He is accused of wire fraud after allegedly boasting about important Hollywood relationships and promising investors that his company, 1inMM Capital LLC, would acquire and license film rights through agreements with Netflix and HBO (CNN and HBO’s parent company WarnerMedia), while according to the Department of Justice does not have such agreements. If convicted, Horwitz could face up to 20 years in prison.
A criminal lawsuit filed by the DOJ on Monday alleges that Horwitz is defaulting through 1inMM on debentures issued to private investors in exchange for $ 227 million raised since late 2018. And a separate complaint filed by the SEC alleges that Horwitz and 1inMM Capital also raised more than $ 690 million from investors from 2014 to 2019 as part of the scheme.
No legal representatives for Horwitz have been listed in court documents since Wednesday. Anthony Pacheco, who was named by The Guardian as Horwitz’s lawyer, did not immediately return a CNN request for comment.
Allegedly ‘called the names of two well-known entertainment companies and produced documents’
The SEC on Tuesday obtained an emergency asset freeze against Horwitz “to insure for the benefit of investors what remains of the money raised by Horwitz,” Michele Wein Layne, director of the Los Angeles local regional office, said in a statement. said and added that ‘we claim that Horwitz promised extraordinarily high returns and made it seem plausible by invoking the names of two well-known entertainment companies and compiling documents. ‘
The SEC’s complaint states that the scheme started around March 2014, when Horwitz allegedly started raising investor funds for 1inMM using debentures that usually promised investors between 35% and 45% in profit.
Horwitz allegedly told investors he would use the funds to acquire distribution rights to specific movies (especially names like “Run with the Hunted” and “Blood Quantum”) and to license those rights to Netflix or HBO, with the profit for investors to repay, according to the complaint.
He pretended to have relationships and experience in the media content distribution industry and provided investors with fabricated distribution agreements that appeared to come from Netflix and HBO, the complaint alleges.
‘Investors find it credible that HBO and Netflix are in dire need of new content, willing to pay a premium for it,’ [and] had the financial capacity to do so, “reads the SEC complaint.” One investor said that “I believe that if HBO is involved, my investment is safe.”
During the course of the scheme, the SEC claims that Horwitz led a portion of the $ 690 million that investors paid to other investors, representing the returns as “profits allegedly generated by its transactions with Netflix and HBO.”
However, the SEC’s complaint stated that Horwitz and 1inMM had no business relationships and no distribution agreements with the streaming services. 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 chartered planes, according to the SEC complaint.
In late 2019, Horwitz allegedly stopped making payments to investors with outstanding debentures and gave false explanations as to why they went on strike, such as that Netflix and HBO did not make promised payments, according to the SEC complaint.
The Justice Department claims it is “in default for investors with a total outstanding principal of about $ 227 million.”
In a trial on Tuesday afternoon, Horwitz’s mortgage was set at $ 1 million, but according to the DOJ, he will only be released before the mortgage is approved. There is also a trial for May 13. There is also a hearing for April 19 to determine whether the freezing point of the SEC’s assets should remain, the agency said in a statement.