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[line trilling]
- Hello?
- Hi, this is Joslyn Jensen.
I'm calling about the documentary film.
- I'm sorry.
What--what film?
[inquisitive music]
- I'm making a documentary about Zach Avery.
And I was hoping that Zach would talk to me
so he could tell his side of the story for the film.
- All right, no.
I can just tell you right off the bat, no.
Absolutely not.
- The FBI arrested actor Zachary Joseph Horwitz,
accused of convincing several investment firms
to give him nearly a quarter of a billion dollars.
- Today I'm very excited to be interviewing Zach Avery.
Zach, hello. - Hello.
How are you? - Very exciting.
You've had a real big jump in your career.
- I took a kind of not straight path into acting.
Could I have done this? Why didn't I do that?
Why didn't I see it coming?
But this is my dream.
This is what I've wanted to do forever.
- I don't want to be bothering you.
I want to understand because I've spoken to another person
who told me that you would.
And now you're not going to.
- The FBI says Zach Horwitz,
who goes by the screen name, Zach Avery,
used the victim's money to repay earlier investors
and to fund his lifestyle.
- Yeah, that's basically it.
Do a little entrepreneur stuff on the side as well,
but mainly--mainly acting.
- Who is this guy? Where did he come from?
And how could he possibly have done
something this outlandish?
- And who the fuck are you, Ronnie?
- I could tell from the beginning
that it was really going to be a juicy one,
that it had everything.
It was Hollywood.
It was a Ponzi scheme.
It was a huge amount of money.
- More than $700 million
for completely phony investment deals.
- That's a staggering amount of money
that was moving around,
all for the purchase and resale
of movie rights that weren't real.
- Turn around.
Get down on your knees.
- We can just tell the truth.
We can just tell the cops what happened.
- We have this treasure trove of clips of Zach's acting,
which we can actually use to mirror
what's playing out in real life.
There are times watching this when his lines are like
he's speaking directly to the story we're telling.
It's almost like he's answering for his crimes.
- Same shit, different toilet, officer.
How the fuck are you?
- I don't think anyone really knows who he is.
Maybe even he doesn't even really know who he is.
He might just be playing multiple characters,
even to this day.
- I can't ask a pathological liar for his life story
and expect him to tell me the truth, right?
Especially in a movie that's all about scamming,
as we try to figure out how he did it.
- How is somebody able to concoct a scheme this large
and make it seem legitimate
and, you know, actually carry it on
for the number of years that he did,
all by himself?
- Our secret, okay?
- Needs to get a little curvier.
- So this is the real Zach Avery,
in his real office,
where he does a lot of his interviews.
Yeah, and then this is our re-creation,
which is pretty good.
I want to have reenactments.
So we're going to hire an actor to play Zach Avery.
We're not really looking for an impression.
But I just want to see these guys
embody Zach in an interview.
This one. - All right.
- It looks like you're so guilty of financial crime.
- No, that's okay.
I might be.
- Speeding?
- Camera speeding. - All right.
Slate in.
- Scene one, take one, mark.
- I'll be auditioning for Zach Avery.
- Reading for Zach Avery. - Zach Avery.
- Zach Avery.
- I'm auditioning today for the role of Zach Avery.
- All right.
Have you done any research on the real Zach Avery at all?
- Every morning, I read the paper.
I saw that. That was a crazy story.
- So I think it's kind of interesting
that he's able to, like, be that charming
and that, like, convincing of a person.
- I would never do something like this, personally.
But I could see how the desperation
would take hold.
- This industry is--
it's all about fake it till you make it.
And everyone will tell you, if you're not confident,
pretend to be.
You know, put on that-- that façade or that mask
so that others will, you know, feed off your comfort.
- Do you know when we're gonna find out,
you know, who gets the role?
I have a vacation coming up.
So I'm just wondering.
- Look at the eyes.
Hmm.
Yeah, this is him.
- Here was an actor nobody had ever heard of,
who'd been in some pretty bad movies.
And he was accused of pulling off
an unbelievably audacious Ponzi scheme.
It was like, what?
- There's this idea that Hollywood is a place
of immense wealth and people are beautiful
and it's a glamorous environment.
And I think that can have an allure to it
that people want to be associated with.
- And when they can't do it legitimately,
some people in Hollywood end up moving
toward criminal activity.
And Ponzi schemes are one of those things.
- It's not usually as hard as it was in this case
to sort of figure out where a con man came from.
There's kind of a mad scientist quality
to what he was doing.
So I just set out right away
to kind of reconstruct the whole scam.
- As I mentioned at the top, we're fellow Midwesterners.
- Yes, definitely. - From the land of the corn.
- Yeah, exactly.
Good old Indiana.
- He grew up in Fort Wayne, Indiana.
In terms of who he was as a kid and what he was like,
it was really hard to figure all of that out.
[upbeat pop music]
♪
- So tell me about this place.
[laughter]
- Generations of Fort Wayne youth
have passed through here.
Zach definitely would have come here.
He moved to town when he was in his early teens.
What are the odds that you'll go to school with somebody
who ends up making news for, you know,
masterminding this multimillion dollar
Ponzi scheme?
- So what was your reaction
when you heard about the Ponzi scheme?
Like, you knew he was a Hollywood guy?
- No. I had no idea.
You know, he never acted in high school.
Like, I did plays all four years of high school.
And Zach and I never crossed paths once.
- So he was more of, like, a jock type of guy...
- Absolutely. - At that time.
- When I read all the coverage about what he did,
like, it just occurred to me, you know,
this guy is a supervillain.
And classmates and I were all there for his origin story.
- Yeah. Wow.
So it seems like what you're telling me
is that high school, where--
it was like the glory days for Zach.
- Oh, absolutely.
All you have to do is, like, crack open a yearbook
and just see.
It's like a greatest hits.
[indistinct chatter]
[school bell rings]
[distant laughter]
[soft music]
♪
[whistle blows]
- Interestingly, Zach actually had
a kind of burgeoning career in football.
- Yeah.
- What was that experience like for you?
- So went to Indiana University, started playing.
[muffled cheering]
[whistle blows]
[crowd cheering]
- But it was derailed... - It was.
- For the better, you could argue now.
- Basically, it was-- before even the first season,
is when I got injured.
It was a total, like, blow.
Like, my kneecap was over on the left side.
Like, it was rough.
- Man, I knew I knew you. It was the Rose Bowl.
Three years ago, you beat SC, right?
- Yeah, I got my knee folded back
about 90 degrees the wrong way.
- Whoa. That's why you never went pro?
- Tore the ACL.
My knee stayed out.
[both laugh]
- That's all.
- He was a good high school football player.
- Mm-hmm.
- But the embellishing, like saying,
"Oh, yeah, I was going to play football at IU."
He wasn't good enough to play in the Big Ten.
- What? He never played in college?
- I don't know.
But my brother probably knows, like,
if he actually ever suited up
for Indiana University football.
- Hey, Robbie. - Hey, Derek.
Did Zach ever actually play football
at Indiana University?
- No.
- And then you said that was before--
- Yeah, so that was training before freshman year,
like, actual, like, season happened.
- Did he ever go to, like, a tryout
or anything?
- No.
He was never on the football team.
I think he tore his ACL playing intramural football.
- [laughs] - Oh, okay.
- What was, like, the--
the impetus for you to then say, "Okay, I'm gonna act"?
Like, "I want to act"?
- My mom's a lifelong educator.
She's a teacher.
She fully was, "You need an education
and you need to go that route before doing anything else."
And so I really didn't have a choice in my head
of, like, "I'm gonna be an actor.
"I'm gonna follow the arts and I'm gonna be an artist,
and that's it, and that's what I want to do."
I was going to school for psychology.
- You started at Indiana University.
- Mm-hmm.
- How did that kind of train your mindset for acting?
- As the actor, you need to be empathetic
and, like, being able to tap into these emotions.
And in psychology, you kind of want
to study why people are doing the things they're doing,
which obviously goes hand-in-hand.
- Psychological expertise and acting and ruthlessness--
these various ingredients that just together
make for a good con artist.
And psychology was a really big part of Zach's talents,
as it were.
- My research is mostly about personality
and how it influences primarily antisocial behavior.
So I'm really interested in sort of what kind of traits
make people do bad things.
- Is there anything, like, that would be a tell?
- Extreme confidence, I think, is a pretty big one.
I mean, folks, I think, who are,
like, kind of Ponzi schemers
are kind of partially psychopathic
because they have some of the traits
that are associated with psychopathy,
also the traits associated with narcissism
and Machiavellianism. - Hmm.
- But they have decent impulse control.
- Thanks for joining class today.
Can we pull our chairs together?
I just want to have a little bit of a talk
before we get into exercises today.
Really, all we have to do is--
we want to get into character, right?
We always talk about, "I want to get into character.
How do I get into this character?"
Well, the villain of the story
doesn't know that he's the villain.
He's just living his own life,
doing things that he feels justified in doing.
So our job as the actor is to ask ourselves,
what would get me
to do the things that that person did?
What is the justification?
- Does anything stand out to you?
- Well, a lot of crime is about,
like, a lack of restraint.
So it's not about, like,
"I really, really want that badly."
It's, "I kind of want that,
"and there's nothing keeping me from going after it
in whatever way that I want."
- And that's where it gets kind of fucked up
because we're like, wait a second.
We all have the ability to do those things.
If you're pushed, if you're prodded,
if you have enough desperation and need...
- When you start to take those sorts of barriers away,
the world is your oyster, right?
I mean, you can do almost anything.
- As an actor, I feel like
part of the mystique of what we do
is that you don't want people to know
who Zach is as a person.
I want people to be able to see me on a screen
and say, "That character is someone I'm believing."
Caught some chatter on the inside
that might be a real score if moved on pronto.
This kook's brother ripped
a couple elbows from the cartel.
- Sounds good.
- This is really incredible.
Did you know that Zach has a blog?
Well, listen to this.
"From one of my favorite movies,
"'The Pursuit of Happyness.'
"After Will Smith's character's son
"tells him he's going to be
a professional basketball player..."
- [laughs] I'm going pro!
- Oh!
- "He says, 'Don't ever let someone tell you
you can't do something, not even me.'"
both: You got a dream, you gotta protect it.
- "'People can't do something themselves,
they want to tell you you can't do it.'"
both: If you want something, go get it.
Period.
- Zach gets out of school.
He leaves Indiana University and moves to Chicago.
I have to assume that Chicago is
just kind of a center of gravity
in that part of the country.
You're leaving college and going to the big city,
Chicago is gonna be that.
One of the mysteries about his time in Chicago
was this smoothie bar, Ful.
The question was, who gets out of college
and just opens a business in Chicago?
That's not easy to do.
You need some real money. Where did it come from?
I've actually heard both versions,
that there's a rags-to-riches version
but also a came-from-money version.
Zach is said to have told people
that Howard Schultz, the CEO of Starbucks,
had bankrolled him
together with this big finance firm called Maveron.
He would tell people that they were behind this smoothie bar.
We do know that right around that time,
his mother had come into a lot of money, millions of dollars,
that she inherited from her second husband
after he died.
- I'm Zach. This is Anton.
We are Ful.
We're really excited to be a part
of the Lakeview community
and excited to be in Chicago
and fuel the minds, bodies, and spirits
of the Chicago area.
- I think it went under very quickly.
- I think for me, it was always in the back of my head.
You know, I always knew that, you know,
LA was kind of like the dream.
- And to fund this goal of moving to LA--
because, you know, that's where
everything is for acting--
you did sell QuickBooks software door-to-door.
Do you think that kind of made you a stronger person
mentally and emotionally?
Because I'm sure a lot of people said no
to what you were selling.
- Oh, yeah, for sure.
98% of the people that I talked to
said no or didn't even listen to what I was selling,
and said no immediately.
- Not interested. Sorry. - Ah.
- I'm in the middle of a card game.
And-- - What are you playing?
- I'm--canasta.
- It was one of those things that--
I needed money. I needed a job.
I needed something to make enough
to be able to do the thing that I knew I was gonna do.
- At the exact same time that Zach Horwitz owns
a smoothie shop in Chicago, he's also busting his ass,
going door-to-door selling QuickBooks software
to get him and Mallory to LA.
I mean, that doesn't make any sense.
Especially because we know a couple years earlier,
his mom inherits millions after her husband died,
which does actually justify how a kid
right out of college could have the capital
to open a smoothie shop.
But if I--if my mom has a couple million dollars,
I'm not going door-to-door.
[laughs] It doesn't make any sense.
But I think this is like the college football.
This is just, you know, stuff that he's using
to spice up his origin story.
- It's hard at the beginning.
You gotta--you gotta climb the ladder
and--and see what works.
- So let's leave psychology
and smoothie bars behind in Chicago.
He and his partner, Mallory, pack up the car
and move to LA.
[tense music]
♪
- I think the scary part about Zach is,
he came to LA with the plan, with the scheme,
with a persona.
And it was calculated.
It wasn't something he just kind of fell into.
He knew what he was doing from the start.
When I was 21 years old, I kind of packed up my job
at a pinnacle of my career and I went out to LA.
I wanted to chase the Hollywood dream.
I wanted to meet people, network with people.
I wanted to do everything I possibly could.
And I was enamored by the industry.
I think Hollywood represents opportunity.
And anything you want to do is available for you to do there.
I got a call for a role.
It was a small role, but I said, hey, what the heck?
You never know who you're gonna meet.
You hear stories like that all the time in LA.
You just have to go.
You never know what directors or producers or connections
you're gonna meet.
I was on that drive for two hours.
Almost turned around 25 times.
Like, "What am I doing? This is two hours away.
It pays nothing."
But I pushed through and showed up to set.
It was one of those roles where everybody kind of
looks the same, talks the same.
But me and Zach were just obviously cut
from a different cloth.
We instantly bonded.
We exchanged phone numbers and made it a plan
to link up right after that.
And that's--that's the day I met Zach Horwitz.
And that's a movie I wish I would've never shown up to.
I can tell you that much.
- If you know that you came from Indiana or wherever
and drove across country or flew here
to land in this place, to follow this dream,
you obviously had something in there that said,
like, "I'm good enough.
I can do this."
And it is, yeah, about studying,
going to class, and things like that.
But it's also about making connections with people.
- After meeting Zach on set, literally the next day,
he invites me over to meet his girlfriend
and just kind of hang out and talk shop
and get to know each other.
I meet Mallory, who, at the time,
wanted to be a wedding planner.
She had big aspirations
to be a celebrity stylist in LA.
And she was going to school for it.
And they tell me their story about, you know,
being from a small-town family and small-town school.
- Zach and Mallory have been together since they were 19.
And there's really no evidence to suggest
that she knew about the scam.
But their relationship, their family,
is a huge part of what makes him credible.
So this is your camera here.
You can just, you know, stare down the barrel.
We're gonna do a slate. How's it going?
- Doing all right. - Good, good, good.
- How about you? - Yeah, I'm great.
Thanks for being here.
- It kind of struck me as really familiar
because I had a friend whose father, actually,
was a part of a Ponzi scheme.
The aftermath leaves a lot of hurt.
- I think he's a psychopath.
And I don't like men like that.
- I guess there's a lot that we don't know about people,
just from passing by.
- It almost seems like a parallel universe, like--
like it's someone that I could have known.
- Do you think she knew what was up?
- Probably not.
The woman doesn't normally know.
- I think that she convinced herself
what he was saying was true.
- I mean, his eyes are-- are stunning.
Very attractive eyes.
Pulls you right in.
He definitely had charisma and confidence.
And you couple that with good looks
and if you know what to say, people will believe you.
♪
So I give Zach my two months' expertise
on what I figured out in the industry.
And I told him that if you want to make it in LA,
you got to do something yourself.
So he kind of leans into me,
and he goes, "Well, how much does it take
to make a movie?"
And I'm like, "Well, like blockbusters, or--"
he's like, "No, something kind of smaller."
I'm like, "Well, I think you make one
for a couple million, you know?"
And he's like, "Really? Okay, okay."
I look at him, and--
"What do you mean?"
Like, you know, he had this kind of persona
that, like, "Well, I can afford that."
So I'm just kind of like, huh.
And he tells me about
a company he founded called Ful.
He told me he was so successful,
he opened multiple stores in a matter of six months.
And he told me it eventually sold to Maveron.
He was whispering all this.
He was being a little bit coy about it,
but I was absolutely intrigued.
And I asked him, "How much did you sell Ful for?"
And he leans over to me like he's telling a secret.
And he's like, "Look, I'll tell you,
"but you can't tell Mallory.
"You know, I just don't want Mallory to know
exactly how much it is."
And he leans over and tells me he sold it for $11 million.
So, you know, in my head, I was like,
okay, you know, I just met this guy.
He wants to make a movie in LA.
And he's got 11 million bucks in his--his pocket.
You know, he's my new best friend.
You know what I mean?
So this is someone I might develop a relationship with.
[soft music]
So me and Zach spent literally the next two weeks,
day and night, you know, dusk till dawn,
thinking we're Ben Affleck, Matt Damon.
I mean, we're writing script ideas and outlines.
And you hear the story of how they wrote their own script
and made it big, won the Oscar, and...
- I just said to Matt, losing would suck
and winning would be really scary.
And it's really, really scary.
- It's kind of who we thought we were gonna be, you know?
We were just a couple people
just wanting to tackle the Hollywood dream.
- Who are some of your biggest inspirations, acting wise?
- I would say Tom Cruise, for sure.
You know, he's--he's one of those guys
that every single movie he's in, he's good.
Leo is amazing.
I mean, he is--he's just--
what he's able to do is ungodly.
- You don't get these lines right,
I'm gonna blow your fucking brains out tonight.
- And then more recently,
Bradley Cooper, I think, is incredible as well,
especially "A Star Is Born" that he just did.
I mean, writing it, directing it, acting in it,
totally transforming into this guy,
those are the performances that I watch that I'm like,
I'm in the right job, because at some point,
if I get even close to that, everything's great.
- You want answers. - I want the truth!
- He was my brother.
And he was one hell of a soldier.
Everything he did,
work, school, friendship,
he did it 110%.
I am completely and utterly in love with you.
I'm the man of the house now.
You know why?
'Cause you're just a fucking child.
[dark music]
- Okay, so we have this script in hand.
And, you know, what we learned is,
you got to have an actor attached.
- It's got a major star interested.
- Which star? - Who are the stars?
- We need a male lead, and we need him now.
- Two.
- And action.
- You get an A-list actor attached,
that brings a certain value to your movie--or a director.
- Cut. Very good.
- Right, 'cause if you get the right director attached,
then the right actor will attach themselves.
- Happy birthday, you son of a bitch.
- So since we didn't have an A-list director attached,
that made it extremely difficult
to get an A-list actor attached.
- No stars. Just talent.
- No stars?
- Yeah, this was like six, seven, eight months
of just grinding and hitting the pavement,
talking to everybody under the sun,
hearing their opinions on how we should do it.
It was exhausting.
But this was just trying to make it happen in LA.
- What I think I understand from Craig is that
Zach's not offering to use any of his "$11 million"
to fund the movie that he wants to make with Craig.
That is key.
- Zach created a couple short films
early on in his career to try and get his name out.
One was "The Laughing Man."
- Mommy always said I was different.
- This is a fan-fiction origin story on the Joker
from the Batman series.
And I remember when it came out.
And--you know, it was pretty creepy.
[disturbing music]
[maniacal laughter]
You know, it went a little viral
when--but that really got his name out there
and grabbed some attention.
- I'm not gonna kill you.
I'm just gonna hurt you--
really, really bad.
- Here's another entry from Zach's blog.
"My sister gave me a framed picture
"about ten years ago that said,
"'When the odds are one in million,
"be that one.'
"This was the impetus
"for naming my company what it was named.
"I absolutely love this phrase,
"and I believe it can be a driving force
for positivity and productivity."
Wow.
[soft music]
♪
- Cool? - Yes.
- Great.
- My name is John Verrastro.
I'm a Special Agent with the FBI
in the Los Angeles field office.
High-yield investment fraud and Ponzi schemes
are common in Los Angeles.
The size and scope of this one is quite unique.
Zach Horwitz was purportedly purchasing
the rights to various movies.
And then he was licensing these rights
to Netflix, HBO, and then other distribution platforms.
- Somehow, he seems to have gotten ahold
of legitimate film licensing
and film distribution contracts
that Netflix, HBO, or others were using.
Once he had legitimate contracts in his hands,
then he was able to take it and run.
And that's exactly what he did.
- Zach Horwitz started this mostly, you know, utilizing,
like, friends and family
as his initial set of investors.
- Zach gave me the opportunity
to become an investor in 1inMM.
So he says, "Craig, I think I can get you in, you know?
I think you can invest."
So my thought process is, of course.
These are deals with Netflix, HBO, Howard Schultz.
They're doing them.
And now I have that same opportunity
to become an investor in this same platform
that Zach has created?
No-brainer. Right?
I don't think twice.
I take out my savings that I have in a real estate fund.
And I give it to Zach.
And I become the first investor in 1inMM Capital.
[sentimental music]
- My wife and I are always looking for ways
to earn passive income.
I had invested in real estate
and in a few small companies here and there.
And so I was looking for other investments.
Scott Cohen, a good friend of mine,
he said, there's some opportunity in film.
And I am a screenwriter.
So I was intrigued.
And he sent me, like, an investor pack.
When I first saw the business plan,
it was, as most are, just sunshine and roses, right?
It's all the positive aspects of this deal.
- What was going on in my head then
was not how good a salesman this guy was.
It was that there was HBO and Netflix and these films.
Like, why would I have to trust him?
I see these contracts.
- Right away, I said to him,
"How do we know this isn't a Ponzi scheme?"
And the answer I got back was just that,
"Of course it isn't, and here's why."
And I trusted that.
- In its most simple form, the Ponzi scheme
is the money part of a scam.
My name's Supervisory Special Agent Doug Thompson.
And I work with the FBI in the White Collar unit.
The money comes in.
And that money is used to pay returns.
There's no actual business going on.
There's no profits in most of these cases.
And those payments that the investors believe
are the profits are actually just the initial capital
that the investors gave.
New investors are paying old investors.
You have to have a scheme to defraud the folks
whose money you're taking.
So when you've misrepresented to them
what you're gonna take the money for,
you accept the money,
now you've gone down the road of committing fraud.
- I met Zach Avery when I was raising money for venture.
And he was part of the VC team that invested.
He didn't come across as, like, a tech guy.
So I just assumed, like, yeah, he's a trust fund kid.
You know, he's charming.
And he was able to kind of talk enough,
like, venture, talk enough, like, Hollywood.
It's kind of, like, a hot place to be right now,
is being able to move between those worlds.
And, you know, you see folks like Ryan Reynolds...
- You're an actor.
You're the owner of cell carrier Mint Mobile.
- Jessica Alba, with the Honest Company.
Snoop Dogg is another one.
They have all done very well being an investor
and also an entrepreneur and also an actor.
Zach, you know, he played that character well,
that, "Hey, I'm this guy
that can do a little bit of everything."
- What's the difference between a pyramid scheme
and a Ponzi scheme?
- They're related.
- Okay. - Okay?
And I would say that you might classify a Ponzi scheme
as sort of the evil cousin of the pyramid scheme.
- All right.
- In a Ponzi scheme,
there's one person running the show.
So you got-- you got your con man.
- Okay.
- Okay, let's call it ZH for Zach Horwitz.
And he comes up with this scheme.
And he's got friends out there,
potential investors.
- A-B-C.
A, Always, B, Be, C, Closing.
Always Be Closing.
- And he gets them to invest.
So they put money in.
- The entry level was 10 grand.
- Okay, so he's taking in at least 30 grand here.
- Okay. - Okay?
And he's promising that in six months,
they'll get back their money plus 15%, okay?
That's a really good rate of return.
- Mm-hmm.
- Your profit on a mere $6,000 investment
would be upwards of $60,000.
- Now, how is he gonna pay them back?
So then he says, "Well, I got to get some more money."
So he goes out, finds another group of investors.
- We are looking to make strategic relationships
to move that along.
But I kind of agree with Mark Zuckerberg
when he said, "Move fast and break things."
- Right? - Uh-huh.
- Okay.
And then some of this money
is going to pay off the early investors, okay?
But if you've upped the ante,
it's no longer 10,000 to get in.
You need 20,000 now or 30,000 or 40,000.
But these people might decide,
"Well, I'm gonna just take this money.
It was a good deal, so I'll just go in again."
- I am talking about giving you $100 million.
- If you go above 4, we might have something.
- I can do that.
- So he gets paid off in principle.
But he reinvests.
Now, of course, these people expect their money too.
Okay?
So then you go to-- you know, you keep doing it,
especially since you're draining some money out.
So you have to get more and more.
As long as they think that it's legitimate
and that they are, in fact, earning these returns...
- I got a whole suite full of mainframe computers.
- We're not really interested, Henry.
- Oh, they are so beautiful.
Listen to 'em hum.
- [chuckles]
Henry, don't try Mr. Hemming's patience.
- You sure?
- It tends to feed on itself.
And if that happens enough, then you're in good shape.
- The key to a Ponzi scheme is getting more investors
in the Ponzi scheme.
There's a pattern to it, where they identify the people
they want to target.
They build rapport with them.
They convince them that they've got this secret way
of creating obscene amounts of wealth.
And that grooming part of this is important,
because it's not just to get them to invest,
but you want them to bring in their friends
and their social network.
- There is a feeling of exclusivity
in that you've been invited in.
You've now joined this club.
And there's always this notion that,
particularly in Ponzi schemes,
there are only so many deals to go around.
- He just had the Hollywood lingo down.
And he had so much bravado behind it,
and he seemed to talk the talk that, you know,
people who were outside of that world
were susceptible to it.
So I think in that respect, that's how his scheme worked.
- Oh, it's not a problem.
A friend in need is a friend indeed, right?
- There was a sense of intrigue
that is beyond the typical scheme,
where someone says,
"You're going to be investing in the stock market."
They don't know anything about these companies.
But they do all think they know something about movies.
And I think investors enjoyed saying
that they were investing in films.
- Most of the investors investing in movies
and in Hollywood don't really understand
how movies and Hollywood really work.
And that's where Ponzi schemes,
fraudsters live.
They love to get in an area where you know a little bit
but you don't fully understand it.
- When you use actual, real movie titles that exist,
where somebody can go and verify,
"Okay, this seems legitimate, and we can get these returns
"because he's actually using
"our money to purchase these things,
"and then he has these existing agreements
"where he's selling them to them,
so the money's gonna come in."
- When it was presented to us, it came from a company
called JJMT out of Chicago.
They were sort of the advisors to us on account of 1inMM,
which was the company that was purportedly buying
the rights to these films.
And all of the members of JJMT were in the finance sector.
So as far as we understood, they had vetted everything.
And that lended credence to this whole scheme.
- The investors would ask, "Well, what if you can't
get it distributed or something like that?"
"Oh, you don't have to worry about that.
"There's some kind of a fail-safe thing.
Don't worry, it's always a safe investment."
- You had every bit of documentation
you could possibly imagine to, you know, believe
that you are, you know, undertaking--
putting your money in an incredibly safe
and secure investment.
You know, there was even clauses,
if HBO doesn't pay or Netflix pay,
what would happen then?
How would, you know, we get our money back?
And it was all laid out.
- So in a case like this,
with promissory notes being used,
at the expiration of the promissory note,
whether that was in six months or a year,
Zach Horwitz wired the funds back to the victim investors.
And then for the next note, the victim investors
would wire the money back.
- You lend the money for six months.
You get the 35%, 40% return, whatever it is.
And then boom, you're out. It's over.
- So that was the thing. I mean, I did get money.
And, you know, I guess I could have walked away.
And--you know, but it seemed legit, right?
- And the other thing that was always presented to us
was that, these aren't gonna last forever.
At some point, there will be other players in the game.
And HBO or Netflix will realize
that they could cut the middleman out.
And Zach--Zach's whole business would be gone.
And so that was another thing that got people to try and put
as much money as they could in as quickly as they could,
because they knew that this was a limited opportunity.
- Around 2017, one of my neighbors down the street
told me the story about these guys killing it in film.
I had a production company called Forager Film.
We made a lot of independent films
starting in about 2013 and going forward.
I've had a lot go to Sundance, Berlin, South by Southwest.
I definitely don't have all the answers.
So I always want to talk to people about that.
So in '17, we had two movies going to Sundance.
And I'm like, "Two movies at Sundance.
I know this business."
Prior to '17, we knew if we came in
at a certain price point, there'd be buyers out there.
And the buyers weren't there in '17.
And so it was getting really hard for us to sell movies.
Then I come back to the summer and he's saying,
"Oh, these guys are killing it in film."
He's like, "Oh, no, the guy would tell them
"what Netflix would need.
"And they'd go out and either make the movie
"or find the movie, some foreign films.
"And they would then turn around and sell to Netflix.
"And they're returning some crazy amount of money
all the time."
And I'm going, wow, I'm having a real tough time
selling movies to Netflix, Amazon, take your pick,
because they want to make their own films.
- Hmm.
So that was the first time you kind of, like,
"Wait a second,
I know how this gets done, and that's not it"?
- Exactly.
The story they were telling,
they were telling a lot of people.
And they were hitting the North Shore,
where there's a lot of wealth and that kind of thing.
And my neighbor was really seriously
looking into this at the time.
He goes, "Well, I think I'm gonna do something."
And I was like, "Okay."
- So when you say, "do something,"
like, give them money?
- Yeah, he was gonna give them money,
about $50,000 at the time
because the returns they were talking about
were, like, close to 100%.
You could do that once or twice in movies.
But consistently?
Why wouldn't Netflix figure this out and, like--
- Doesn't smell right. - Exactly.
There was nothing good that was gonna come of it.
- I would see a title.
Some of them were something as ridiculous
as "Satanic Panic."
[metal music]
It's not a film I was ever gonna watch.
And it was most often in HBO Latin America
or the Latin American markets for Netflix.
So the library of films from which he pulled
consisted mainly of titles we'd never hear of.
And from what I understood, that made sense, right?
Like, a movie that didn't cost a lot to make,
the financiers would be happy to get 4 million bucks for it.
And then we would pay for it,
we would own the rights to that,
and then the streaming company would give us
this amount back.
So I think that was one of the smart things he did,
was to use obscure titles
that we would never really know or even check on.
[tense music]
- Zach had a spider web of lies he would tell
to help his image, his persona.
He was always building these lies up,
that he was this wildly successful investor,
multiple business owner.
Then from a friends standpoint,
this person had grown to be,
you know, my closest and best friend in LA.
How do you get so close to somebody,
look someone in the eye, and, you know,
know that it's just not real?
- It's too easy. It's just too easy.
- Hollywood has an allure to criminals.
They want to own homes in Hollywood Hills
and in Brentwood.
They want to drive expensive cars.
And they want to be part of that entire scene.
- I got way too drunk, stupidly hooked up
with some girl I had no business being with.
The end.
- Zach wanted to be famous.
But unfortunately for Zach,
he's a pretty fucking terrible actor.
- [sputtering]
- Zach Horwitz, that was his greatest role.
The real Zach is closer to Zach Avery.
That's a cheater.
It's a liar. It's a psychopath.
That's the real Zach.
- Zach was great at being convincing to everyone,
except when he was on camera.
[gunshots]
- One of the mysteries was,
how is he getting these parts in the first place?
- Do I know you?
- I'm the guy.
- What else is coming down the pipe for you?
- We're gonna talk about
"The Last Moment of Clarity" today.
Brian Cox, how did he make you feel on the set?
- He was incredible.
He's just such a master at his craft.
- "Gateway." - Yeah.
- Olivia Munn. - Dahlia!
- Mike? Oh!
- This amazing talent, do you just feel like
it forces you to up your game immediately?
- It does.
It completely elevates every single thing
you're doing because you know
you can't just kind of phone it in.
- It started to look to me like maybe he was putting
money from the Ponzi scheme into the movies
to get the producers to cast him.
- When it comes to living in LA,
there's an undeniable pressure to be somebody.
And I think that pressure breaks people.
For Zach, it was very obvious that he didn't want to wait.
- They're coming.
- Stay here.
- If you go on these auditions the normal way,
I mean, you're gonna be going on auditions a long time,
you know, unless you just get lucky
and you're that one in a million.
I'll tell you what, any role he got,
it wasn't for his ability in the audition.
- "Oh, ho, ho, coffee."
Remember B Man?
That dude from first-year contracts class?
"Stomp on those bananas."
- As far as the ability to cut a check...
- Yeah. - Money talks.
- Well, yeah, definitely.
- Zach found that shortcut, that way around
the one in a million opportunity.
And he was buying his way into roles.
Every single role, whether it's major or minor,
Zach paid for using investor funds.
- You may have impressed someone.
You may have met someone that I'm like,
"He doesn't fit for this or I'm not gonna
bring him on to this project because X, Y, or Z."
- I want to show you something.
- "But I'm also doing something in a month
"or someone else is doing something that I know
that he may fit for."
- He began creating relationships
with these producers.
And producers would say, "Hey, well, I can get you,
you know, in this role if you can give me X amount."
And he would pay it freely.
We're talking $100,000, $200,000 for a small role.
- There were at least four movies that he was in
that the Securities and Exchange Commission
has confirmed that he used proceeds from the Ponzi scheme
to help finance the movies that he was cast in.
The exact amount is not exactly clear.
But it's somewhere in the $10 million,
$20 million range.
- I want to kind of get into "The White Crow,"
directed by Ralph Fiennes--
and I wish I knew him, and you do.
But what was it like to-- to work on that film?
- Yeah, it really was
an eye-opening experience for me.
Yeah.
My specific role, it's a guy named Michael.
He's an American journalist that essentially was getting
the American perspective on this kind of journey.
- Just having that little glimpse
of seeing his face on the big screen,
you know, it was all worth it for him.
- Every new project you go into,
you're nervous because as you grow also,
I start thinking, like, am I gonna be good in this?
Do I know what I'm doing?
You have that imposter syndrome,
where it's like, am I supposed to be here?
Are they gonna find out that I'm this fraud the whole time?
- He was flying private jets out to the sets.
One of the stories was about him going out to film
a movie in Kentucky.
He arrived there and I believe got paid
less than what he spent on his accommodations.
- That's what happened here.
- Selling these very unbelievable schemes,
I don't think it's that hard in Hollywood
because people deal with extraordinary stories
all the time.
And so there's a part of it that makes it very easy,
where people are very optimistic
and anything's possible.
[soft music]
- In many of these cases,
and in this case in particular,
you build your credibility through the people around you.
And then just over time, it gets larger.
And as it appears to work, you know,
more people, you know, believe in it
and then start investing in it.
- So I started to see Zach-- on his Instagram,
he's going to Berlin Film Festival
and South by Southwest and Cannes.
And I'm just like, you know, damn.
I'm just kind of working away,
you know, at my kind of original job in Orange County,
and I'm seeing Zach just-- just kind of living the dream.
You know, his cars improve and house improve.
And I just couldn't believe it, man.
It was cool to see.
- One of the important factors for investors
is to see that, hey, the guy has a track record.
And to prove that, look at where he lives.
Look at his family. Look at the cars.
Look at the watches.
I mean, who else has a watch subscription service?
Why not buy a damn watch?
Why not have a collection of watches?
He did all the things to have the appearance
that he was the most successful person he could be.
- In the era of social media, you can create yourself
to be whatever you want.
The character of Zach Avery kind of fit the mold
of that new kind of con artist,
where you can leverage technology
to be whoever you want in this world.
- I think the persona that Zach had
rather carefully fashioned
was important for him to attract money.
I think he needed people to see him that way.
And then, of course, it was also important to him
to present the husband he had promised his wife to be,
that he was gonna be successful,
that he was this great actor.
[melancholy music]
- Zach marries Mallory.
And they have two kids.
He's just living a lifestyle now that, honestly,
only some of us dream about.
- This is on my Insta story. Relax. Hold on.
- And you got to witness this at every major life event
that Zach and Mallory have.
[cheers and applause]
- For me, it's very clear that you are
an absolutely amazing mother.
- Whoo!
- You're an absolutely amazing wife,
amazing friend... - Yes.
- And an absolutely amazing person.
- Whoo!
- So I fell in love with you 14 days before you turned 20.
[laughter]
- Whoo! - Whoo!
- And now I've been with you 10 years and 14 days.
[laughter]
- Amazing.
- And I promise you, I'm gonna love you
every fucking day for the rest of my life.
[cheers and applause] - Yeah, buddy.
- Mallory got serenaded.
And it was just the most romantic
and probably intimate thing I've ever been to.
You know, and it honestly kind of made--
made all of us husbands and boyfriends
kind of look bad because, you know,
Zach put on quite the show.
And that was, I think, the pinnacle of his success.
The closer you were to him, the more you loved Zach,
the more he took advantage of you.
- Do you think you could love another woman?
- No, not if I have you.
You're one in million.
[soft dramatic music]
- As he was drawing in investors,
the money he would bring in
would pay back the earlier investors.
And you could reinvest or you could cash out.
But the returns were so great that people would reinvest.
- So you're constantly just giving more.
You're never actually making money.
You're just giving more and more and more.
- After the first year or so,
you know the payments are coming out.
They're coming out on time.
And everybody is being made whole
and getting all the payments that they were promised.
So we stopped really paying attention.
- And he never act like he needed the investment
or even wanted the investment.
He was always like, "Well,
I'll have to think about it," you know?
"Maybe. I don't know if I can. We'll see."
You know, if you know anything about sales,
you know "no's" the strongest word in sales.
He was just an absolute master manipulator.
- It seems oftentimes,
at least with the Ponzi schemes
and these high-yield investment frauds,
they don't really believe that what they did was wrong.
Some of them actually believe what they're doing is real,
even though everything isn't real.
To these individuals, the idea of itself being real
makes it real.
- But, of course, he's taking the money out for himself.
And this is all just a huge lie.
- The main reason Ponzi schemes fail is,
the person running the scheme is taking too much money out.
They will start purchasing luxury items.
They'll buy cars, homes.
They'll start developing
an entirely different lifestyle
that's very extravagant.
They don't have enough money coming in
to pay the Ponzi payment because they've taken it.
- So here's another quote from the blog.
"I was always obsessed with belief in a superior life
"that existed just beyond my grasp,
"a feeling that a better party was happening somewhere else.
"But every once in a while, however,
"this sensation was punctuated by a visceral electric
sense of presence, times where I truly felt like I belonged."
I am not sure how to feel about this,
because, you know,
this is what he's choosing to write about
while he's serving his 20-year sentence in federal prison.
First of all, I didn't even know
you could have a blog in prison.
This is the very little, subtle acknowledgment
of this scam that--
the closest thing he gets to saying why he did it,
just because, you know, there were times
when he felt like he belonged.
[indistinct chatter]
- If not, that's fine.
And actually-- I'm not exactly sure.
- Should I just look in the lens?
- Hmm.
- I think there's something especially sick about somebody
who could not only take advantage
of their friends and family, but use them as bait in a way.
- I don't know, like, the psychology of this human
is fascinating.
- It's strange and curious how somebody could have
that much confidence
and that little of a conscience.
- I had some family members lose their pensions
in the Bernie Madoff Ponzi scheme,
which I'm sure we all remember.
And I'm really curious about the type of person
that could do that, like, the egos involved
because I witnessed the damage,
psychological and financial, from the victims' side.
[somber music]
♪
- And come visit us in Las Vegas when we re-open.
We'd love to have you. - For sure. I'd love to come.
- In court, one of his victims did say
that he had spent a weekend with Zach in Las Vegas.
To take someone to Las Vegas
and hang out with them for a weekend--
he's spending real face-to-face time
with these people,
knowing that he's taking their money
and never giving it back,
and these are their life savings.
That struck me as incredibly predatory.
He's really leaving these people destitute.
- Knowing that, you know, I'm not some hedge fund
or one of the big investors, I mean,
why did you need my money?
Tell me how I'm gonna, like,
pay the bills that I have to pay.
What am I gonna do with the money
that I was supposed to have been saving up?
I've read the houses and the cars
and the luxury watch service.
How did you sleep at night?
Did you wonder if the cops were gonna knock on the door?
Or did you even think about that
when you were going through all this?
- Lo and behold, how Zach operated
with the people closest to him,
he didn't want anybody being friends with anybody.
Mallory and I, we were close at the beginning.
But as time went on, we were just a little distant.
I could tell there was just something off.
And I couldn't put my finger on it.
And come to find,
he was pinning everybody against each other,
especially everybody close in his life.
He didn't want me talking too much to Mallory.
He didn't want her talking to me either
because Zach knew
the more time I'd spend with Mallory,
I'd start asking more questions.
The more time I'd spend
with some of his other LA friends
and some of his acting friends,
and I'd bring up, you know, 1inMM,
And then they would ask questions.
So he kept everybody on their own individual island
while he masterfully manipulated them
and everyone around them.
We could all be just his own personal pawns
in his own game.
- At this point in time,
the investment had grown quite large.
The payment amounts that were being sent back and forth,
they were in the millions of dollars.
- I think there is
kind of a runaway freight train quality
to what wound up happening.
- Zach was able to create this aura around you of legitimacy
by associating with other people,
like Howard Schultz, who are legitimate.
- We were told that Howard Schultz had bankrolled
his initial investments.
And from there, the story went on
and became kind of this legend of Zach.
- That's something that's been missing from this story,
is how much this relationship Zach conveyed he had
with Howard Schultz and these very powerful people
was all a part of Zach's persona.
- I dream the kind of dreams that other people said
would not be possible.
- He'd have his phone out.
And his phone would literally buzz.
[phone buzzes]
And he'd look at it and say, "Oh, it's Howard again."
He would call him Howie.
Then he'd show the text message.
Like, how are you supposed to know this is fake, you know?
When you're seeing live emails on his computer
and you're shown text messages
with their names and-- and you're even receiving--
supposedly receiving emails from Howard Schultz himself.
These characters in Zach's story
were so real to all of us.
It was uncanny how timely
these text messages came in as well.
- We do take it at face value.
I find it hard to, in my life, assume
that somebody is lying to me.
When I heard that Howard Schultz was involved,
it made sense to me in the sense
that this guy must have had some money,
seed money, to start somewhere along the line.
And that he had found himself in a relationship
with Howard Schultz, it's like,
seemed fortuitous for him, but it certainly could happen.
[dramatic music]
♪
- Zach and I go out one night just to hang out and--
at least what I thought was just some--
some innocent fun, just to catch up.
[phone dings]
He takes out his phone and shows a live message
interaction with Ted Sarandos, the man in charge of Netflix.
Ted Sarandos and him are going back and forth.
And Ted asks Zach if he's ready to sell his library yet.
He's got an over 400, 500 film library, supposedly,
that Ted would acquire for anywhere from 400
to 700 grand apiece,
with 11, 12, 13 years left of film rights.
And Zach responds with, "It depends."
And then Ted responds with, "Depends on what?"
And Zach says, "The zeros."
I'm seeing this live on his phone.
Ted sends over an offer.
It's a massive offer.
Zach hits the floor,
falls down to his knees, and starts crying.
♪
And he's saying, "Craig, we made it.
We did it."
I start crying.
This is just the greatest thing that's ever happened.
Zach's telling me how,
"You're gonna be taken care of.
Gonna get a portion of the sale."
And--and I'm just through the moon.
You know, I run home and, you know, tell my girlfriend.
And we're just so excited.
He's got me tuned up.
I am all in on 1inMM Capital.
- I've been looking through Mallory's divorce filing
and I actually found the answer
to a huge question in this case.
So here it says, "There have been countless text messages
"and emails Zach would show me.
"Many times I would see him receive notifications
"while he would be sitting right next to me.
"Now I have learned that Zach was actually sending
"the fabricated messages to himself
"using an app to make it appear as though
"he was receiving communications
from third parties."
So check this out.
I put in my phone number.
I put in the message.
"Hey, Zach, ready to sell me your library?"
And then I can select today's date and the time.
[phone dings]
Oh, it's Ted Sarandos.
"Hey, Zach, ready to sell me your library?"
Then all I have to do, if I'm him,
is memorize my lines.
"That depends."
I send that back.
I already have another one coming in.
"Depends on what?"
"The zeros," and et cetera.
- To locate real people and create communications
with these people and then sending them to investors
and saying, "Look, I'm talking to these people,"
when really you're not.
Zach Horwitz's ability to produce
documents that support that was unique.
- The amount of work involved in keeping track
of all of these different deals is unbelievable.
[phone dings]
He's got hundreds of millions of dollars on the table
that he's got to keep track of and make sure people are
getting repaid and bring in new money
to make sure it's possible to repay them.
It's just really, really elaborate.
You had to realize that at some point,
the whole thing was gonna collapse under its own weight.
- We'll see what happens.
You never know what tomorrow holds, obviously.
[laughs] - Yeah.
- Behind the scenes, things were beginning
to fall apart for Zach Horwitz and 1inMM Capital.
- When we first stopped getting payments,
my wife's first reaction was, "What's going on?
There's some kind of scam happening."
She had, just prior to that,
wanted to pull all the money out.
We were assured everything was fine.
There's a little bit of panic that sets in.
[tense music]
- So there are really two parts to this fraud.
The first part was the actual fraud itself, the agreements,
getting the investors to invest.
Then at the end of 2019 when the payments stopped,
what could be determined was,
wasn't getting enough new investor money
to repay existing investors.
And that's why the investment collapsed at that point.
This is where part two of the fraud starts.
- Zach just sending text messages
and email communications on the daily.
- We had screenshots of text messages
that were supposed to have been
between him and HBO or Netflix,
like, why--why have things suddenly changed?
And more importantly, both these massive companies
had stopped paying, coincidentally,
at the same time.
- I mean, we think we're just in,
like, kind of this war to receive payment.
- And then once it starts falling apart,
he's now having to create all this false documentation,
emails from HBO and Netflix.
- It just became more and more convoluted for him.
And, of course, each time he lies,
he's got to back that up with more.
I would imagine that was his full-time job.
When he wasn't filming, he was forging documents.
- We call those lulling statements.
And what they're doing is buying themselves time,
either to bring in new investors,
get influx of money so they can pay the people,
or, if this is really the end,
this may be the time that they're
going to exit the Ponzi scheme and then make a run for it.
- You see it oftentimes in these Ponzi schemes.
But the extent to which he really went down that path
is like probably nothing I've seen before.
And that, in turn, caused more damage to investors
because now they believe that,
"Oh, he's actually working to recover our money."
And these--these are large companies.
These are legitimate companies.
And they're gonna make good on these payments.
So now these investors are now digging themselves
into further financial loss.
- He came after myself and my parents
for any last dime that he could squeeze out of us.
And we didn't think, in a million years,
that, you know, I'd never see that money again,
that my parents would never see their retirement again.
- Regarding Netflix, once the audit's done,
hoping to get a date when they're gonna pay.
That's kind of the latest and greatest.
And if Netflix pays, we get some breathing room
and get to survive.
- Scott Cohen was playing tennis at a club.
And he ended up playing with a man who was in charge
of Howard Schultz's finances.
Scott said to him, "Hey, it's sort of a small world.
I work with Zach Horwitz."
And the guy looks and says, "Who?"
He said, "Well, you know, Zach.
"Sometimes Zach Avery. But he's--he's an actor.
He does all the film finance deals with Howard."
And he looked at him and said, "I don't know who that is.
Never heard of him."
He didn't tell me that
until everything began to fall apart.
He just kind of kept it to himself.
I think he started to realize that things weren't as rosy
as he was trying to make them out to be.
- Clearly, you can see everybody is motivated
and pushing, other than the fucking people
that owe us the money,
which is just a fucking disgrace.
- He hired counsels to represent him
in fake litigation.
- Another reason why we all felt this was legitimate--
his lawyers, from a very big law firm,
reached out and said things like,
they want nobody to try and contact HBO or Netflix
because that would jeopardize the relationship
that Zach had cultivated over these number of years.
And so we were instructed basically not to do so.
- So I go to Zach.
And I'm like, "Zach, you know, hey,
"you know, we got our house here
that we're gonna lose if I don't get my money back."
He's like, "Oh, man, I'm sorry.
"You know, it should be paid.
It's gonna be paid any time. Here, look."
And then he'd forward emails and forward communication
or show on his phone that, you know,
things were gonna be paid.
So if there was any a time
where Zach could have just maybe looked out
for myself, my family, my fiancé,
that would have been it.
He had no financial gain by letting us lose our home
and keep putting money out to this home.
He could have just said, you know, "Hey, Craig,
"there's gonna be other houses.
"You know, I would just wait for this HBO stuff
to get cleared up."
Then I would have been begrudgingly like, "Oh, fine.
"You know, we just lost our house,
but we'll get another one."
But that just shows me that Zach
is just absolutely soulless.
Two weeks go by.
And we finally think we're coming to agreement now
with WarnerMedia, you know, the owner,
the parent company of HBO.
And then, of course, COVID hits.
- The entertainment industry in California has been
decimated by COVID-19.
- Netflix shutting down production
on all of its scripted television and film projects.
- You know, now we're into, you know,
May and June and July.
And what a perfect built-in excuse
for Zach to play off of.
- The individuals perpetrating the frauds often use
current events as reasons for why the investment
isn't working anymore.
- Everything was going fine, except that the attorney
for Netflix just got COVID, right?
And then I said, "I mean, this is strange
because Netflix has more than one attorney."
But, of course, each time any investor brought up
any concerns, they were met with explanations and answers
that were meant to satiate us.
And for a period of time, it did.
- And it was just a nightmarish year of COVID,
first and foremost, and then,
you know, dealing with this disaster
of not having any funds.
You know, he cleaned us out.
He cleaned myself, my family, and closest friends out.
- If you look back at some of the texts
that we're getting during the time
that we had ceased being paid,
there was just a sort of a "bro" element.
I don't know if there's a better way to put it.
Here we have a member of JJMT saying,
"This year fucking sucked.
"But hoping for a quick blastoff of positivity
starting next week, boys."
Then Zach responds, "100, double exclamation point.
"Fuck 2020 in all ways.
"2021, baby.
LFG." Let's fucking go.
- It takes a specific type of person, I think,
to do this.
I don't think most people can do it,
at least not on the level that we're talking about,
where you're talking about tens of millions of dollars
and you're going to destroy these people.
They're going to lose their, you know, life savings.
They're going to lose their homes.
That's a particular level of human callousness
that most people probably don't have.
- A lot of actors have a deep insecurity.
And it's one of the reasons why they want to be on film,
why they want to be someone different,
why they want to portray these other characters.
And I think that's part of what drove him to that.
But I think most importantly for him
was just this idea of fame.
And he was willing to do whatever it took to get there.
- You're gonna need something when you get there, no?
- Thank you.
- Very few Ponzi schemers actually have a exit strategy.
They sometimes flee and get out of the jurisdiction.
But it's hard to really disappear now.
- Can you show us how it all kind of breaks down?
- You've got several of these investors.
They're paying in. Okay?
These people are earning their returns.
And somebody in one of these tiers,
let's say it's this person, draws out.
And maybe he recruited.
Well, now, it's not enough to support it.
And the whole thing collapses.
So nothing's coming in.
And at the same time, the people
that got screwed down here, at the bottom,
are just going to the police.
- I don't know that there's a lot more time left
in the patience box with 1inMM.
This is a real fucking disaster.
- I think that Scott, at that time,
actually reached out to the FBI.
And that's when it kind of all came crumbling down.
- The case was initiated.
A victim attorney contacted the FBI office,
that they believe that Zach Horwitz had committed
a fraud against their clients.
- One of the first things we do in these fraud cases
is the financial analysis.
The FBI has created an entire cadre of forensic accountants
in addition to the special agents.
And so they get the bank accounts
and then trace where all the money went.
- The FBI was on the case.
The SEC was on the case.
- We know what's going on.
And then we interview the victims
to see what they thought they were investing in.
- Oftentimes, these investigations can last
6 months, 18 months, even years.
One of the things that enabled this investigation,
in particular, to move quickly was the documentation
that the victim investors had.
- One of the key elements of this is,
was there a scheme to defraud the victims?
The way we prove the scheme is showing what they were told
and what actually happened.
And that's how we identify the fraud.
- There was a lot of pressure
that Zach Horwitz is gonna flee.
That's often a concern of investors,
that this thing's falling apart now,
and he's gonna take all the money and run.
[suspenseful music]
[indistinct radio chatter]
[sirens wailing]
- The morning of the arrest, out of nowhere,
FBI agents are pounding on the door,
and there are agents all swarming into the yard,
demanding that they come downstairs.
It's just complete panic.
And suffice it to say,
Mallory was pretty freaked out.
- When Zach's wife came to the door,
she didn't know why we were there.
And then the next person to come down was Zach Horwitz.
I don't know if he had any inkling
that the FBI was investigating him.
I'm guessing it's probably at the time of the arrest.
Well, that reminds me of something else
I'll tell you about.
One of the unusual things about him was--
is oftentimes, when we arrest these people,
they'll often say, like, "Oh, why are you here?
"This is all a misunderstanding.
It's a real business."
[distant sirens wailing]
Zach didn't say a word.
He was very calm.
He wasn't in shock.
So that was unusual.
I mean, when you arrest somebody,
usually they want to know what they're being arrested for.
But he never asked that question.
After Zach was arrested, we Mirandized him.
Myself and another agent attempted to interview Zach.
But he declined.
He never made any statements to law enforcement.
- When I first saw the "LA Times" article,
I was blown away.
I was just like, this-- this can't be true.
- I didn't believe it.
You know, I was almost mad.
Like, I didn't even know what to think
because there was just no way in my being--
how is this even real?
That was my first reaction
until I just kind of sat there
and, you know, let it all digest.
And then that's when it sunk in
that one of my best friends has been conning myself,
my family, and some of my closest friends
for the last ten years, and that he stole
everything from us,
and that I might not ever see it again.
- The day they raided his house
was a good day, you know?
You finally see somebody
getting their comeuppance, right?
And more importantly for us, I guess it began the process
to be able to hold him accountable and--
and perhaps in a very unlikely scenario, that--
that some of the money could be recouped.
- It seems that a lot of the people
who invested in this
and who lost money were older people
or people in transitions, people going through divorces,
people who lost members of their family recently,
people who had sick members of their families.
And so a lot of these people, I think,
were vulnerable in that respect.
And I think he was able to really capitalize on that.
- When these cases come to trial,
what kind of jail time can you expect as a Ponzi schemer?
- I see that most of the cases end up at two to seven years.
But it's a complicated process.
Depending on the number of victims,
the number goes up.
Depending on the loss amount, the number goes up.
Your role in the crime, the number goes up.
Aggravating circumstances-- did you target elderly people?
Did you target groups that would be
particularly injured by your crime?
That causes the number to go up.
There's a cap, like, at 20 years.
But the judge can deviate
from those sentencing guidelines.
- I just went into the courthouse
and asked about the camera.
And they said no cameras in federal court, which is fine.
Kind of what I expected.
Check, check.
Sound good?
- Yeah, just hide the wire a little bit.
- Oh.
Better? - Yeah.
- Okay.
So here he is, coming in, right here.
- I have sat through a lot of statements to the court
by people who have been convicted of crimes.
And his lacked specificity in a way that struck me.
When I was writing my story
and I was trying to find quotes from it,
I actually just threw up my hands
because he really didn't say that much.
It was--it sounded very generic.
- We found out that Zach had sent a letter to the judge.
And in it, he had asked the judge
to be lenient upon him because, in fact,
it was the fault of the victims
for not seeing the red flags.
And it went over about as well as you can imagine.
The judge was not too pleased.
- I fucked up.
I'm a piece of shit.
- Actor Zachary Joseph Horwitz is agreeing to plead guilty
to a $650 million Ponzi scheme.
- When Zach agreed to plead guilty in October,
he appeared in court.
And he pled guilty to a single count of securities fraud.
And with that agreement, other charges,
with decades more in prison, were dropped.
- When Zach Horwitz was sentenced,
you know, he was sentenced to 20 years
and ordered to pay $230 million in restitution.
A 20-year sentence, you know, was--
I was a little surprised by it.
I think in this case, I think it's just
the sheer numbers involved.
- It was really striking to hear the judge go over
all of the money that was spent during this scheme.
The $7 million on the American Express card.
I think it was $700,000 for interior design.
The Mercedes Benz of Beverly Hills.
Where is that money now?
- I think I know the answer to this,
and it's a bummer.
But what about the victims?
Do they ever get their money back?
- This is one of the toughest things I have to tell people,
because they all believe that the money is
squirreled away somewhere.
And it's not.
- All the money has been spent.
And that's why the actual investment collapses.
They spend the money, dinners, travel,
like, things that you can't recover.
- They frequently tell me that they know,
at some point, they're gonna get caught.
If you know that the end is coming,
just spend the money.
- He had his house and the contents of the house.
And that--really, that was about it.
You know, there was approximately a little over
$2 million that was recovered from the sale of the house.
- I don't see myself
as the victim who was impacted the most
because some of the stories I've heard
have been far more tragic than mine.
My wife and I lost $1.8 million in total.
It took us a long time to save that kind of money.
It's--again, it's relative.
To some person, 120,000 would be the equivalent of that.
And to some, it's 120 million.
For us, that 1.8
was everything that we had managed to accrue
over a long period of time.
And so that was just wiped
just so somebody could feel good about himself
and cast himself in a few movies
and party in Vegas a little bit.
And that's--that's tough to deal with.
- Speeding.
- It's bad regardless, strangers or people you know.
But to get family and friends involved, it's--
that's a whole other level
of just blocking out right and wrong.
- You just want to believe the best of a person
and kind of block out everything else.
- I've personally known a lot of Zach Averys.
I just never thought that any one of them
would be smart enough or cold enough
to pull something like this off.
- It's so fascinating to me that something like this
could happen in our industry, like, right in my backyard.
- He did a lot of things that we,
on different levels, you know, would consider terrible
or immoral or dishonest.
- At the end of the day, it's sort of just
an unforgivable thing to lie that way,
to scheme that many people, and take that much money
all for yourself.
- The greed took him over completely.
- Really made me consider my past actions.
I think I'm making really good progress now.
- When I went to court to watch Zach be sentenced,
you know, there was a realization that all of us,
all of the victims, had been sentenced.
And for some, it was a life sentence, right?
We are now forced to pick up the pieces of the lives
that this guy has shattered.
But there are those that I know will never be able to,
not just because the amount of money,
but just because of the time it took to get there
and how much time they may have left.
- My mom's in the other room, just found out that she,
you know, has terminal cancer.
You know, my parents' retirement's in this fund.
How do you go in the hall and go look at your dad
and tell him that their money's gone,
this was all a lie?
Like, how do you have that conversation?
You know, imagine having that conversation.
It was one of the hardest conversations I've ever had.
You know, he was just-- he loved Zach as well.
And just the hurt, you know, in his eyes
and my mother's eyes, and I just--
you know, it just wasn't--
I just couldn't believe it,
that everything I thought was my life
and what was real just wasn't.
- How could somebody do that, just lie to all the people
that knew him, trusted him, and, like, just full-on lie?
How am I gonna face my kids? They're upstairs.
Like, how am I gonna face my wife?
This is gonna be a stain, like, forever in our marriage.
Like, how do we-- how do we get past that?
You know, and what happened in your past
that you would make this happen,
so I can avoid that with my kids
and make sure they don't turn out like you?
- At a sentencing, the defense is given an opportunity
to make a statement.
And during the whole period of his sentencing,
he was sitting at a table with his counsels
and, you know, was very just expressionless.
And then when he got up to make his statement,
he became animated and was very remorseful
about all the damage he had caused
and the irreparable financial loss
he had created to all the victims
and all the people that, you know, he had betrayed.
And then after he had made his statement,
he--he sat back down and went back
to, you know, that same poker face.
So maybe--maybe at that point in time,
we were seeing a little bit of Zach Avery in the courtroom.
- After the court case, I went to the bathroom.
And as I was walking out, the door opened.
And in walks Zach Avery, Zach Horwitz.
And it's such a strange feeling
because there's this guy that's ruined my life.
And he--he walked past me and he looked up,
and we kind of met eyes.
And he's like, "Hey, man, I'm, like--
"I'm so, so sorry.
I'm so sorry."
And it's just-- well, I should hope so.
I mean, I'm sure you're more sorry you got caught
and you're spending 20 years in prison.
But I said, "Look, dude, what was your endgame?"
And he said, "I didn't have one."
It's almost worse to hear than he just messed up, right?
It's like, he never had a plan.
He just was taking people's money and spending.
- That he perpetrated this crime against people he knew,
people he didn't know, and then his own family,
who also is dealing with the wreckage
because he's got two young sons
and he's in prison for the next 20 years,
so by the time he gets out, they'll be adults.
- He's in jail now and is leaving his two kids behind.
That is his legacy that he's in prison, you know?
And he is a criminal.
And, you know, I wish he'd stay behind bars
the rest of his life.
- Okay, we're speeding. - Speeding.
- Okay.
- 59. Take one. Mark.
- I guess if I'm being honest, just the type of egos
that are involved in running schemes like this--
what makes that guy tick, you know?
- I would love to actually meet him, honestly.
Like, I'm so curious.
- He's crazy.
I mean, what is wrong with this guy?
How can you be so smart
and so stupid at the same time?
- I mean, I'd watch this movie.
[laughs]
- I always try to do things the way
you're supposed to do them.
And whenever I see somebody getting away
with just breaking the rules,
it makes me really angry.
- I'm very interested in exploring
how someone's capable of carrying that much guilt
on their own shoulders.
- So you're gonna be looking straight down the barrel.
- When people read about financial crime,
they are engaging with it from an arm's length
because nobody wants to identify with the criminal
because they don't think they can lie at that level
or be cruel.
And we really don't have that much sympathy
for the victims either because nobody thinks of themselves
as being reckless or naive or stupid enough
to get scammed like that.
But I think what you're doing with the director
"character" in this movie is different
because it just shows you how easy it is
for anyone to get taken in.
I don't think of myself as a scammer.
But I'm an actor.
So to me, this is just another role.
- I'm auditioning today for the role of the director.
- The director. - The director.
- I'm Joslyn Jensen,
and I'm auditioning for the role of the director.
[dark music]
♪