♪♪
He was a very popular guy in high school.
Zach Horwitz basically grew up like a Hollywood star.
Goldberg: A Midwest kid with Hollywood dreams.
It's a familiar story, but this one is a blockbuster.
♪♪
Right off the bat, it was apparent
that there were several hundreds of million dollars
that nobody could account for.
It's not just about a guy who wants to be behind the camera.
He wants to be a star.
Clark: I was not terribly impressed
by Zach's acting chops.
He found another route to the top.
Mosley: This was an investor's dream come true.
They're all in big Hollywood business.
Verrasto: It's everybody from your mom, your dad, grandparents.
And then they lost everything.
Krebs: Nobody saw it coming.
I couldn't fathom doing that to friends.
Schwab: A Ponzi scheme can only grow so large.
Hackett: He had a 1,000-bottle wine cellar.
He flew on private jets.
He wore $500 T-shirts.
Krebs: Zach commanded attention
regardless of who the audience was.
Goldberg: He's got plenty of attention now,
but I'm not really sure he's going to like it.
Mosley: Zachary and his wife, Mallory, get a wake-up call.
It's an FBI raid.
Clark: It seemed like something
that would only happen in the movies.
Goldberg: Oh, no, no, honey, this is happening in real life.
And it's happening to you.
♪♪
I'm Whoopi Goldberg, and this is "The Con."
-- Captions by VITAC --
Welcome to Fort Wayne, Indiana,
a working-class town at the crossroads of America,
the perfect opening scene for a starry-eyed dreamer
who's going places.
To guide us on this epic journey,
we've brought in self-professed scam goddess Laci Mosley,
who can spot a Hollywood grifter 2,000 miles away.
Mosley: This is Zach Horwitz, actor, writer, producer.
And his story, like many Hollywood stories,
began far, far away.
♪♪
Krebs: Growing up in Fort Wayne was not quite a small-town feel,
but it was very family-oriented.
♪♪
It was the type of community
where if you went to school with someone in kindergarten,
chances were you were still going to be in school with them
in high school. [ School bell rings ]
For the most part, you knew the majority of the class.
♪♪
I met Zach around sophomore year.
From there, we became friends.
Goldberg: Despite being the new kid in town,
Zach redefined his role
as big man on campus in Fort Wayne.
He was a very popular guy in high school.
♪♪
Clark: I was classmates with Zach Horwitz.
He was a jock through and through.
Being an athlete, playing football
was really, really intrinsically tied
to who Zach Horwitz was in high school.
He always looked like somebody that,
hey, that's what a star athlete looks like.
You know, Zach was that popular guy in everybody's high school.
Really good looking, great hair,
got along with the geeks and the jocks.
He was beloved by all.
He was even voted Best Body.
Clark: I recall talking to the yearbook photographer
who took that photo, and they remarked
how he insisted on taking his shirt off,
disrobing, really showing off what he had.
That is a very weird yearbook category.
Why are the kids voting on each other's bodies? Strange.
Zach Horwitz basically grew up
like a Hollywood star in Fort Wayne, Indiana,
because everywhere he went, he turned heads,
and he thrived off of it.
Maybe he lived for it.
Goldberg: That can be all it takes to get the bug.
Why hide those talents under a helmet and pads?
At some point, he did get into drama and acting.
Krebs: Most of us had to take one theater class
while in high school.
He was a really captivating storyteller.
My lasting memory of Zach is
we were in a class once,
and he regaled the class with this story
of how he and his sister were at this shopping mall in Florida,
and they were approached by Derek Jeter,
and he invited both of them back to his estate
to have dinner that night.
Goldberg: Yankees legend Derek Jeter?
'Cause for someone in high school,
that's an incredible story.
I'm not sure that I believe it, but his classmates seem to.
It seemed like something that would only happen in the movies,
and here it was.
The guy I'm sitting next to in class,
it actually happened to him.
Krebs: Zach and I graduated high school together,
and we both got accepted to Indiana University.
We decided that we were going to room together our freshman year.
I.U. is kind of where the cool kids go,
so it seemed like a good fit for Zach.
Krebs: We had a large group of friends that would be there.
The group of guys that we were hanging out with
were guys that I expected to spend our later years in life
still being friends with.
Mosley: Zach is the typical all-American guy.
He's got these piercing eyes, and people really like him.
Krebs: Our junior year of college,
Zach met his girlfriend, Mallory.
He seemed to really like her quite a bit.
He would still go out to the bars with us.
He was still doing all of his classwork,
but the rest of his free time was spent primarily with her.
He got good grades throughout, graduated on time.
I knew that, at the end of the day,
that he was going to be a successful guy.
He's always done well for himself.
I figured that he would land on his feet regardless
of what the next direction was that he wanted to go in.
♪♪
So, Zach leaves Indiana and goes to Chicago,
where he opens up a smoothie bar called FUL,
spelled F-U-L, you know, fuel.
Goldberg: And for a city that's knee-deep in melted cheese,
smoothies and salads
would certainly disrupt the market.
Krebs: Zach told us he planned to open a restaurant in July of 2011.
Zach mentioned to me
about wanting me to be involved in it in late September.
A large group of our friends
were a part of this restaurant opening.
The restaurant was beautiful.
It appeared to be busy, but they were going to
try to build FUL into a larger national chain.
My wife and I went out to Chicago,
put a down payment on an apartment out there.
I put in my two-weeks' notice at work
and had planned to move to Chicago after Thanksgiving.
FUL was well-received when it opened.
But from a financial standpoint,
it wasn't making a profit yet at this point.
It seemed like one of those things
where you can get in at the ground level.
You can work with your friends
and hopefully turn it into something that's really big.
Goldberg: While his friends are prepping sandwiches,
Zach starts preparing for acting roles.
He talked openly about wanting to make it as an actor.
Goldberg: He takes a few classes and books some short films.
It's no red carpet, but it sure beats green juice.
The friend group that he brought in,
everybody was kind of working together.
They had their own specialized field,
and everybody at the same time was still working in the store.
They were making sandwiches. They were making smoothies.
They were managing it from open to close every day.
♪♪
In November of 2011,
two weeks after I put the down payment
on the apartment in Chicago,
I got an e-mail from Zach saying that he was basically
going to close the doors on the business and disband it.
♪♪
Nobody saw it coming.
It seemed like it happened overnight.
It felt like betrayal.
I couldn't fathom doing that to friends.
I was disappointed with the closing personally,
just because that was a new chapter in my life
that I expected to partake in and didn't happen.
There were a lot of things going on at home,
and my wife was pregnant, so it was tough.
The group of friends we had were all in Chicago
with leases on apartments or condos,
and they needed to find a new job and a new way of living.
♪♪
Goldberg: Seems Zach didn't get into show biz to make friends,
and he might have lost a few when he left the smoothie biz.
Mosley: Suddenly, he leaves his friends in Chicago
and decides he's going to bigger and better things --
Hollywood.
Goldberg: Dreams aren't going to chase themselves.
And Zach leaves behind a nightmare
for those back in Chicago.
♪♪
Goldberg: In late 2011,
Zach Horwitz put the Second City in his rearview mirror,
leaving behind his friends and the health food business
with a new goal -- to make it big in La La Land
with a shiny, new stage name,
Zach Avery.
Krebs: I don't believe he had even gotten any roles yet.
He was really just putting video out there as part of his reel
or whatever for trying to land an acting job.
And to be honest, they were --
They were hard to watch at the time.
I'm watching Zachary Horwitz's acting demo reel.
Let's see what Zach is giving.
I'm the man of the house now.
You know why?
'Cause you're just a [bleep] child.
Oh.
Wow, this man was terrible.
This was so bad -- I feel --
Zach, you owe me money.
Goldberg: Zach's first big-screen credit
was in the Brad Pitt war movie "Fury."
There he is.
Wait. Or is that him?
Well, he's in there somewhere.
And despite landing the non-speaking role of tank medic,
parts just did not come rolling in for Zach.
So, whilst Zachary's acting career
is ascending at a snail's pace,
he decides to create a production company.
Clark: When the acting work wasn't coming
as rapidly as he figured it would,
I think that he found another route to the top.
♪♪
Goldberg: Making it big in the movie business is not easy.
[ Chuckles ] I should know.
And the only way to make sure the kid stays in the picture
is to be the one producing the picture.
My name is Larry Hackett, ABC News contributor,
and I'm the former editor-in- chief of People magazine.
In Hollywood, there's a very low cost to entry.
I mean, anybody can claim they're a movie producer
and claim they've got a script or claim they have a new star.
So while Zach Avery was the actor,
Zach Horwitz was the growing movie investor/producer
who created a company called
1inMM Productions. [one in a million]
He loved the idea of this name
'cause it suggested to potential investors
that the idea of movie success is one in a million,
and you should be that one who has that success.
Goldberg: Production company -- check.
Killer catchphrase -- double check.
A way to make money? Well, not so much.
Little help here?
My name is Anita Surendran.
I'm an entertainment lawyer in Beverly Hills.
When you are selling a film in Hollywood,
there's a few different ways that you can do it.
One is through the studio route. They fully finance the budget,
and then they control the distribution of the film
once it's produced.
The other route is to go through an independent financing model.
You are putting together the financing yourself
and then finding ways to bring it to a distributor.
Goldberg: There's a new way to watch movies,
and Zach sees a new way to make money.
He just needs some investors to buy in.
At this time, the streaming wars had just begun,
and they're all hungry for content, and they're looking
for production companies to provide it.
Surendran: It was a little bit of the Wild West,
because a lot of these companies were figuring themselves out.
So they were happy to work with emerging filmmakers,
and Netflix was kind of going after a much wider scope.
Hackett: So, what Zach said to people was,
"These streaming services exist globally,
and they have different rights and different projects
in different countries.
What I'm going to do, investor,
is to buy the rights to a movie.
Netflix can then pay for and broadcast in Latin America,
in Australia, anywhere but in the United States and Europe."
And people would think, "Okay, that sounds good."
So the idea is I'm a broker.
I'm a kind of toll plaza, if you will.
You give me the money. I buy the movies.
I lease them to Netflix and other streaming services.
In return, you'll get 35 to 40%
on top of your initial investment.
Goldberg: A middleman delivering 40% returns?
There's always been money in movie magic,
but that is the kind of profit that parts the Red Sea.
He kind of essentially meant
that it was a guaranteed investment.
He was going to be the guy to find it,
bring it to them, sell it to them.
And you, the investor, were going to reap the benefits.
Goldberg: Remember those friends from college?
Yeah, the ones that got mixed up in the smoothie business?
Well, he's going to make it up to them
with an offer they can't refuse.
Zach enlisted some of his college friends,
people who'd gone out and become financial planners
and investment experts.
Based on their friendship and based on their history,
he got them to invest their money.
Surendran: A lot of times, you see investors
who are not Hollywood people,
who don't know how the industry works,
and they come to the table 'cause they'd like to get in
because it's a cool business.
Krebs: Once our group of friends started to get involved,
that's when I really took notice of what he was doing
from the movie distribution standpoint.
I certainly asked him questions.
He kind of told me what he was doing,
and it seemed like a reasonable explanation,
and that was it.
And so, yeah, parents got involved,
grandparents got involved, in-laws, friends.
Hackett: The idea that if you live in the Midwest,
and you can invest some money,
and you're going to get, "A," your money back,
and perhaps one day, you'll be able
to put on a tuxedo and get an Oscar
'cause you were a producer, that's very, very attractive.
It was a $20,000 kind of initial commitment
in order to get involved.
And Zach was somebody that I trusted explicitly.
Hackett: Initial investors signed a promissory note
and then got back up to 45% of their investment.
This sounds like a good deal.
Krebs: 2016, 2017 is when we really started
to see people that were making money
and doing really well and living a nicer lifestyle.
♪♪
Goldberg: Zach has sold the Hollywood dream
to his friends in the Midwest,
and everyone is getting a taste of success.
With that, he's started to make a name for himself in Hollywood.
People, his friends who he'd gone to, the financial planners,
told other people.
And soon, money was streaming in to people.
They believed it was a smart investment
and that they were on the bottom floor
of what became this absolutely voracious streaming mania
throughout the past decade.
This was an investor's dream come true.
They're seeing returns, and everybody's over the moon.
They're all in big Hollywood business.
Goldberg: Hold onto your seats, darling.
There's going to be a plot twist.
♪♪
Even though Zachary was killing it on the investment front,
his acting career was still D. O. A.
So he decided to use some of that money that was coming in
to invest in projects that he could cast himself in.
What Zach Horwitz, movie producer, did
as Zach Avery, growing movie star,
was basically pay for play.
He took his own money, and he made his own projects.
It was enough money, millions of dollars,
that he could sustain the creation of movies
and stick himself in the cast.
Zach was simply kind of refining and updating
what was a very old, traditional Hollywood idea.
And it worked.
Everything's great.
Goldberg: Zach Horwitz/Avery
was making big waves in Los Angeles.
The networking of Zach Horwitz
turned into more and more screen time for Zach Avery.
I think what makes Zach Horwitz's story so great
is that it's not just about a guy
who wants to be behind the camera.
He wants to be a star.
To look at his filmography, you would think
that Zach Avery was a guy
whose career was absolutely about to explode
into A-list fame.
He'd gone from uncredited roles
to sort of mid-level roles with higher profiles,
to starring alongside people like Olivia Munn
in a film called "The Gateway."
Avery: Yeah, well, I'm here now, and I'm done with that [bleep]
You don't have to worry about anything.
Playing that dynamic
between kind of the good guy and the bad guy
and how I can work through those nuances was really fun.
Hackett: It had nothing to do with Zach Avery's sudden talent
that he became an above-the-board star
or accredited star.
It had to do with the fact,
unbeknownst to people involved in the movie,
that he was financing it with money that he raised.
For what it's worth,
I was not terribly impressed by Zach's acting chops,
and I think for that reason, it was not terribly surprising
to learn that he had a side hustle.
If you have that kind of money,
you can make your own playgrounds.
And that's exactly what he was doing.
He was building his own toys
and hiring the best actors in Hollywood to play with him.
♪♪
Goldberg: We get it. He's not a great actor.
But as a producer, he earned rave reviews.
The money continued to flow,
with more and more investors signing on
for a piece of Hollywood riches.
People were buying nice houses.
They were talking about
the return on investment that they were receiving
and how happy they were with participating
and being able to be a part of what Zach was doing.
Hackett: Variety and trade magazines wrote stories
about 1inMM Capital and about the idea
of the investments involved in these movies.
So much of this is about appearance,
and whether or not it's successful
is up to the people who don't live in Hollywood.
Goldberg: With his career on track to stardom,
Zach asked his girlfriend, Mallory,
to be his leading lady in life
and began planning a blockbuster wedding.
At this point, everything is going well for Zachary.
He starts blowing this money on a big Hollywood wedding,
and you know that had an open bar.
Goldberg: In 2014,
Horwitz assembled his friends and family in Beverly Hills
to witness him marry his longtime girlfriend, Mallory.
The wedding at the Four Seasons was very lavish.
It was well-done.
I'm sure that the wedding planner that they used
cost a lot of money.
She did a fantastic job.
Hackett: I've seen weddings
at the Four Seasons in Beverly Hills.
They are elaborate affairs.
They must cost hundreds of thousands of dollars.
They're enormous testimonials
to, frankly, the wealth and glamour and riches
of the individuals having the ceremony.
♪♪
He had a 1,000-bottle wine cellar.
He flew on private jets.
He wore $500 T-shirts.
Goldberg: Zach was the living embodiment of success.
And the bigger he got,
the more people wanted to follow in his footsteps.
Hackett: I think when investors saw the lifestyle
Zach was leading, they thought to themselves,
"This is how it's done in Hollywood,
and he's successful, and I should be part of it."
This helped him fan the flames and just bring in more money
and live an even higher life.
♪♪
Goldberg: From 2014 to 2019,
Zach was a filmmaking financial hit maker.
Investors were paid on time with their 40% return profit.
A well-oiled, camera-ready Hollywood machine.
And then came 2020.
Krebs: People were quitting their regular day jobs
to participate in this
and kind of pool all their money together.
And by early 2020,
there was talk that payments had started to be delayed.
Goldberg: Uh-oh.
♪♪
Krebs: The initial reaction was worry.
So I was asking questions.
Zach was blaming HBO and Netflix.
He said they weren't honoring the contract
and paying on the exact date that they were supposed to.
It was a similar update every time.
"There's a reason why these guys can't pay,
but I promise I'm working on it,
and eventually, you'll get your money."
Goldberg: You know, I've seen this movie before,
and it's box office poison.
♪♪
Goldberg: 2020 -- a real-life disaster flick.
And for Zach Horwitz,
this was the year his meteoric rise in Hollywood
started to look like it might crash back down to earth.
The payments to investors start to get delayed,
but Zachary promises that everything's fine.
Krebs: As things kept progressing,
there was always a different story or a reason
as to why the payments weren't coming.
And everybody was very mad.
♪♪
I've had conversations with friends,
and they're talking about how much they had invested
and just how difficult that circumstance was.
It was basically, "We don't think there's any money,
and there's no contracts."
The people that we thought we were dealing with
either don't exist or were fabricated by Zach.
Goldberg: When you're on the hook for millions of dollars,
quick tip -- Don't ghost your investors,
or they might give a quick tip to the authorities.
♪♪
Verrasto: I tend to specialize in financial crime,
economic crime, sometimes also referred to
as white-collar crime.
♪♪
We started an investigation February 24, 2021,
and then engaged with the United States Attorney's Office.
And we found that the SEC had an investigation, as well.
♪♪
Schwab: Whenever you get a case like this, you always wonder,
is this just a business deal gone awry,
and there's unhappy investors, or is this actually a fraud?
And those things oftentimes look similar at the outset,
and it takes a little bit of digging to distinguish the two.
And we started to realize this was an unusually large scheme.
♪♪
Chao: We deal with a lot of fraud cases,
but right off the bat, it was apparent
that there were several hundreds of million dollars
that nobody could account for.
Goldberg: Did he just say hundreds of millions?
This fraud just became a Hollywood blockbuster.
Schwab: When the investigative team
reached out to Netflix or HBO,
we found out that they didn't have
the types of business relationships
that he was representing to his investors.
In fact, in many instances, they had no idea who he was.
Goldberg: Wait a minute.
Working with streamers was his entire business.
What was he doing? Where was all that money going?
Verrasto: When the investigation first started,
some of the first steps that I did was, you know,
reach back out to investors to get more information,
documentation from them, to kind of build out the case.
Mosley: The FBI had surveilled him
making six-months to one-year promissory notes to investors
through his production company, 1inMM.
Zach was being investigated, but he didn't know it.
So we had to kind of carry on conversations with him
like everything was normal.
And we were told that,
"You might be asked for text messages.
You might be asked for e-mails," things like this.
And it got real very quickly.
We learned that Zach Horwitz was telling investors
that he was purchasing distribution rights
and then licensing those rights to streaming services.
He would present to investors different films
that he was considering purchasing,
and he would provide a list, and then investors could choose,
like, which films they wished to invest in.
Zachary Horwitz, also known as Zach Avery,
was potentially conducting a Ponzi scheme.
Goldberg: Did he just say Ponzi scheme?
Okay, time for a flashback,
'cause you probably remember the Ponzi scheme
from the Bernie Madoff scandal in 2008.
It's a form of investment fraud
where new investors are recruited
to pay off old investors.
And when you're desperate for new investors,
sometimes that means bringing in your friends
to keep it all going.
I'm William D. Cohan,
New York Times best-selling author.
It was a classic Ponzi scheme
where he used the money from new investors
to pay off the old investors.
Of course, given the ridiculous rates of return
he was promising, there was no way he could sustain it.
Hackett: Zach thought he could
just keep paying out the long-term investors
while just sucking in more money into the front end.
But he just couldn't do it anymore.
Mosley: Zachary Horwitz took money from investors
as promissory notes.
And in order to repay that note,
you would get money from the licensing
that happened through HBO or Netflix.
Verrasto: And so what he would tell the investors is,
"When you provide me with funds,
that's how I secure the rights to these films."
And what ended up happening was none of that was true.
Goldberg: In other words, Zach was given money
to buy the rights to real films
but then never really bought them.
He continued to lull the investors
by providing them with fake correspondence
that he purported to be having with agents at Netflix and HBO.
He goes as far as to provide them documentation
from the streaming platforms
that says that the payments are on the way.
But these documents are as fake as Zachary's acting.
Goldberg: Zach may not be a method actor,
but his documents went through extensive transformations.
He would find sample deals online,
change the names to real studio execs
that he dug up on LinkedIn,
add a forged signature for flourish, and voilà,
an Oscar-worthy faked contract.
There's so much more access to information now.
Back in the day when we didn't share files over e-mail,
it would have been much more difficult
to get your hands on something like that.
But now he could have found a way to do it fairly easily.
Using those fake e-mails and correspondence,
Horwitz was able to essentially drag on the scheme
for another year or so.
Zach Horwitz was successful
at staying current on those investments,
paying back the promissory notes as he had promised.
But at a certain point, you're gonna run out
of additional people, additional money.
It becomes too big, too unwieldy to keep the thing going.
From the get-go, there was no business.
He was telling investors he was doing things,
and he just simply wasn't doing them, and he never did them.
He created an extremely large Ponzi scheme
that he obviously could not keep up with.
And I think that his real goal in all of this
was simply to become a famous actor,
which is almost the saddest part.
♪♪
C-list actor. No experience in finance.
No experience on Wall Street.
Zero credentials. Zero.
And here he is making these promises of 40% returns
in six to nine months to a year.
It's just beyond the pale.
The largest victim
was over $160 million they were out at the end.
And then within the investment pools,
it's everybody from, you know, your mom, your dad,
grandparents, friends, family,
people who, you know, were convinced
that this was a good investment and it was relatively secure
and they could trust it.
And then they lost everything.
♪♪
For these schemes, usually, like, the investigative period
is six months to a year and a half, sometimes longer.
This particular investigation moved very quickly,
and from the time that it was opened
to the time that, you know, we filed a complaint
was about 42 days.
There was so much documentation that it was getting to the point
to go and ask for an arrest warrant.
Goldberg: Next up, his $5.5 million home
gets a surprise visit.
♪♪
Goldberg: Now that the feds have built their case,
they have set the scene to bring our movie villain to justice.
Once we determine that we have probable cause,
we obtain a search warrant that's approved by a judge,
and then the FBI executes that search warrant
at the approved location.
[ Siren wails ]
We moved quickly because Zach Horwitz
had already listed his house for sale,
and we wanted to make sure that he didn't have an opportunity
to sell that out from under the investors
and prevent us from recovering those assets
that could, in fact, be used as restitution.
We didn't want to take the chance
that he would flee the area.
[ Siren wailing ]
So, in April of 2021,
Zachary and his wife, Mallory, get a wake-up call,
only it's not their alarm.
It's an FBI raid.
♪♪
Verrasto: 6:30 a. m.
We put together a team to go out there
and to execute the search warrant.
We knew more than likely
that Zach Horwitz would be home, his wife would be home,
and that we knew he had two small children, as well.
We go to the door. We knock.
We announce.
And then the first people that came to the door
was Zach's wife
and their young son.
She was very surprised by our presence
and kind of shocked that we were there.
Hackett: You can imagine what it was like in the pre-dawn hours
when someone suddenly is pounding on your door.
Mallory is awake and has no idea what's going on.
They have a 1-year-old and a 3-year-old.
You can only imagine the terror.
Verrasto: We kind of briefly explain to her
what was going on, asked her to come outside.
You know, we removed her from the house.
That was the first moment she found out
that the life she'd been living was a life full of lies.
Zach's wife, Mallory, knew nothing
of the schemes and lies of Zach's
until the FBI banged on their door in April of 2021.
Verrasto: And then the next person to come out
was Zach Horwitz.
He came down, didn't have a shirt on.
We immediately put him in handcuffs
and then also removed him from the house, as well.
Mosley: Zachary's wife, Mallory, and her children
were so startled to find the FBI raiding their home.
But what was curious
was that Zachary was calmly taken away in handcuffs,
almost as if he knew it was coming.
Verrasto: He said absolutely nothing.
He was just very stoic.
Just came to the door,
took whatever direction we gave him,
and was just quiet the whole entire time.
Goldberg: Soon after Zach's arrest,
Mallory Horwitz filed for divorce.
Krebs: I don't think anybody was surprised
that she filed for divorce.
I think the quickness with which it happened
maybe caught everybody a little bit off-guard.
But I think you either have to decide right away
whether you're gonna stick with that person
that's your husband, or you're gonna distance yourself
as far as possible,
and I think she certainly made the right decision.
Chao: Horwitz was charged with 13 counts,
including securities fraud, wire fraud,
and aggravated identity theft.
In order to prosecute a Ponzi scheme,
you need to follow the money
to figure out, how was the money spent?
Was it spent on the ways
in which there should have been spent,
or was it spent for other reasons?
It was relatively easy to see
that the money that was coming in from investors
was not being used to purchase film rights
but instead was being used for paying off other investors
or to fund Horwitz's own lifestyle.
There's the $5.5 million house that he lived in.
It showed that he used investor funds
to pay off credit card bills in excess of $6 million.
There's over $700,000 spent on a celebrity interior decorator.
He used it to make trips to Las Vegas
and nightclubs there.
Oftentimes, Zach Horwitz traveled by private jet,
because that was not only something
that he could afford with other people's money,
but was something that fit the role, fit the idea
that he was this Hollywood success story.
Chao: The investors generally invested
between half a million to a million dollars
in any given promissory note,
but there were hundreds of promissory notes
over the course of this scheme since 2014.
And in the aggregate, those numbers added up
to in excess of $650 million.
Goldberg: $650 million?
That is a heck of a movie.
There were red flags at every single step of this con
that anyone who's experienced in the business
would have recognized right away.
I mean, I'm sure Zach Horwitz couldn't believe it himself
when he was pulling this off, and people were actually
sending him hundreds of millions of dollars.
I mean, he was living the life of a Hollywood mogul,
and he was a two-bit criminal.
To actually achieve what he initially set out to do,
which was to be a well-known actor,
it didn't quite fit that motivation.
It felt like he was just trying to legitimize his own name
within the business.
♪♪
Schwab: After his arrest, Zach Horwitz was in custody
for a period of time.
He was eventually released.
Zach Horwitz's mother posted a bond
that was secured by her own house
and a million dollars in equity in that house.
Goldberg: Despite the well-documented $650 million
that went through Zach's hands,
a large portion of that can't be found.
It is typical that we see several-million-dollar losses,
but this amount, which was in excess of $200 million
that were unaccounted for, that was unusual.
Hackett: I'm sure to some degree, he thought
he would never get caught, but he had to have been aware
of the hundreds of millions of dollars
that he had stolen from people
and that, eventually, the jig was gonna be up.
A Ponzi scheme can only grow so large,
and it appears that Zach Horwitz
tapped the entirety of that universe.
Goldberg: With the walls closing in,
Zach prepares for his final act.
♪♪
Goldberg: By mid-2021,
Zach was facing the consequences of running a giant Ponzi scheme.
His Hollywood star had collapsed into a black hole,
taking with it the investments of his friends and family.
Chao: I think what really drove me in prosecuting this case
was obtaining justice for the victims.
A lot of them were ordinary, middle-class folks,
many of them who were retired and elderly
who had put their life savings with Horwitz.
♪♪
The night before Zachary Horwitz was supposed to appear in court,
he pleads guilty to a federal securities charge
and running a Ponzi scheme.
Cohan: It's clear that the evidence against him
was overwhelming.
Had he gone to trial, he clearly would have lost.
There's no way he could've ever explained what he did
as being anything but a scam.
I'm sure his attorney gave him the right advice
to not take this to trial and to plead guilty.
When he got sentenced to 20 years,
I was sad for him, sad for his family,
but happy for all of us that were defrauded by him,
that were hurt by him.
I think, sadly enough to say, that he got what he deserved.
Chao: Unfortunately, with these types of schemes,
it is usually the case that the money's already gone.
Goldberg: The FBI searched for every last dollar,
but of the $650 million,
over 1/3 has appeared to have vanished.
$230 million seems like a lot of money
to completely blow through.
But the fact that nothing has been found yet
is obviously not a great sign.
♪♪
At the end of the day, I think our group of friends
has become even closer because of all of this.
We certainly lost someone that we thought was a friend.
But I think everybody's smart enough
and young enough that they're gonna rebound,
and they'll end up ultimately okay,
even if the next handful of years are tough.
Younger people, if you still have a career in front of you,
you know, you can recover.
But when you're in your 60s, 70s, sometimes 80s
and lose everything,
that financial damage is irrecoverable.
♪♪
Goldberg: Like most things in Hollywood,
appearances can be deceiving.
Despite maintaining a lavish lifestyle,
Zach actually owned very few luxury items.
His remaining assets were a small fraction
of the missing $230 million.
Verrasto: You're looking for assets
that, you know, investor money was used to purchase.
And unfortunately, in this case, a lot of it was leased.
Things like his cars were leased.
He had, like, a watch service, I think,
that he was, like, renting watches from.
He was basically just leasing everything,
so there's nothing to recover.
Goldberg: The Securities and Exchange Commission
has filed a civil case against Horwitz
in hopes of recovering missing funds for the victims.
Schwab: If Zach Horwitz were to come into money down the road,
we have tools at our disposal
to make sure that that money is going to end up
going to victims to help make them whole.
Chao: Victims who testified and spoke at the sentencing,
one of those, for example, said that he's also
in dire financial straits now,
and he has two kids who he's trying to support
and is using food stamps to get by.
Krebs: This person's gonna be in jail
until they're in their 50s, and he's got two young kids.
You hate to see that
for somebody that didn't need to do it.
I don't think that he did it for his wife or for his kids.
I think that he did it for himself.
And at the end of the day,
what he cared about most is just himself.
That idea is just heartbreaking and just unbearable to me
and I think to most people.
But in the minds of a con or in the heart of a con person,
they're not.
It's kind of the collateral damage.
It's hard to say whether or not
he's gonna feel the exact same way.
Probably not.
Okay, so, Zach would never win an Oscar
for his performance here,
but the performance that he gave investors?
Meryl Streep could never.
Schwab: Zach Horwitz's Ponzi scheme
was absolutely sophisticated.
It was massive, but at its root,
there was something simple about it.
He was using lies to take people's money.
Clark: I don't care how nice of a lifestyle you were living.
When the cost is potentially being away from your kids
for an untold amount of years,
how is that worth it?
He won life's lottery in a lot of ways,
and there was no need for him to do what he ultimately did.
He's not famous, he's infamous.
And I think that on some level, he probably enjoys that.
There's something about the breadth
and the scale of his scam
that is gonna be irresistible
to the very places that he told his investors
he was doing projects with.
Some streaming service is gonna do a story
that's gonna be about the guy who told people
that he had a deal with streaming services
and that you could get rich if you just gave him your money.
Goldberg: And that's Hollywood, baby.
♪♪