When Bernie Madoff was going peak Ponzi, he tantalized thousands of unwitting investors into believing they could get a return of about 10 percent a year, every year, if they were lucky enough to get him to take their money. That promise was good enough to attract $65 billion to his scheme—and good enough to earn Madoff a sentence of 150 years in a federal prison.

But promising 10 percent clearly wasn’t cool enough for Hollywood’s millennial Madoff, Zachary Joseph Horwitz. No, if he was going to pull in the under-35 set, the aspiring actor with the screen name “Zach Avery” knew that something sexier than a 10 percent bump on stocks would be needed to appeal to his millennial targets. So when the then 28-year-old unleashed his Ponzi scheme, in 2014, he promised investors returns of anywhere from 25 to 45 percent, often in just six months, by investing in movie-distribution deals. By the time it all fell apart, on April 6, 2021, he had bilked these investors—many of whom were his chums from Indiana University—out of around $227 million.

That April morning, F.B.I. agents arrested him at his $5.7 million home, in Beverlywood. (Yes, that’s a real place. And he paid cash for that house in 2018, with the stolen money.) The Securities and Exchange Commission charged him with securities fraud, seeking an immediate freeze of his assets and disgorgement of “ill-gotten gains.” A month later, a federal grand jury indicted him on 13 counts of knowingly committing wire fraud and securities fraud. He was in big trouble.

Horwitz pleaded not guilty to all counts, and his bail was set at $1 million. But by September, perhaps realizing the game was over, he pleaded guilty to one count of securities fraud and entered a plea agreement with prosecutors. (The S.E.C. case against him has been stayed for the moment.) He also agreed to pay a fine of twice the gross gain or loss resulting from the scheme ($227 million) and to pay restitution to his victims—which suggests he’s now on the hook for an estimated fine of $454 million and restitution of another $227 million.

The lower level of Avery’s former house, which includes a large-scale entertainment zone with a custom home theater.

All of which means he can kiss his house in Los Angeles good-bye, along with its screening room, home gym, and 1,000-bottle wine cellar. The feds will also relieve him of his grand piano, his pool table, and whatever other goodies he acquired when he paid the L.A. “celebrity” decorator Lonni Paul Design $700,000 to trick the place out. As for those days when Horwitz could drop $125,000 on trips to Las Vegas, or spend $1.8 million on his American Express card, or pay $165,000 for “high-end automobiles,” $137,000 for chartered jet flights, and $55,000 on a luxury-watch subscription? Well, they seem long gone.

As is his wife of seven years, Mallory Hagedorn, a hairstylist whom he also met in college. Last spring she filed for divorce and for custody of Jaxon, their toddler son.

All the Right Moves

Born in leafy, hippie-ish Berkeley, California, in 1985, Horwitz moved with his mother and stepfather to Fort Wayne, Indiana, where, he has told interviewers across the years, he played football and dabbled in the theater. However, Steve Clark, one of Horwitz’s high-school friends who spent a lot of time in the theater program, wrote on his blog that as far as he could tell Horwitz “never acted” in high school. Clark also wrote that Horwitz used to tell the tale of how he and his attractive sister were in a mall one day in Tampa when Derek Jeter invited them to his mansion for dinner. “I now realize,” Clark wrote, “that it was probably all bullshit.” As was much of Horwitz’s life story, crafted—as any serial liar’s life story is—to identify suckers. (Contacted in Los Angeles, Horwitz’s attorney declined to be interviewed for this article.)

After high school, Horwitz played football at Indiana University, until an injury dashed both his spot on the team and his dream of a career in the N.F.L.—or at least that’s what he repeatedly told reporters over the years, including one at the Los Angeles Times. In the Indiana University football media guides in the years leading up to his 2009 graduation, there is no mention of him.

He does appear to have graduated from I.U., however—maybe with something more valuable than a jock degree: one in psychology. He claimed in an interview he’d always been fascinated by psychology and sociology.

He promised investors—many of whom were chums from Indiana University—returns of anywhere from 25 to 45 percent, often in just six months, by investing in movie-distribution deals.

“Why people do the things that they do, what makes them tick, how they interact with others,” he told the movie-review Web site Loud and Clear, in August 2019. “I could sit in a park all day and simply observe behavior: we are all so unique.”

Horwitz decided to enroll in a doctorate program at the Chicago School of Professional Psychology and, as he said in the interview, learn “the decision-making process for every person.” But he started to spend most of his time at underground comedy clubs or acting in local theater troupes. It wasn’t long before he decided to dump his doctoral studies and chase the Hollywood dream.

To get money for the move to Los Angeles, he reportedly sold QuickBooks, the accounting software, door-to-door in the Chicago suburbs. On New Year’s Eve 2011, he and Hagedorn drove west, with only a few bags and their dog. His big break came relatively quickly. At a dinner at the home of a family friend, he met the filmmakers Julio and Diego Hallivis. The brothers were about to shoot a short film called Shifter, and were casting the role of Striker, a soldier with the ability to “shift” into a clone of himself if ever he were killed in action. Horwitz seemed a natural and got the part.

Zach Avery as Sam Pivnic in Last Moment of Clarity.

Horwitz worked with the brothers on more short films, and in 2016 they cast him in the small role of Alex in his first feature film, Curvature, a science-fiction thriller. Later, he was in the 2018 film Farming, along with Kate Beckinsale. He also played Michael Jones in The White Crow, a film directed by Ralph Fiennes about the defection of Rudolf Nureyev. He was in Trespassers, Last Moment of Clarity, The Gateway, and Shookum Hills, whose title was changed to The Devil Below. The only one of these films to register at the box office (barely) was The White Crow, which raked in about $7.3 million in worldwide revenue.

Asked once what he liked best about being an actor, Horwitz responded, “Having a job that allows you to explore the psyche, personality and world of so many different characters. Every role that I play teaches me something new about myself.”

He may not have been a big talent in Hollywood, but the business—and the deals—captured his imagination. And around the time that he and Hagedorn got married (in October 2014 at the Four Seasons Hotel in Los Angeles), he teamed up with the Hallivis brothers to form a film-production company of sorts. They called it 1inMM Productions. (It was named for one of Horwitz’s mantras: “When odds are One in a Million …. Be That One.” In other words, he liked to say, “a million people could be walking into a room but you bring a unique perspective simply because you are you. Know that and truly believe it…. And other people will as well.”)

If the articles in the Hollywood trades are indicative, 1inMM Productions seemed legit. Somewhat. In 2017, Deadline reported that City National Bank had provided the company with funding for two or three “elevated genre” films to be made for less than $5 million each. In 2018, 1inMM teamed up with another production company to develop English-language films to bridge the culture divide between the Anglo and Hispanic communities. In 2018, the company announced it was producing a horror film set in Kentucky, and that Zach Avery would star in it. (That was The Devil Below. It came out a month before Horwitz’s arrest, and promptly flopped.)

Meanwhile, Back at the Ranch …

Yet by 2018, Horwitz’s scam was well underway. According to the F.B.I. and the S.E.C., here’s how the scheme worked: Beginning in and around 2014, Horwitz started soliciting money from investors on behalf of 1inMM. He told them 1inMM intended to use their money to secure the distribution rights to various films in regional geographies, and then sell those rights to streamers such as Netflix and HBO.

Using promissory notes—a form of legally binding debt agreement—Horwitz borrowed money for six months to a year, and a promised return on investment of up to 40 percent. Each promissory note was supposedly tied to a specific film. For instance, there was a December 2018 12-month note tied to the supposed movie “Active Measures,” for $1.4 million, that paid interest at a rate of 43 percent. And a May 2019 note for $744,500 tied to Run with the Hunted, which was allegedly going to pay off in six months at an interest rate of 35 percent.

He may not have been a big talent in Hollywood, but the business—and the deals—captured his imagination.

Given that interest rates are at their lowest levels in recorded history, these sky-high returns should have been the first red flags. But they weren’t. Because in Hollywood, crazy promises are all too common. It’s a town that runs on them—a place where everyone is searching for the next big payoff, regardless of how incredible.

According to Alexander Loftus, an attorney for Steven Zaleski, one of the defrauded investors, his client was used to being offered these kinds of “private equity”–like returns. “These are wealthy young men who are connected with other wealthy young men, who continue to get wealthier,” Loftus tells me. “They’re just in a different world.” Zaleski is owed $1.4 million, according to Loftus’s complaint. (Zaleski declined to be interviewed.) Steven Aronson and Matthew Aronson, who live in Massachusetts, claim in a lawsuit to have lost more than $1.8 million in Horwitz’s scheme. (Attorneys for the Aronsons did not respond to my request for interviews.)

The two sides of Avery.

Part of what swayed Horwitz’s marks was surely that his documentation looked very impressive. The promissory notes, the license agreements, and the contracts with HBO and Netflix that he shared with investors looked like the real thing. But, according to the F.B.I., they were all elaborate fakes. A Hollywood version, in a way, of Theranos and Elizabeth Holmes, a fellow convicted millennial grifter.

Horwitz also made other false representations. According to the S.E.C., Horwitz claimed that he “had experience acquiring and licensing distribution rights in movies to HBO and Netflix,” that he had “used the profits from those transactions to repay investors in 1inMM’s promissory notes,” and that he described himself to investors, in company documents, as bringing “a wealth of knowledge, reputation, and experience.”

But, according to the F.B.I. and the S.E.C., Horwitz and his company “had no relationship with HBO or Netflix” and had “never licensed any movie rights to either company,” and Horwitz “misappropriated investor funds to pay putative returns on earlier investments” to fund his lavish lifestyle, including the millions used to buy that home in Los Angeles.

To pull in the under-35 set, the aspiring actor with the screen name “Zach Avery” knew that something sexier than a 10 percent bump on stocks would be needed to appeal to his millennial targets.

His 2015 annual report to investors was an impressive piece of Hollywood spin. In addition to photographs of movie sets, logos of the companies that 1inMM was in “strategic partnerships” with, and a snapshot of the films supposedly in the 1inMM library, Horwitz included his gem of a biography, in which he claimed he was responsible for “the companies [sic] overall strategy, capital transactions, operations, investor relations and content acquisitions” at 1inMM, and that he planned to grow 1inMM to be a “prominent force in the foreign distribution landscape.”

If all that weren’t enough, he assured everyone that “the safety of our investors’ funds should always be our first priority” and that “our strategy has been and will always be a collateralized investment approach to ensure that solid returns and safe investments are the pillars that solidify our foundation.” Horwitz went so far as to say that if somehow either HBO or Netflix failed to pay for the distribution deals, he would find another streamer. Total smoke, as it turned out. But it did sound comforting. Perhaps as a way to make the report go down smoother, Horwitz included a bottle of Johnny Walker Blue Label scotch with each copy that he sent out.

According to the S.E.C. and F.B.I., Horwitz raised more than $690 million from “five principal investors”—feeder funds of sorts, in the same way that Madoff drew on the good faith of other fund managers to funnel client money to him. These five principals then raised money from “more than 200 downstream investors,” such as friends and family members, some of whom raised funds from further downstream investors to finance the purchase of the promissory notes he was selling, which were backed by the fake distribution deals and the fake rights agreements.

The largest intermediary funneling money into Horwitz, by far, was a Chicago-based partnership known as JJMT Capital, run by four of Horwitz’s college pals. According to Zaleski’s lawsuit against JJMT Capital, JJMT ultimately “solicited” nearly $500 million for Horwitz’s promissory notes, of which $120 million “remains outstanding” and is unlikely ever to be repaid.

Avery with his former wife, Mallory Hagedorn.

Zaleski claims that in 2014 Horwitz approached an Indiana University friend, Jacob Wunderlin, with the opportunity to invest in a promissory note, the proceeds of which would be used to license a film in Latin America and that would be repaid by the subsequent distribution deal with Netflix or HBO. According to Zaleski’s lawsuit, JJMT was formed in July 2015 “for the sole purpose of selling investment into 1inMM.” Zaleski also claims that JJMT sold the 1inMM promissory notes to investors by “regurgitating the lies told by Horwitz,” and it accused one of the principals of JJMT of failing to do the most basic checking—so-called due diligence—on whether what Horwitz was claiming to be true was in fact true. For nearly five years, Horwitz used the money raised through one set of new promissory notes to repay the old promissory notes that were coming due every 6 to 12 months.

“In some instances, the investors were repaid with their own money”—according to the federal complaint. In other words, a classic Ponzi scheme. Horwitz and 1inMM entered into about 500 promissory notes between October 2014 and 2019 with JJMT alone, according to the F.B.I. affidavit.

But in late 2019, things got rocky. Until then, Horwitz had used new money to pay off the old money. Everyone was happy, collecting equity-like returns on debt-like obligations. But on December 11, 2019, Horwitz and 1inMM began defaulting on the promissory notes. He also started making up all sorts of reasons why he couldn’t pay.

“When the money stopped coming, then the lies got crazier,” Loftus explains. “What was odd from JJMT is that they kind of over-communicated. They started sending out weekly updates, and there were pretty elaborate stories as to why payment was delayed. So as soon as the payments stopped coming, it looked fishy.”

According to the F.B.I., Horwitz told JJMT that HBO and Netflix “refused to pay on time for the distribution rights as obligated.” Horwitz also gave JJMT “excuses that were purportedly given by Netflix and HBO,” including, for instance, that HBO Latin America was “restructuring” and would resume making payments once the changes were finished.

In both cases, he sent e-mails to JJMT purporting to be from executives at both HBO and Netflix. (The F.B.I. confirmed with internal attorneys at both HBO and Netflix that Horwitz had no agreements with the companies and had never corresponded with them.) In e-mail after e-mail throughout 2020 and early 2021 to the investors it had roped into 1inMM, JJMT repeated Horwitz’s excuses about why the investors weren’t being paid. Horwitz promised to make payments—finally—on February 28, 2021. But he didn’t.

The next day, Matthew Schweinzger (the M in “JJMT”) wrote to the JJMT investors, “Very recently, as part of our ongoing efforts to address 1inMM’s nonpayment, we learned information that leads us to believe 1inMM deceived and defrauded JJMT. This development is obviously very serious and deeply troubling. We are extremely distressed, as we expect you will be too.”

Avery’s California home.

Schweinzger wrote that JJMT had hired King & Spalding, a large Atlanta-based corporate-law firm, and informed federal law enforcement of the developments and confirmed that the S.E.C. had opened an investigation. (Neither Schweinzger, nor any of the other three JJMT principals, nor their attorneys, responded to a request for an interview. Zaleski’s lawsuit against JJMT claims JJMT Capital was “negligent” for failing to properly vet Horwitz and 1inMM before recommending the investments. “One phone call any step of the way would have prevented all of this,” Loftus says. “Instead, [JJMT] relied on Horwitz to do his own due diligence on himself.”)

According to the S.E.C. complaint, Horwitz was fully aware of what he was doing. “Horwitz knew, or acted recklessly in not knowing, that the representations he made to investors in 1inMM about his and 1inMM’s alleged business relationships with HBO and Netflix and his use of investor funds were materially false and misleading,” it reads. “In addition, Horwitz’s conduct was negligent. Horwitz’s conduct in offering and selling securities issued by 1inMM, while lying about his business relationships with HBO and Netflix and his intended use of investor funds was a departure from the ordinary standard of care of a person offering and selling securities.”

All of which makes a comment Horwitz made to Naluda, an online magazine that calls itself the “#1 site for exclusive interviews,” in February 2019, a real head-scratcher. Asked whom he would most like to meet, living or dead, Horwitz said Abraham Lincoln. By then, his Ponzi scheme had been in full swing for years, and he was still 10 months from seeing it collapse under its own weight. But: Honest Abe?

“I have always been interested in him for some reason and it would have to be extremely cool to pick his brain over a beer,” he told Naluda. To Horwitz, however, it all made sense. Because when you are a con man, you have to believe everything makes sense.

Horwitz will be sentenced in a federal court in Los Angeles on Valentine’s Day. He’ll be alone, and will probably stay that way for a good long time.

William D. Cohan is a Writer at Large for Air Mail and the author of such best-selling books as The Last Tycoons, House of Cards, and The Price of Silence. He is a founding partner of Puck. His new book, Power Failure, will be published in November