Narrator: In this episode of "American Greed,"
a struggling actor, with a side hustle
worth millions.
This one is tragic because it started off as imaginary
and continued imaginary and then grew so large.
Zach Horwitz moves from Indiana to Hollywood...
I'm good enough. I can do this.
Takes the stage name Zach Avery...
and dazzles his friends back home.
You believed that he was a big-time player in L.A.
Krebs: He was great. Like, you'd go out.
He's buying all the drinks, he's got the good places to go.
Narrator: There's a phrase, "Acting is like lying."
But for Horwitz, lying is like acting.
As an actor, I feel like,
you don't want people to know who Zach is as a person.
Because Horwitz' most convincing performance
isn't on-screen, it's in real life...
Scamming his longtime friends.
I would just love to know what his endgame was with this
and does he feel any remorse.
Narrator: His pretentious podcasts
play different now.
Playing that dynamic between the good guy and the bad guy
and how I can work through those nuances was really fun.
Narrator: It's Hollywood's biggest Ponzi scheme,
with a warning: "Be careful who you trust."
McKerr: These are his alleged best friends
and he just took all their money,
and I just was... I couldn't believe it.
♪♪
Narrator: In 2019, the relatively unknown actor
Zach Avery is finally getting somewhere.
He's landed a starring role with Olivia Munn
in a film called "The Gateway."
Oh!
In the movie, Avery... Real name Zach Horwitz...
Plays a hardened criminal.
Ironically, at the very moment he shoots this scene,
walking a cellblock in a jail,
Horwitz is a real-life criminal mastermind,
running an investment scheme built on 100% lies.
Chao: It was clear from the beginning
that it was just fake from the get-go.
Narrator: Zach Horwitz has talent.
He's a world-class liar,
with charm that he lays on thick
for anyone with a microphone and camera.
Knowing what you know now,
what would you tell your 14-year-old self?
Oh, that's a tough one.
I would tell him
that everything happens for a reason,
that you're gonna go through trials and tribulations,
but they will all teach you something along the way
that you'll use in the future.
And you'll be alright, kid. Don't worry about it.
[ Chuckles ]
♪♪
Narrator: Like many Hollywood stories,
this one begins in the heartland...
In this case, Fort Wayne, Indiana.
It's modest, humble,
and the resting place of American icon Johnny Appleseed.
You couldn't get more all-American if you tried.
Zach and I lived in a nice neighborhood.
He lived in the very nice part,
like, probably a fairly brand-new house.
Narrator: Derek McKerr is
one of Zach Horwitz' high school friends.
Horwitz moves to Fort Wayne for his sophomore year,
after a childhood spent in Florida.
McKerr: We met at football, our sophomore year,
and almost instantly became friends.
Narrator: Chris Krebs is another high school friend.
He and others say Zach's family is well-off.
His stepfather is an executive
at a computer-components factory.
Krebs: They certainly weren't struggling.
They had a really nice lake house
in addition to their main residence.
Narrator: According to friends,
Zach Horwitz is a popular student
at Fort Wayne Carroll High School.
He was athletic, played sports. Girls liked him quite a bit.
He was just a good guy... A fun guy to be around.
Narrator: In his senior yearbook,
Zach is nominated for homecoming king,
awarded Best Body,
and is a member of the school's Academy of Finance.
The yearbook page of the club,
in a "you can't make this up" twist,
is titled "Fun with Future Finances."
McKerr: It's just surreal.
How did this guy from Fort Wayne, Indiana,
run a $690 million Ponzi scheme
with zero financial background?
♪♪
Narrator: After graduating high school in 2005,
Zach attends Indiana University in downstate Bloomington.
While most of his friends attend
I.U.'s acclaimed Kelley School of Business.
Zach goes a different route and majors in psychology.
Friends say Horwitz is a great guy to be pals with,
especially on spring break.
McKerr: You know, the classic,
like, you throw a football in the sand
and it bounces toward some girls,
you would want Zach to go get that ball.
And all of a sudden, those girls would be coming back
and hanging out with us
for, like, the rest of the spring break.
Narrator: After Horwitz graduates from Indiana,
friends say he intends to pursue a graduate degree in psychology.
Instead, he opens a restaurant on the North Side of Chicago
in the summer of 2011.
Friends say the shop is funded by inheritance money
Horwitz receives after his stepfather passes away.
Krebs: Zach tells a group of us,
"Hey, I'd like you guys to join in with me on this
and take on various roles, and we'll, hopefully, become rich
off of this restaurant that I'm gonna start up."
Narrator: The name of the restaurant is Fuel.
Horwitz claims the joint will combine healthy food
with a healthy lifestyle,
including an on-site nutritionist.
While Chris Krebs doesn't invest,
he says Horwitz wants him on board.
Krebs: Zach's like, "Hey, I want to bring you on,
do some marketing things, whether it's social
or trying to drum up business or whatever that looks like."
Narrator: Horwitz tells Krebs and others that Howard Schultz...
Yes, Howard Schultz of Starbucks fame...
Is interested in his concept.
Krebs: At one point in time, Zach said,
"Look, Howard Schultz has this investment group.
It's called Maveron,
and they're interested in what we're doing
and they think there's potential to expand upon it."
That was incredibly enticing.
I mean, you're counting millions in your head at that point.
Narrator: After only a few months, the restaurant closes down.
Krebs says Zach Horwitz has an interesting excuse
for the restaurant's shuttering.
At the time, he takes it at face value,
but it now seems prophetic.
Krebs: He said that his money manager,
who's helping manage his money,
was involved in a Ponzi scheme.
Yeah, a little... Little foreshadowing.
[ Chuckles ]
♪♪
Narrator: According to Zach's narrative,
on January 1, 2012, he and his girlfriend,
pack up their car and abandon the Midwest.
They're heading to California,
where Zach can pursue his dreams of being an actor.
To his old friends, it's apparently a new dream.
They say Zach has no acting experience
and has never even mentioned it.
Krebs: It was incredibly surprising.
He had never talked about acting before.
And all of a sudden, to be involved in,
and trying to make himself an actor
was just... It was kind of weird.
[ Crowd cheers ]
McKerr: He loved "Entourage."
Like, was a very huge fan of "Entourage."
And when he moved to L.A.,
that's kind of what I always thought,
was, like, he wants to kind of live that life.
But he was never, like, an... Like wanted to be an actor.
Narrator: Upon arrival in California,
Zach begins auditioning for various TV and film roles.
In the next few years, Zach gets a few nibbles...
Roles like Demon #3 and
Unnamed Basketball Player.
Weiner: You can be what they call atmosphere.
You can be extras in a film by just signing up.
And then you get to go on set.
There's not a real background check on that.
Narrator: But as the saying goes,
"There are no small roles, only small actors."
Horwitz hypes his film appearances to any website,
podcast, or YouTube channel that will have him.
And in each interview, his legend grows.
One of his favorite stories is
how an injury dashed his dreams of playing in the NFL.
Went to Indiana University, started playing,
and basically it was before even the first season
is when I got injured,
is when we were in the training process before that.
That was the longest-running joke in our group.
It's like this guy never played football at I.U.
He did tear his ACL playing football at I.U.,
but it was intramural football.
Krebs: "I was gonna be a football player,
but I had this injury that happened during intramurals,"
but he kind of played it off
like it was a real football injury.
Narrator: In 2013,
he tells his friends he's landed a plum role
in Brad Pitt's World War II tank drama "Fury."
Krebs: Yeah, it was amazing.
Some of the actors and actresses that he worked with,
like, he would send, "Oh, I'm working
on this movie with this person."
And we're like, "Really?"
Narrator: Just like his alleged football career,
this role is constantly attached to Horwitz' name.
Emmanuel Noisette is a film critic
who writes for themovieblog.com.
Alright, so, if we keep our eyes on the screen here,
Zach should be coming up very soon.
Wait, wait, wait, there he... there he is.
Okay, there, and it's gone.
Yep, that's... that's all for... That's all for Zach.
Narrator: Horwitz' penchant for exaggeration,
on-screen and off, helps raise his profile.
Weiner: Everybody has a story. It's critical.
It's kind of funny, actually, because nobody checks it.
Nobody really cares, but they like to know
that you have some sort of a background
and it's interesting.
♪♪
Narrator: Next on "American Greed,"
Zach's little white lies
eventually become great big whoppers,
when he claims he strikes a deal
with one of the biggest names in Hollywood.
Schwab: Working white-collar cases,
you tend to see the gamut of what deceit can cause.
This one, in terms of its brazenness,
in terms of the size of the scheme,
really takes the cake.
♪♪
Narrator: Shortly after arriving in California,
Zach Horwitz strikes up a friendship
with a pair of aspiring filmmakers,
Diego and Julio Hallivis.
Horwitz partners with Julio and founds a company in 2013
that they call 1inMM Productions LLC.
The name comes from one of Horwitz' favorite sayings,
"When the odds are one in a million, be that one."
♪♪
Schwab: He was going to be
in the business of producing films,
perhaps with the idea that he was going to have
an acting role in some of these movies, as well.
Narrator: The partners strike gold...
24-karat nerd gold...
When they make their first movie,
a Batman-related fan film.
The film is a 20-minute short called "The Laughing Man,"
based on a DC comic book storyline.
Zach plays the title character,
who is locked in an insane asylum.
Mommy always said I was different.
Noisette: So, the basic premise is the Laughing Man
is extracting revenge or getting his kicks
out of murdering one of the doctors in the film.
The Laughing Man also proceeds to cut off his own face.
So, this is probably one of the most disturbing scenes
in "The Laughing Man."
But don't take my word for it. Let's check it out.
Aaah! Aaah!
It looked like he felt like he was crushing it.
You are the best.
I didn't get that impression,
but I think he felt like he was in the zone.
Narrator: Horwitz is ready to crush it off-screen, too.
During his time in Los Angeles, the film industry
is undergoing a major transition.
Streaming services are gaining steam
and changing the way Hollywood conducts its business.
Netflix is arguably the biggest name in the game.
Bottom line... Netflix is adding customers faster than expected.
Reporting more than 50 million streaming subscribers
for the first time.
Narrator: The streaming service is constantly on the hunt
for new movies to keep viewers hooked.
Horwitz spies an opening and devises a plan
to get a piece of the action.
In late 2013, he starts another business,
1inMM Capital.
Schwab: It's well-known
that streaming platforms, like HBO and Netflix,
are oftentimes looking for content,
and that content comes from third parties.
And so 1inMM Capital was playing into just that idea.
Narrator: Horwitz says 1inMM Capital
is not in film production,
but rather the film-distribution business.
Its purpose is to collect movies to feed the streamers.
At the time, Netflix is a $23 billion-a-year juggernaut.
And Horwitz says he's struck a deal with them.
Weiner: We know it's coming,
and Netflix is making tons of money,
and it's in all the articles.
So yeah, I can see how everybody thought,
"Wow. He has a deal with Netflix?
This guy's got to be rolling in it."
Narrator: Horwitz tells potential investors
that 1inMM Capital is looking to purchase
the rights to dozens of low-budget movies.
FBI special agent John Verrastro
is the lead investigator on the case.
Verrastro: So, what Zach Horwitz told the investors
was that the money that they provide him,
he goes and he buys the actual film rights
from the content provider or their sales agent.
And then he told investors, "I have existing relationships."
And then he sells the content to HBO and Netflix
for a 36-month period.
Narrator: Assistant U.S. Attorney David Chao says
the films are not blockbusters...
Far from it.
Chao: They seem to be American-based,
with kind of, you might expect,
B- or C-list type movies.
Narrator: Horwitz displays the movies in a glossy package.
He says that the rights to each film
cost anywhere from a few hundred thousand
to over one million dollars.
He also claims they'll be shown exclusively in Latin America.
Schwab: And maybe that actually helped assist the scheme,
because these weren't well-known movies
like a "Star Wars" or a Marvel film,
but rather more like an indie film.
So, it would be more difficult, in some ways,
for a victim to fact-check, for example,
whether in a particular country in Latin America,
Netflix is happening to be streaming
this movie that they invested in.
Narrator: But in order to buy the rights to these films,
1inMM Capital needs capital.
To find the funding,
Zach Horwitz hits up some old pals.
McKerr: And, yeah, it was, like, all of Zach's friends
And then they would go after the parents
and try to get the parents to invest, as well.
♪♪
Narrator: Next on "American Greed,"
this Golden State transplant hits the mother lode,
back in the Hoosier State.
Schwab: Horwitz not only represented himself
to be a successful Hollywood insider,
he also spent money as though he actually were one.
♪♪
Narrator: For a Midwest boy from Fort Wayne,
Zach Horwitz appears to be
that one-in-a-million success story.
He has a few movie roles under his belt,
and he claims to be the CEO of a new venture
with Netflix and HBO.
His friends back in Indiana think he's killing it.
Well, the portrait that Zach portrayed on social media
was, like, private jets
and, like, jetting all these places,
like, film festivals, and doing all this.
I was like, "He must be doing well."
Krebs: I would ask him what he was doing,
and he said, "Oh,
distributing films to Latin and South America.
We've got HBO. We've got Netflix."
And it kind of explained the lifestyle
that he was living.
Narrator: Horwitz takes advantage of his star status
back home in the Midwest,
according to prosecutor David Chao.
Chao: So, his first investors were his friends...
Friends that he knew from college in Indiana.
Narrator: While at Indiana University,
most of Zach's friends are business majors.
Since graduation, they've established themselves
at major investment firms like JPMorgan in Chicago
and Morgan Stanley in New York.
Loftus: They're brokers with 7 Series licenses.
These are top-flight financial professionals.
I mean, they're young, but they're the best.
Narrator: According to federal prosecutors,
Horwitz tells his friends that they can make returns
of up to 45% in this emerging market.
Zach Horwitz wasn't selling equity.
He wasn't selling shares in his own company.
Rather, what he was doing
was raising money through promissory notes.
The way that the agreements worked,
they were whole-dollar-amount agreements.
So just using a hypothetical example,
he would say like, "Oh,
I'm buying it for a million dollars."
Narrator: After purchasing the rights to the film,
Horwitz then says he turns around
and makes a distribution deal with Netflix or HBO.
Verrastro: "And then we'll get back like $1,450,000.
And then that $450,000 would be the 45% return
to the investors."
Narrator: Investigators say Horwitz makes sure
that his early investors get paid.
And frankly, many of them were skeptical at first,
but when they gave him the money,
they didn't just get a return back on a piece of paper.
They were actually receiving payments
into their bank accounts.
Verrastro: Like, oftentimes,
the investors don't ask for their money back.
They just tell you to roll it into the next investment.
But in this case, every six months, every year,
you know, depending on when the notes matured,
monies were moving back and forth
between the 1inMM Capital account
and the victim investor's accounts.
Narrator: In the summer of 2015,
Horwitz sends an annual report to his college friends.
In the report, Horwitz says he has already
"acquired and successfully distributed 49 films
through the 1inMM Capital banner
without incurring a single loss in the process."
Chao: Number one, touts the success...
The prior success that he's had.
It projects these glossy posters of the movies
that he supposedly has acquired and distributed.
♪♪
Narrator: Investigators say Horwitz wants his friends
to help him take the business to a new level.
Some have already made small investments with him,
but Horwitz wants them to go all-in.
To entice his college buddies, he gives them a special gift.
He sent his friends a bottle of Johnnie Walker Blue.
Purporting, you know, as, like, a gift for the success
that they were having with the business.
McKerr: I had friends who started investing
very early with him,
and it didn't totally make sense to me,
but, again, like, I didn't have the minimum to invest,
and I'm in law school or paying back loans at that point.
♪♪
Narrator: Four of Zach's friends
are ready to take the plunge
and start a new company to capitalize on the venture.
The startup is called JJMT,
after the first names of the founders...
Jake Wunderlin, Joe deAlteris,
Matthew Schweinzger, and Tyler Crookston.
Schwab: So, JJMT... They initially
were investing informally in 1inMM Capital.
After seeing those early returns,
they left their normal jobs.
♪♪
Narrator: JJMT establishes an office in downtown Chicago,
just off the Magnificent Mile.
Over the next couple of years, JJMT invests
hundreds of thousands of dollars with Horwitz
and hits up other friends and family
back in Indiana to join in.
Schwab: Zach Horwitz was perfectly situated
in order to make this work.
His friends knew that he had some involvement in Hollywood,
albeit a small one.
And those friends themselves had a role
in finance in their own sector.
And as a result, he was able to tap in to their investment
and their money.
Everybody that I knew that was invested loved it.
I mean, it was the easiest money they've ever made.
Narrator: After witnessing Horwitz' restaurant debacle
a few years earlier, Chris Krebs,
with the support of his wife, declines to invest.
Krebs: Absolutely tempted.
I mean, it's hard to pass up the kind of money
that you're seeing people make.
But after the Fuel experience, we just decided, at that point,
we're not going to mix friends and business anymore.
Narrator: But Krebs says plenty of others
want in on the action.
Krebs: I know of parents that were involved,
that put their retirement into it.
I know grandparents, brothers, and sisters,
and people that were involved,
and large groups of friends, too.
Narrator: Those friends tell their friends,
who tell their parents and their neighbors.
But no one ever bothers to actually confirm
the legitimacy of Horwitz' business.
His reputed Hollywood success is all the info they need.
And they're happy to write a check to the hometown boy
through his successful finance friends.
Verrastro: So, there were some people
who were not really sophisticated investors at all,
but were relying on, like, their family member
that, you know, had told them that this was a good investment.
Narrator: The word-of-mouth advertising
sparks exponential growth.
Between 2015 and 2019, court filings show,
1inMM Capital issues hundreds of promissory notes
to JJMT clients,
in exchange for a mind-blowing $485 million.
Schwab: Certainly, the demand here
was extremely high for individuals
to invest their money with Zach Horwitz' enterprise,
with 1inMM Capital.
Narrator: And just like that, the company...
And Zach Horwitz... Is swimming in cash.
♪♪
Next on "American Greed"...
eager investors take extreme steps
to get in on the action.
Crandall: We were really excited about it.
Hence, we almost took $400,000 worth of equity
out of our house. We thought we were
the people who finally had the leg up,
you know, had the inside track.
♪♪
Narrator: In just a few short years,
Zach Horwitz' film-distribution business
has gone from starting up...
to blowing up.
As word of its alleged success spreads,
he picks up hundreds of investors across the country.
In Orange County, California, Terry Crandall
is a local economics professor and entrepreneur
who runs a nonprofit voting website.
Crandall: When it comes to investing,
I take a relatively long-term approach.
As an economist, I have a lot of hubris, right?
That's sort of taught into us.
But, really, there are times
that I can see patterns in the market
and say, "Okay, I think the market's gonna turn."
Narrator: While Crandall says his investment philosophy
is usually conservative, he can't help but be curious
when his neighbor says he's making serious bank.
Crandall: He said, "You know, it's pretty aggressive.
It's probably outside of your normal sort of investment."
And he was right.
But, you know, I watched him,
and I asked him a lot of questions.
Narrator: Crandall says his neighbor
is making hundreds of thousands of dollars
investing with 1inMM.
He's also the point man for a local group
of JJMT sub-investors.
Crandall wants in,
and ponies up $10,000 to join the group.
After seeing a 12% return on his first investment,
he bumps up the dollar amount the next time around.
So, like, this one, as you can see,
is from July of 2017, where we invested $15,000.
And I apparently invested in movies called "Redcon-1,"
"The Forgiven,"
"Origin Unknown," and "Drop-Off."
The agreement was for them to pay me back my $15,000
and then pay me $1,125 in interest.
Narrator: The group includes
approximately three dozen other sub-investors.
But they aren't the only ones raising fund
for Zach Horwitz and 1inMM.
Verrastro: There was, total, like five big groups...
Investment groups... That all had,
like, sub-investors underneath them.
So JJMT was the largest investor, for sure.
Narrator: The feds say the other groups are
The movie Fund, Vausse Films,
Pure Health Enterprises, and SAC.
All of the investment groups
are based outside of Hollywood...
An important detail, according to Hollywood-based
investigative journalist Allison Hope Weiner.
If he tells people that he's involved in
all these projects in Hollywood,
and they're not from Hollywood,
I mean, they don't know how the entertainment industry works,
so it'd be easier to talk to people not in the business
and kind of fudge what you...
What you're actually doing in the business.
Narrator: HBO and Netflix are multi-billion-dollar businesses.
Weiner stresses that they wouldn't be working with
a low-level actor like Horwitz, no matter how suave he may seem.
Weiner: If you talk to somebody
who's an attorney in the movie business
or in the streaming business,
they're gonna know that nothing he's saying is true.
Right away.
Narrator: But his investors' ignorance is Horwitz' gain.
He's raising hundreds of millions of dollars
and enjoying every minute of it.
He purchased an opulent house on the West Side of Los Angeles.
He had a full wine cellar, a home movie theater.
He spent it on private jets and private yachts and so forth.
Schwab: He spent hundreds of thousands of dollars
on events like birthday parties
and spent all kinds of money taking junkets to Las Vegas.
Chao: He spent the investor funds
on Amex bills north of $6 million;
party consultants ranging in the six figures.
He spent, I think it was north of $500,000
on leases for, like, Audis and Mercedes.
Narrator: Horwitz marries his college sweetheart
at the Four Seasons in Beverly Hills.
He acts like a real Angelino
and buys courtside seats to Lakers games.
Krebs: It was great.
It was always a good time with him,
kind of similar to college. Like you'd go out,
he's buying all the drinks,
he's got the good places to go.
Narrator: For more than five years,
Horwitz lives the Hollywood high life.
But, eventually, his insatiable
spending habits catch up with him.
Next on "American Greed"...
Horwitz' fantasy comes crashing down,
and his investors must face the cruel reality.
Loftus: This one is tragic,
because it started off as imaginary
and continued imaginary and then grew so large.
Narrator: Want more "Greed"?
Follow us on Instagram, connect on Facebook,
and listen to the "American Greed" podcast
wherever you get your podcasts.
We'll be right back.
♪♪
Narrator: One unusual thing about Zach Horwitz' business
is, other than his JJMT pals,
few individual investors have ever met him in person.
Investigators say Horwitz generally works directly
with the principals of his main investor groups.
He does a very good job of finding people
that, you know, believe in him
and then kind of provide credibility to him.
Loftus: No investor is dealing with Horwitz.
They are dealing with their buddy
who brought them in at the aggregator level,
who then deals with the guys at JJMT or SAC.
Narrator: In Orange County, Terry Crandall
has been investing through his neighbor,
who then forwards the money to JJMT.
I never met the J's or the M's or the T's.
I never met Horwitz.
Narrator: In two years,
he's made nearly $30,000 in profits.
Things are going so well,
Crandall says he starts borrowing money
against his assets for more investment funds.
Crandall: We had done the math.
Sort of like taking equity out of our cars, right?
We could pay for our cars
with the interest-rate gains for the year.
Narrator: While his wife has a stable career,
Crandall says he plans to quit his teaching job
to pursue his dream
of starting the Voting Smarter app and website.
Crandall says he's ready to take $400,000 in equity
out of his home, invest it,
and live off the interest.
Crandall: If, at around 20% to 25%,
if I could put in $400,000 into this investment,
I could make $100,000 a year,
which is what I was making as a professor.
Narrator: He says he knows it's a crazy idea,
but the thought of making easy money
is too hard to resist.
Crandall: No matter how cautious you are,
no matter how thoughtful you are or how smart you think you are,
there'll be a moment where the greed can get to you.
Bells would go off,
and the little greed monster in your brain
silences the bells.
Narrator: In December 2019,
Crandall is expecting his latest windfall,
as his six-month note is just about due.
Crandall: Yeah, I mean, we were waiting for $105,000
worth of principal back, as well as,
you know, another $18,700 of interest.
Narrator: But, he soon learns that the money isn't coming.
Crandall: We got an e-mail saying, "Hey, look,
the Netflix deals are on hold.
They're auditing everything."
Narrator: He frantically calls his neighbor,
who tries to reassure him that nothing is wrong.
Crandall: I said, "My bells are going off."
He's like, "No, this is legit."
I was like, "Okay."
And then another month, another delay.
Narrator: What Terry Crandall and his neighbor don't know
is that Zach Horwitz isn't some whip-smart, young entrepreneur.
He's a con man running a Ponzi scheme.
His entire business is fake.
There's never been any film distribution,
no selling off film rights to Netflix or HBO.
He's just an actor
playing the role of a real-life villain.
Like, no matter what,
every new project you go into, you're nervous
'cause you have that impostor syndrome,
where it's like, "Am I supposed to be here?
Are they gonna find out that I'm this fraud the whole time?"
Chao: It was clear from the beginning
that it was just fake from the get-go.
This one is tragic because it started off as imaginary
and continued imaginary and then grew so large.
Narrator: By late 2019, the inevitable arrives...
Horwitz is out of cash.
Schwab: He stopped being able to make payments
on the promissory notes.
There was outstanding obligations
of over $230 million at that point.
Narrator: Ponzi schemes require
a constant infusion of new investors
and new cash to pay off old investors.
Without fresh victims, the schemes always collapse.
It's impossible for a Ponzi scheme to end well.
It's mathematically impossible.
No matter how successful you are at operating a Ponzi scheme,
eventually there's a limit
to how much new money you can recruit,
how much new money you can bring into the scheme,
and that's what happened to Zach Horwitz.
Narrator: Ironically,
just when his film-distribution business
is hitting the skids,
Zach Horwitz' acting career seems to be on the rise.
He appears in "The White Crow" with Ralph Fiennes
and "Last Moment of Clarity" with Brian Cox.
And in a bit of "art imitating life,"
Zach is cast as a criminal in the film, "The Gateway."
Noisette: One thing that Zach likes to do is intense scenes.
This was a good fit for him, you know?
Like, he had his moments
of just being really, really aggressive,
which I'm sure he picked up
from his intramural football days.
Narrator: Next on "American Greed"...
Horwitz learns to play the strong, silent type
when the feds finally catch up with him.
He didn't ask why he was being arrested.
He didn't seem surprised that we were there.
♪♪
Narrator: In early 2020, it appears Zach Horwitz
is about to face his day of reckoning.
He's out of money,
and making more excuses to investors than payments.
But, in the month of March,
an unlikely event buys him some time.
Crandall: And then COVID hit.
And it was just like, "Well, what do we need
the money for, right? The world's ending."
Verrastro: Everybody started to lock down in March, April,
and so I think it created an environment
where it was easier for him to say,
you know, why there was delays.
Narrator: Horwitz uses the downtime
to concoct some explanations for his inability to pay up.
Verrastro: He used the excuse that Warner was buying HBO,
and as a result of their acquisition,
they were holding off on payments to any contracts
and they wanted to renegotiate all the contracts.
Narrator: Coincidentally, he says,
Netflix also has issues.
Verrastro: He just claimed that, "Oh, Netflix was conducting
an audit of all their content that they were purchasing,"
and until the audit was complete,
no payments could be made.
Narrator: To help cover his tracks,
Horwitz types up some fake correspondence
and presents them to his investors.
Chao: He would create, from whole cloth,
fake e-mails or text messages
with supposed employees of Netflix and HBO.
And these e-mails look very legitimate...
Again, using real people that worked at HBO and Netflix.
Narrator: For Terry Crandall, the sequence of events
prevents him from taking out a $400,000 mortgage on his home.
Crandall: Luckily, the payments sort of stopped,
and it was just... it just wasn't the right thing to do.
We had at least enough sense not to do that
and lose... you know, potentially lose our home.
Narrator: Horwitz manages to drag out the proceedings
for over a year.
Brian Michael is an L.A.-based attorney
who is representing three of the men in JJMT.
Tyler Crookston left the group in 2018.
Zach was able to engage in a very sophisticated effort
to do what is known as lulling and to keep the JJMT members
and the sub-noteholders from suspecting
that there was any fraud.
Narrator: But in early 2021,
many investors, including Horwitz' college friends,
are fed up with the excuses and contact the authorities.
Michael: So, we brought it to the FBI,
we brought it to the Justice Department,
and in essence said to them, "We believe we have been victims
of a massive, sophisticated fraud.
We need your help."
[ Siren chirps ]
Narrator: In Horwitz' film "The Gateway,"
his character gets off a good zinger
when he's arrested.
How you doing, Mike?
Same [Bleep], different toilet, officer.
[ Spits ]
Narrator: But Horwitz isn't as cocky on April 6, 2021,
when FBI agents show up at his L.A. home
with an arrest warrant.
Verrastro: One of the unique things about the arrest
was how calm he was when he came to the door.
He didn't ask why he was being arrested.
He didn't seem surprised that we were there.
♪♪
Narrator: Shortly after, Horwitz' wife files for divorce.
According to federal prosecutors,
Horwitz' Ponzi scheme is the largest in Hollywood history.
Chao: Based on the evidence we've seen,
Horwitz raised over $650 million
in the course of this six-year scheme.
Narrator: One month after his arrest,
Horwitz is indicted
on five counts of securities fraud,
six counts of wire fraud,
and two counts of aggravated identity theft.
Chao: It was all a fraud.
He had no relationship with Netflix.
He had no relationship with HBO.
He had no relationship with the sales agents
for the production companies
that he said he was getting these movies from.
Narrator: The feds say Horwitz still owes investors
an astounding $230 million.
Chao: Unfortunately, in this case,
a lot of the money has been squirreled away
or already spent.
But where that money is now, exactly, is hard to say.
Narrator: In Orange County,
Terry Crandall loses over $100,000.
His neighbor fares even worse.
Crandall: I mean he lost millions of dollars.
But I know he's... he's equally or more broken up
about losing his investors' money.
And, I... I just couldn't imagine
if I'd lost my friends' money.
Narrator: Horwitz pleads guilty to securities fraud
and gets a 20-year sentence.
Verrastro: I think the sentencing was so harsh in this case
was 'cause of the dollar amount to that loss...
The $230 million restitution.
Narrator: The rest of the charges against him are dropped.
While Horwitz is the only person charged in the case,
the question remains,
"What about his friends in JJMT
and the other investment groups?"
The feds say Horwitz acted alone.
But Alexander Loftus, who represents JJMT clients,
says JJMT didn't do its due diligence.
For example, Horwitz didn't have an accountant.
There was no audit of his financial records.
The most simple thing that didn't happen
until, you know, right before it collapsed,
is no one picked up the phone and called Netflix
and said, "Hey, what's going on here?"
Narrator: The class-action suit against JJMT
seeks damages of at least $120 million.
Loftus: For the civil claims,
we don't need to prove they knew anything.
We prove it was dumb,
and the basics of the claim is, "This was dumb,
and you made money off of being dumb,
and you got to pay it back 'cause it was stupid."
Narrator: JJMT's attorney says
the men should be viewed as victims of Horwitz' scheme.
Michael: They're 100% victims.
The Department of Justice has recognized them as victims,
and everything about the life they're living today
is reflective of someone who has been horribly victimized
and nearly wiped out financially by the fraud of a friend.
♪♪
Narrator: Zach Horwitz may have been a middling actor,
but to the film critic,
his strongest performance was not on-screen.
If you're doing something of criminal activity
for seven, eight years,
I think, at some point, you start to believe
that you're not doing anything wrong at all.
It sounds as though like he believed his own part.
That was his greatest role,
and he'll never get an award for it.
♪♪
Narrator: Meanwhile, Horwitz' victims
are still dealing with the fallout.
I've tried to just put that mistake of mine
somewhere hidden in my past, because I blame me.
Um...
there's plenty of tricksters and fraudsters out there,
and I should have known better.
Narrator: Investors, family, and friends can only wonder
how this whole thing happened in the first place.
I would like to go see him face-to-face and ask him why.
I don't expect that I'm gonna get a truthful answer,
but I'd at least like to have the conversation.
He was a good friend of mine for half my life.
I would just love to know what his endgame was with this
and does he feel any remorse.
Is there any remorse at all for this?
Captions by VITAC...
♪♪