Whether you’re a seasoned professional in the financial industry or a famous figure in Hollywood, one thing is for sure Ponzi Schemes don’t last forever, and you definitely end up defaulting on payments to be made to the investors.
Lately, Actor Zach Avery had been planning something of this sort for a long time and was the mastermind behind running a Hollywood Ponzi Scheme.
Avery had been involved in fooling investors to gain funding for his distribution company. The actor used fabricated documents showing that he had licensing deals with Netflix and HBO. All this was done via the actor’s company 1inMM Capital LLC as per the FBI.
The actor was arrested by authorities this Tuesday in L.A in this massive defraud. The company had promised an annual return of 40% to its investors. In total, it is claimed that investors had lost around $227 million under Avery’s scheme.
The actor used his goodwill and recognition to convince people to invest. He also presented fake licensing deals with HBO and Netflix, and a couple of more platforms.
The People’s magazine contacted Avery’s legal team and publicist to comment on the situation. However, there has been no correspondence from the other side as yet.
1inMM was founded as a company with a vision to distribute English films to the Latin America audience, claiming to have the support and partnership of HBO and Netflix, as per the FBI.
In 2015, he sent Johnny Walker Blue Label scotch bottles to the investors, along with an annual report stating that the company had acquired and distributed successfully 49 films through the 1inMM Capital Banner without causing any loss.
This news furthermore builds trust in the company, and this is the time when more investors start hopping in when they initially see huge returns; only to realize in due time that it’s nothing but a gigantic fraud which will leave the investors penniless at the end of the scheme.
More to the icing, Avery also claimed to have made distributions agreements with Netflix in countries such as Australia and New Zealand.
According to Verrastro, the annual report stated,
With this growth, we have the ability to safely and profitably distribute more than 25 additional films per year, creating ample opportunity for investment and substantial growth of our thriving feature film library.
As with every Ponzi scheme, a time comes when the person committing the fraud runs out of funds to pay back the investors. And that’s what happened in Avery’s case as well. Initially, he used fake emails to justify delays in payments.
However, again Verrastro revealed that,
In reality, neither Horwitz [Avery] nor 1inMM Capital ever engaged in email correspondence with Netflix or HBO, nor did Horwitz [Avery] or 1inMM Capital ever have any business relationship with Netflix or HBO at all,” Verrastro wrote
Avery appeared in court on Tuesday in a teleconference. He is facing wire fraud charges. Alexander Schwab, US assistant attorney, has allegedly urged the judge to hold Avery before a hearing, alleging that he is a flight risk, reports the Los Angeles Times.
Despite concerns, the judge has set a $1 million bond for Avery, who will be held under detention until the bond has been approved. The United States Attorney’s Office said that arraignment was scheduled for 13 May to address the issue.