A Beverlywood resident pleaded guilty on Oct. 4 to a federal securities fraud charge, admitting that he operated a Ponzi scheme that generated at least $650 million through false claims that investor money would be used to acquire licensing rights to films that HBO and Netflix agreed to distribute abroad.

Zachary Joseph Horwitz, 34, also admitted the scheme caused more than $230 million in losses to victims. United States District Judge Mark C. Scarsi scheduled a sentencing hearing for Horwitz on Jan. 2. The defendant faces a statutory maximum sentence of 20 years in federal prison.

Prosecutors said over the course of approximately five years, Horwitz used his purported film distribution company – 1inMM Capital LLC – to solicit investors with false claims their money would be used to purchase regional distribution rights to films. The investors were told their money would generate profits when the film company licensed the rights to online platforms such as Netflix and HBO.

The scheme began in 2014, when groups of private investors began entering into hundreds of six- and 12-month promissory notes with 1inMM Capital based on Horwitz’s statements, federal authorities said. The funds supplied under each note were supposed to provide money for 1inMM Capital to acquire the rights to a specific film. The promissory notes guaranteed a specified payment on a specified maturity date, as well as the specified amount to be paid at maturity, which included returns ranging from 25% to 45%, authorities added.

Instead of using the funds to acquire films and arrange distribution deals, Horwitz operated 1inMM Capital as a Ponzi scheme, using victims’ money to repay earlier investors and to support his personal lifestyle, including the purchase of his $6 million Beverlywood residence, prosecutors said.

Investors started to complain in 2019 after 1inMM Capital began defaulting on notes, according to court documents. In response, Horwitz, “falsely reassured investors that any missed payments on promissory notes were caused by the actions of the online streaming platforms, and that payment on the notes would resume,” he admitted in a plea agreement. To support the false claims, Horwitz sent investors emails and text messages that he falsely claimed had been sent to him by representatives of the online streaming platforms.

Horwitz defrauded five major groups of private investors that derived funds from more than 250 sub-investors. By late 2019, 1inMM Capital began defaulting on all of its promissory notes. In the plea agreement, Horwitz admitted that he owes investors more than $230 million, and that his scheme has caused substantial financial hardship.