Movie Ponzi Scheme Crushes Investors with Over $100 million in Losses.

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses in Ponzi schemes.  All of the most egregious swindles start out with a simple dual promise: High returns and no risk. That was the case with JJMT investments, which sold bogus promissory notes.

Started by fraternity brothers from Indiana University, JJMT lured investors with 30% to 40% returns on notes that financed movie deals in Hollywood.  According to Bloomberg, “Zachary Horwitz, a former actor, duped his old college friends and their families out of tens of millions of dollars. Three of Horwitz’s buddies from Indiana University said he tricked them into providing him with hundreds of millions of dollars in loans to fund bogus Latin American licensing deals with Netflix Inc. and HBO.”

From mid 2015 to late 2019, “JJMT Capital provided financing to Horwitz’s company 1inMM in exchange for promissory notes with a total principal value of approximately $485 million, Bloomberg stated. Horwitz’s company still allegedly owes investors “around $165 million before interest – including more than $42 million of their own money.”

On April 6, Forbes reported “federal agents in Los Angeles arrested Horwitz and accused him of running a Ponzi scheme that securities regulators said totaled $690 million. The movie-licenses and the deals with HBO and Netflix were bogus, federal prosecutors said, adding that by far the largest source of investor funds that came into the Ponzi scheme was raised by JJMT.”

What was so appealing about this apparent fraud? It combined Hollywood sizzle and outlandish returns. Promissory notes are often used in scams to promote above-market interest rates that are not available in legitimate investments. There was also a “story” behind the fraudulent notes. In the summer of 2015, Forbes added, Horwitz sent investors “an annual report touting 1inMM had acquired and distributed 49 films without incurring a single loss in the process. He said HBO and Netflix were hungry for content. For a personal touch, Horwitz also sent his college buddies a bottle of Johnny Walker Blue Label scotch with the annual report.”

Another element of this scheme is what regulators call “affinity” fraud. Many of the investors all knew Horwitz – and trusted him with their money. This is where many scams begin, often in church, community, or ethnic groups. When people know each other, they tend to apply less scrutiny to things like annual reports, especially when they promise outrageous performance.

“They thought this was their golden goose. I had no idea the scale of it,” Adam Ferrari told Forbes. He is a petroleum engineer who invested in nine of Horwitz’s notes through JJMT, lost about $100,000 and has filed a lawsuit against JJMT. “My frustration with the JJMT group is they had a fiduciary duty to vet this guy in L.A. and they didn’t do it.”

If you lost money in a Ponzi scheme or other investments recommended to you by a financial advisor, you may have a claim to pursue through FINRA Arbitration or through litigation. Please contact Stoltmann Law Offices, P.C. at 312-332-4200 for a free, no obligation consultation with a securities attorney. Stoltmann Law Offices is a contingency fee law firm which means we do not get paid until you do!