Latest / Follow the Lies: Fraud & Deceit Uncovered / Episode 16: Hollywood’s $650 Million Fake — How Zachary Horwitz Forged Netflix and HBO
Transcript
- Kevin Barrows: twenty seventeen. Streaming is rewriting Hollywood. Netflix and HBO are paying real money for foreign rights, and in Los Angeles a young actor with a handful of bit parts has a deal that sounds simple. Buy inexpensive films and flip the rights to the biggest platforms in the world. twenty five to forty five percent back in a matter of months, and he has the contracts to prove it. Investors write the checks. The notes get paid, the circle gets wider. Relatives get pulled in. But almost no one asks is whether Netflix or HBO ever signed a single page. Today we follow the lies, from Netflix already wants it to agreements Netflix said it never signed. Welcome to Follow the Lies for Undeceit Uncovered. I'm Kevin Barrows. After almost three decades investigating financial crime in the United States, I had a front row seat to how deception works when it arrives looking official. As a former FBI special agent, I led major white collar cases involving securities fraud, bank fraud, and large scale financial manipulation. Today as a private investigator, I still do that work for companies, institutions, and individuals trying to figure out what they're actually looking at. What I've learned is that some of the most expensive frauds aren't hidden in a spreadsheet. They're hidden in a document that survives the first reading and sometimes the second, because it carries a name everyone already trusts. This case is not interesting because an actor lived well. It's interesting because the product he sold was not a movie. The product was paperwork. And paperwork, when it carries a logo of a company the investor never independently calls, can travel further than any pitch. There's a Hulu documentary called Bad Actor that tells this story as a Hollywood character study. We're gonna follow the paper trail. If you're enjoying these episodes, I'd really appreciate it if you'd hit subscribe, leave a rating and review, and tap the bell so you never miss an episode. Zachary Horitz grew up outside Chicago, went to Indiana University, and moved to Los Angeles to act. Under the name Zach Avery, he landed small roles in real productions, the kind of credits that look modest on IMDB and impressive at a dinner table. Those bit parts. Some of them alongside recognizable names became part of the pitch. The man selling foreign rights looked like he already belonged in that world. That part is real. What he built next was not. In 2013, he publicly announced a plan to buy inexpensive films and place them with Latin American buyers and platforms. That announcement, and a thin record of actual distribution talk, gave him something most first time promoters never have a plausible origin story. One early transaction involving Sony and a Mexican title later became the example investors thought they were repeating. After that, the papers started multiplying faster than any real catalog ever could. Through a company called One In MM Capital, one in a million, he told investors he was acquiring regional distribution rights and licensing them to Netflix and HBO. This was not sold as a blind fund. It was sold one title at a time. Slasher Party, Satanic Panic, Lucia's Grace. One of those notes was packaged as a $1.4 million rights purchase with a $2 million payoff a year later. The number was specific, and specificity is what makes a fake feel very real. Each raise was a short term promissory note. Six months, twelve months, with promised returns of twenty five to forty five percent. In the mid 2010s, with streaming companies buying catalogs at high speed, that sounded less like a fairy tale and more like an inside deal. He started close to home. In twenty fourteen a college friend lent him thirty seven thousand dollars. More friends followed, including men who had gone into finance in Chicago. Those friends then built a pooling vehicle, later known in reporting as JJ MT Capital, that brought in family, colleagues, and wealthy investors on Chicago's North Shore. Hundreds of notes moved through that vehicle. A separate group out of Las Vegas, led in public accounts by steel executive Jim Russell. put up tens of millions after meetings that sounded like an industry briefing, including a sit down at the four seasons. Harwitz told Russell that HBO had never backed out. That one sentence does a lot of work. It turns a company you can't see into a guarantee. He didn't need a studio, he needed a template. According to the FBI affidavit later court reporting, Harwitz obtained genuine distribution contract language down to the technical details like screen resolution. And used it as a mold. He copied the structure in Word, dropped in film titles, and added signatures of executives whose names he could find in public biographies. He created email threads and text messages that appeared to come from people who actually worked at HBO and Netflix. Porting based on the filings describes apps that could send messages on a delay, so a reply would arrive while an investor was still sitting in the room. Court coverage also described an unidentified woman who impersonated an HBO contact by phone. Investors later said they were shown message threads that looked like they came from senior platform executives, including a celebration in the room when a supposed offer came through. The performance of the deal was part of the sale. A forged contract is one thing. A voice on the phone confirming it is another. Together they give people the feeling that two separate sources are saying the same thing. He added another layer, a collection account. Lenders were told platform money was sitting at a third party shop, waiting to be released with a title cleared. Minimum guarantees, he said, meant HBO would always have enough income cash to cover the notes. When someone asked for one in MM's own financials, the refusal was framed as strength. A company that wasn't desperate didn't open its books. One lender actually wrote that the lack of financials made him more comfortable. If they needed the money, they would have sent the statements. That's how a warning sign gets read as reassurance. I've seen this in case after case, not the least of which was made off. Non transparency gets sold as sophistication, exclusivity. He also told investors not to contact Netflix or HBO directly due to nondisclosure agreements and relationships that would be damaged by an outside call. If you spent any time around fraud, you recognize that instruction. It isn't a confidentiality clause. It's a way to keep the only people who could kill the story from ever being asked a question. For years it worked. New notes paid the old ones. Some investors really did receive the twenty-five to forty-five percent they were promised. Those checks were the best advertising he had. People who got paid on time brought in the next wave. The Chicago side pool alone moved hundreds of millions of dollars across hundreds of notes. Las Vegas was a second stream. Early winners in both groups pulled in family money, and at least one email chain later filed in court. A lender wrote that he had verified the HBO contracts directly. He had not verified them with HBO. He had confirmed a story that was circulating inside the investor group. Those are not the same thing. The incoming money was not buying a catalog. He was paying earlier notes and paying for a life that looked like the success story he was telling. The house in Beverlywood, with its screening room and a thousand dollar wine cellar, wasn't just spending. It was part of the proof. Prosecutors put the purchase at $5.7 million. When the notes started breaking down, the house went on the market at $6.5 million. Prosecutors and the sentencing judge later itemized the rest. Hundreds of thousands of dollars on Mercedes and Audi vehicles, hundreds of thousands on private jets and yachts, more than $700,000 on interior decorating. party consultants, Las Vegas, a luxury watch subscription, courtside Lakers seats, and about $6.9 million in American Express charges. Judge Mark C. Scarcy said it plainly in court. These were expenditures of other people's money. By the time the accounts were examined near the end, the operating balances were a few thousand dollars. The government later put the amount still owed at more than $230 million. Harwitz raised money from five major investor groups, knowing those groups were drawing from individuals. More than two hundred and fifty people, college friends who put in not only their own money, but their parents, grandparents, siblings, and in laws' money. A Chicago finance family that stood to lose millions. A retiree who told the court he cried every day and stopped seeing people because of the shame. Affinity is what makes this kind of scheme successful. You don't need a cold call when the person across the table sat with you in a dorm room and now works at a bank. You figure your friend already verified the Netflix deal. He figures Harwitz already did, so nobody picks up the phone and asks Netflix. They had blind trust. In 2019, one in MM stopped paying on schedule, and the excuses began flowing. Harwood said HBO was in a merger. There was red tape. Netflix was in an audit. Then COVID became his go-to excuse. Harwood forwarded what he called proof, emails and texts that used the names of real people at those companies. He said the delays were temporary and urged his clients to keep lending. A Chicago family finally did what almost nobody had done in the first year. Their lawyers subpoeded Netflix about titles they believed they had financed and asked the company to match those titles against actual payment records. Netflix's answer was damning. The contract was fraudulent. The email was forged. There were no such agreements. A Netflix lawyer put it in writing that possession of those documents was of grave concern, and they wanted to know how the family had gotten them. On February 23rd, 2021, Two of the original college friends called the collection shop they had been told was holding their money and were informed that there was no account. That afternoon they contacted the FBI. On February 24th, the SEC subpoenaed Harwitz and one NMM for records and sworn testimony. He failed to appear and did not turn over documents. On March 15th, FBI agents recorded a call between the friends and Harwitz. They told Harwitz that they had already spoken to the collection shop and there was no money sitting there. as he had represented. Knowing the walls were caving in, he said the lawyers should be the ones doing the talking. On April 1st, agents obtained a warrant for Horowitz's phone location data. On April 5th, the FBI searched his home and the SEC filed in Los Angeles for an emergency asset freeze, an accounting, and an order not to destroy documents. The complaint described a Ponzi scheme that had raised over $690 million on fabricated third party deals. The next day, the FBI arrested him on criminal complaint charging wire fraud. Now let's go inside the investigation, where I pull back the curtain on how a case like this actually gets made. I've worked enough to these cases to know that proving the documents were fake was the easy part. Netflix did not need to conduct a year of forensic accounting, they simply had to search their systems and determine if the deals existed or not. Once the fraud is established, Investigators interviewed the victim investors to determine the extent of the false statements that they were told and the fake documents they were provided. Then came the forensic accounting exercise, analyzing the flow of funds, investor wires coming in, note payments going out, and the personal spending on top of it all. In the end, the accounts were already empty. That's the classic pattern of a Ponzi scheme. New money paying old money, with lifestyle expenses coming off the top. The bank records tell the true story. The hardest question for investigators was who else knew? That decides whether you have one defendant or a conspiracy. The college friends who built the feeder fund cooperated after they learned the collection account wasn't real. They were also the people who had raised money from others. Later court filings treated that group as sitting in a messy middle, victims and also conduits. In the end, a partner from the early distribution effort was not charged. And the woman described as impersonating an HBO contact was never publicly named. A grand jury later added counts to Horowitz's indictment involving the use of other people's identities on the documents. Quick note about witness cooperation, because it's sometimes confusing from the outside as to why certain people get a pass. I've made this trade many times before. When a lower level player's testimony is the cleanest way to establish important internal processes and corroborate victim statements from inside the scheme. It's often the most impactful way to prove intent beyond a reasonable doubt. For example, that March 2021 recorded call is a home run for the FBI. While it's just short of confession, have the lawyers talk is not a denial and a clear sign that the performance is over. Harwitz pleaded guilty to one count of securities fraud in October 2021. On February 14, 2022, Judge Scarcy sentenced him to 240 months, the maximum on that count. And ordered restitution of over $230 million. Prosecutors told the court that this was the largest known Ponzi scheme in the history of that district. They wrote that the lie was not a departure from an otherwise honest life. It was the core of his identity. He was not a Hollywood insider. The judge walked through the spending while family members in the gallery wept. Harwitz told the court he was a flawed and broken man who had lost his way. The court appointed receiver later tried to claw back transfers from net winners, people and entities that had taken money out of the fraud, and sued City National Bank for hundreds of millions. The suit alleged the bank had granted more than 450 extensions of credit, totaling tens of millions, and handled a huge volume of one in MM's wires while missing red flags that should have been obvious. I've done this kind of recovery work. A restitution order means very little when the accounts are empty and the defendant is judgment proof. Prosecutors were blunt that substantial recovery was unlikely. If you take one lesson from this investigation, take this. The breakthrough was not a hidden offshore ledger. It was a lawyer who asked Netflix a direct question and a collection shop that said the account did not exist. The scheme lasted for years on documents nobody independently tested. It ended the moment somebody did. Each case has its place on what I call the deception spectrum. And this one sits on a different level than we work in other cases involving real companies with a real product and a story that ran far ahead of the books. Harwit sold the appearance of credible outside partners, Netflix and HBO, who were the due diligence for the investors. Once those names were on a page, the note felt backed by someone else's reputation and balance sheet. That's what makes forged third party documents so dangerous. It borrows a reputation the promoter does not own. Harwitz's background and friendships opened the doors and forged documents sealed the deal. Remove either piece, and this does not last for years or reach this scale. Prosecutors put it as well as anyone could. He portrayed himself as a Hollywood success story. He was not. He just played one in real life. Roommates, cousins, a feeder fund, a logo, that's who people trusted. Some lost retirement money, some lost the ability to look at their own families without shame. That's what happens when nobody makes the independent call. Each episode, I'll share a lie detector tip, a practical field tested piece of advice drawn from real investigations to help you spot deception or protect yourself from situations where deception becomes far more likely. Today's tip is about the dangers of borrowed letterhead. If a deal depends on a contract, an email, or a payment promise from a well known company, the only confirmation that counts is confirmation from the company. Through a channel that you started using contact information you found yourself, not a number or an address someone else handed you. Here's the practical test I use. Origin. Did you get the phone number or the legal document off the company's own website? Or did it arrive in the same packet as the pitch? Independence. Are you being told not to call the named company? If the answer is yes, that's a serious concern, not a professional courtesy. Specificity. Can the other side confirm this title, this territory, and this payment date, or only that they do deals like that sometimes? A logo is not a reference. A forwarded email is not confirmation. If the only way to reach the other party is through the person who needs your money, you do not have another party. From bit parts and a company called one in a million to hundreds of promissory notes and a twenty year sentence. The Harwitz case is a reminder that some of the most expensive fictions arrive as attachments. If this episode hits home, if you've ever been shown a contract with a famous company name on it and told not to call them, I want to hear how that conversation went. Send it to Kevin at Follow The Lives Podcast dot com. The most useful notes often shape later episodes. If you want practical, battle-tested tools to protect yourself from deception, download my free guide, seven proven strategies to spot lies and uncover the truth in any interview. It's available at Follow The Lives Podcast dot com. While you're there, I'd love for you to join our community on Substack at follow the lives.substack.com, where I share deeper dives and extra lie detector tips. If you're getting value from these episodes, subscribe and turn on notifications. If you're on Apple Podcasts, a rating takes two seconds and it really helps. Thanks for listening. Until next time, follow the lives.