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The Securities and Exchange Commission has announced that it has achieved an asset freeze and other emergency relief to take action against an alleged Ponzi scheme in Los Angeles.
The regulator is acting against LA-based actor Zachary Horwitz and his company, 1inMM (one in a million) Capital. The alleged scam raised more than $690 million. Horwitz and 1inMM allegedly told investors that they were buying film rights, purportedly to resell them to Netflix and HBO; in fact, in fact, neither Horwitz nor 1inMM had ever sold any movie rights to, or done any business with, HBO or Netflix, the regulator said in a statement.
Horwitz allegedly showed investors fabricated agreements and emails regarding the purported deals with HBO and Netflix. The complaint alleges that Horwitz and 1inMM promised investors returns in excess of 35 per cent, and for many years paid supposed returns on earlier investments using funds from new investments. The complaint further alleges that Horwitz misappropriated investor funds for his personal use, including the purchase of his multi-million dollar home, trips to Las Vegas, and paying a celebrity interior designer.
"We allege that Horwitz promised extremely high returns and made them seem plausible by invoking the names of two well-known entertainment companies and fabricating documents," Michele Wein Layne, director of the SEC’s Los Angeles regional office, said. "We obtained an asset freeze on an emergency basis to secure for the benefit of investors what remains of the money raised by Horwitz."
The SEC's complaint charges Horwitz and 1inMM with violating the antifraud provisions of the federal securities laws. In addition to the asset freeze and other emergency relief granted by the court, the complaint also seeks a permanent injunction, disgorgement, prejudgment interest, and civil penalties against Horwitz and 1inMM. The court set a hearing for April 19, 2021, to determine whether the asset freeze should remain in force for the duration of the litigation.