This case was last updated from PACER on 06/04/2021 at 09:32:29 (UTC).

Securities and Exchange Commission v. Zachary J. Horwitz et al

Case Summary

On April 5, 2021, the Securities and Exchange Commission (“SEC” or “Plaintiff”), represented by Kathryn C. Wanner and M. Lance Jasper, attorney at the SEC’s Los Angeles Regional Office, filed a civil enforcement action against Zachary J. Horwitz (“Horwitz”) and 1inMM Capital, LLC (“1inMM”) (collectively, “Defendants”), seeking injunctive relief, disgorgement of all ill-gotten gains among other reliefs for offering fraud and Ponzi scheme in alleged violation of the federal securities laws. This case was filed in the U.S. District Court for the Central District of California with Judges Gail J. Standish and Christina A. Snyder presiding. 

 

In its complaint, the SEC alleged that “Since March 2014, until at least December 2019, Defendants raised over $690 million from investors by selling promissory notes issued by 1inMM, using fabricated agreements and fake emails with prominent third party companies with whom Defendants had no actual business relationship. Horwitz then misappropriated and misused the offering proceeds, including for the purchase of a luxury home he has recently listed for sale.” Furthermore, it was alleged by the SEC that “Defendants represented that the purpose of the offering was to finance 1inMM’s acquisition and licensing of distribution rights in specific movies, primarily from Latin America, to major media companies, mostly Netflix or Home Box Office (“HBO”). To persuade investors to purchase the promissory notes, Horwitz made materially false and misleading statements, including that he had experience acquiring and licensing distribution rights in movies to HBO and Netflix, and that he had, in the past, used the profits from those transactions to repay investors in 1inMM’s promissory notes. Horwitz described himself to investors in company documents as bringing “a wealth of knowledge, reputation, and experience.” Defendants also claimed that HBO, Netflix, and other media corporations were 1inMM’s “Strategic Partners.” 

 

The SEC further alleged that “Defendants promised returns in excess of 35% on 1inMM’s Promissory Notes. In reality, 1inMM and Horwitz had no relationship with either HBO or Netflix and never licensed any movie rights to either company. Instead, Horwitz misappropriated investor funds to pay putative returns on earlier investments.” “In late 2019, Horwitz began defaulting on outstanding notes issued by 1inMM, leaving investors with more than $234 million in unreturned principal. From early 2020 to at least March 2021, Horwitz has been lulling investors with false promises that he and 1inMM are on the verge of reaching agreements with HBO and/or Netflix, and would soon be able to repay investors from the proceeds of those settlements.”

 

There are two claims for relief laid down by the SEC. The first claim is for the alleged fraud conducted in connection with the Purchase and Sale of Securities, hence, for the alleged violations of Section 10(b) of the Exchange Act and Rule 10b-5. The second claim for relief is for the alleged fraud conducted in the Offer or Sale of Securities, hence, for the alleged violations of Sections 17(a) of the Securities Act.

 

In its prayer for relief, the SEC has requested the court to issue a temporary restraining order; a preliminary injunction; an asset freeze; accounting and document preservation; permanently enjoin the Defendants from violating the laws alleged in the complaint; order disgorgement of ill-gotten gains derived, together with prejudgment interest thereon; and order to pay civil penalties under Section 21(d)(3) of the Exchange Act, 15 U.S.C. § 78u(d)(3), and Section 20(d) of the Securities Act, 15 U.S.C. § 77t(d).

 

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Case Details Parties

 

Case Details

  • Case Number:

    2:21-CV-02927

  • Filing Date:

    04/05/2021

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Finance - Security/Commodity/Exchange

Judge Details

Referral Judge

Gail J. Standish

Presiding Judge

Christina A. Snyder

 

Party Details

Plaintiff

Securities and Exchange Commission

Petitioner

City National Bank

Defendants

Zachary J. Horwitz

1inMM Capital, LLC

Attorney/Law Firm Details

Plaintiff Attorneys

M Lance Jasper

Attorney at US Securities and Exchange Commission

444 South Flower Street Suite 900

Los Angeles, CA 90071

Kathryn C Wanner

Attorney at US Securities and Exchange Commission

444 South Flower Street Suite 900

Los Angeles, CA 90071

Petitioner Attorney

Joshua G. Hamilton

Attorney at Latham and Watkins LLP

10250 Constellation Boulevard Suite 1100

Los Angeles, CA 90067

Defendant Attorneys

Michael J. Quinn

Attorney at Vedder Price LLP

1925 Century Park East Suite 1900

Los Angeles, CA 90067

Ryan S Hedges

Attorney at Vedder Price

222 North Lasalle Street Suite 2600

Chicago, IL 60601

Docket Entries

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