to 1inMM using banknotes that typically promised investors between 35% and 45% in profits.
Horwitz allegedly told investors that he would use the funds to acquire distribution rights to specific movies (with names including “Run with the Hunt” and “Blood Quantum”) and license those rights to Netflix or HBO by using the profits to repay investors according to the complaint.
He pretended to have relationships and experience in the media industry’s distribution industry and provided investors fabricated distribution agreements that were made to look like they came from Netflix and HBO, the complaint claims.
“Investors found it credible that HBO and Netflix had an urgent need for new content, were willing to pay a premium for that content,” [and] had the financial means to do so, “the SEC complaint states. One investor said that “I thought that if HBO was involved, my investment would be safe.” “
Throughout the scheme, the SEC claims that Horwitz withdrew some of the $ 690 million that investors paid to other investors, representing those returns as “profits allegedly generated by his trades with Netflix and HBO.”
However, Horwitz and 1inMM had no business relationship and no distribution agreements with the streaming services, the SEC complaint states. Instead, he allegedly misused the funds, including by buying a personal home for about $ 5.7 million in cash, taking trips to Las Vegas and flying on chartered jets, according to the SEC complaint.
In late 2019, Horwitz allegedly claimed to make payments to investors with outstanding banknotes and gave false explanations as to why they had stopped, such as that Netflix and HBO had not made promised payments, according to the SEC complaint.
The Justice Department claims he is “in default of investors on a total outstanding principal of approximately $ 227 million.”
During a hearing Tuesday afternoon, Horwitz’s bond was set at $ 1 million, but he will not be released until the bond is approved, according to the DOJ. A prosecution is set for May 13. There is also a hearing set for April 19 to determine whether the SEC’s asset freeze should remain in place, the agency’s statement said.