ENCORE: The Hollywood Ponzi Scheme | Once Upon a Crime in Hollywood | Part II
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Wondery Plus subscribers can listen to Scamfluencers early and ad-free right now. Join Wondery Plus in the Wondery app or Apple Podcasts. Have you ever been an actor? You know, I was cast in a school play of Mice and Men. Uh-huh. And you played? I played the old black man because no black people auditioned for it. And I got the role by default. The play was canceled. Okay.

So yeah, I do know a thing or two about showbiz. Right. So you understand the need for attention that actors inherently have. Right. Well, Zach Horwitz craves it too. And he's going to do anything to chase that high. So it's June 2017 and Zach has been running his Ponzi scheme for around three years. The

The whole thing depends on hooking new investors. Without that, it all falls apart. The Ponzi scheme, but also Zach's dream to become a famous actor. No more new investors, no more movies for Zach to star in. And no more fancy movie star lifestyle either. And Zach's feeling even more pressure to bring in more money now because he's about to become a father. Mallory is pregnant with their first child.

So he's constantly pitching investors and taking as many meetings as he can. And one of those meetings is at the Four Seasons Hotel in Beverly Hills. That's also where he got married. So real full circle moment for him. Everything's coming up, Zach. He's meeting with a group of five investors from Las Vegas and California. They've given him a lot of money already. And Zach's got his sights on one man in particular, Jim Russell. Zach's meeting him for the first time.

And that's the guy who gave Zach like more than half a million dollars for that movie licensing deal, right? Yeah. Jim had some reservations about investing, but ultimately he went ahead and he's come to LA to learn more. If Zach can convince him that these deals are a sure bet, he can open a pipeline to a lot more money.

And we don't know exactly how this meeting went down, but I can't help think about Zach and Jim meeting. There's like Zach, who's this buff wannabe actor with his like fancy watches and a permatan. And then Jim is obviously very wealthy, but he's still kind of a blue collar guy. Like he's an executive at a company called Performance Steel, which sounds like

a weightlifting supplement brand. And like Zach's swaggering into the hotel bar to meet Jim and the rest of the investors. And he's probably late and he's like, oh, you know how LA traffic is. And so later when they head to a nearby restaurant for a bite, Jim sits next to Zach at dinner and he peppers him with questions about the movie deals.

He wants to know, how do they actually turn a profit? Yeah, and Jim's a legitimate businessman. I'm hoping he's sussing Zach out and he figures out that Zach is a liar.

When it comes to making a pitch, he's got nerves of steel. So Zach plays it really cool. He answers calmly, all but telling Jim that actually he doesn't need his money. After all, he made $20 million last year. And Zach can tell that Jim is impressed by the number. He smells blood in the water.

So, Zach breaks down the details. He tells Jim that when HBO buys the rights to distribute a movie in Latin America, they guarantee a minimum payout.

They also pay royalties and they give him an informal promise to license each movie before he buys it. And that's why it's such a secure investment. So just to make sure I have this straight. Yeah. The idea is that Zach has such a great relationship with HBO that he can be like, hey, if I buy this movie, will you license the rights? And they'll be like, of course, go ahead. We want it. And we guarantee we'll pay you this. Yeah.

That's impossible. Yeah, this no-name actor who owns this production company that hasn't really made any big blockbusters somehow has this sweetheart deal at HBO. Oh my God. Yeah, listen, it's total nonsense. And Jim asked Zach if HBO has ever changed its mind about buying a movie. And Zach tells him, no, they've never pulled out of a deal.

And hey, even if they did, they'd just find another way to make sure his investors get their payday. For example, he can always sell the rights to another distributor. I like to picture Zach studying Jim's face and just waiting for that beautiful moment, the one that he's been trained to spot as a salesman, where Jim goes from skeptical to curious to someone who wants to believe. And then when the server comes by, Jim orders another round. You know what that means.

He's in. No, Jim, I was rooting for you. Well, Zach's future just got a whole lot richer. He can provide for his family and he can keep living out his movie star dream for now. But the stress of all that lying, the pressure to constantly bring in new investors, it's starting to wear on Zach. He's trying to keep it together, but cracks are starting to show.

From Wondery, I'm Saatchi Cole. And I'm Sarah Hagee. And this is Scamfluencers. In our last episode, Zach started a Ponzi scheme around movie licensing deals. He also made friends with a pair of filmmakers who helped him get roles in their movies. Yes, the unauthorized Joker short film. Exactly. And to keep up the act, he's got to keep the cash flowing. This is episode two, Once Upon a Crime in Hollywood. ♪

So Zach's riding high off the Four Seasons meeting. Getting Jim on board is a huge win. And just a few months later in August 2017, Zach scores another big win.

He and his film production business partners, Diego and Julio Halivas, as I'm sure you recall, Sarah, they announced that One and MM has raised $5 million to make new films. Okay, I'm so sorry. I thought the whole pitch was film licensing. Yeah, you're right.

Zach hasn't been asking investors for money to make movies. He's been pitching them on licensing deals, which is a totally different thing. Yeah, give me money to make low-budget horror movies is not going to get someone like Jim Russell to open his wallet. Be like, hey, I have this B movie I really want to make. Yeah, so probably not.

Deadline reports that 1&MM has $5 million in the bank and two films coming up. And both of these movies feature our favorite untalented beefcake, Zach Avery, who up until now has had some bit parts here and there.

And there's something really weird about the article. It mentions both Zachs as if they're two totally different people. So in the photo, Zach Horwitz is standing next to Julio and Diego, and he's mentioned as a co-founder of One in MM. And he's raising funds to produce these movies that Zach Avery is starring in. There is no hint that this is actually just the same guy. He's like fully Jekyll and Hyde. There's like handbrake.

Hannah Montana and Miley Cyrus going on here. Like, enough. Well, the very next month, in September 2017, Zach and Mallory welcomed their first child, Jackson. And having a newborn isn't exactly compatible with Zach's job, or his two jobs.

But he can't give up on his dreams. So he proposes that Mallory quit her job instead because he says they can afford it. This guy, honestly, he does not have one job. Neither of his jobs are real and he's trying to get Mallory to quit her job. Yeah. And so obviously the idea of quitting makes Mallory nervous.

She didn't grow up rich and she's had a job since she was 14. For the last few years, she's been working at the Ken Pavis Salon in West Hollywood. And stars like Megan Fox and Eva Longoria are in and out every day. And the salon itself is pretty slick. It's got these sleek black styling chairs and gold framed mirrors and a lush courtyard. It is very much the place where I would get ill-advised bangs.

Anyway, Mallory has a dream job. And also, I can't stress this enough. It's a real job. At this point, it's clear that Mallory has her own dreams. And even though a lot of money is coming in, I don't think she wants to give that up to become a stay-at-home mom. And Zach, he knows that he's asking her to give up a really good job with a promising future for a scam. But he insists that they can afford it.

He says he's made some lucky investments. Actually, he seems to be doing quite well. Their lifestyle has become increasingly lavish. Mallory presses Zach about it sometimes. Can they really afford that fancy new car? What about the luxury watch subscription service? And do they really need to take private jets to Vegas? You know what? The watches are one thing, but the planes, that's some real big baller shot caller stuff. Yeah.

Like, it's insane to me that he's doing that. He has no jobs and he's never been in an actual movie. Yeah. For real. Right. So to recap, zero real jobs, but private jets. And Zach obviously controls their finances. So Mallory is in the dark about how much money they really have beyond what she herself is making. And when Mallory hesitates about quitting her job, Zach drops the hammer.

He says that they have $40 million in the bank. Okay, that's an amount of money where she should be asking way more questions than if they were broke. Yeah, it's the kind of money that's like probably stuffed in the pillows of their couch. Yeah, that's not... Okay.

But you know what? I guess in all fairness, like if I was married to somebody and he told me we had $40 million liquid just sitting there, I would probably feel differently about leaving my job behind just to be like rich and white. What would you buy with that? A whole new face and body. Yeah, you would just be a different person. Yeah. I think I would buy a toilet seat that warmed my butt. I would give a lot of money to charity.

Oh, that sucks. You can't change your answer to charity after I said like hot toilet seat. That's not fair. I'm sorry. Well, anyway, Zach tells her that he can provide for her and the baby. So will she do this for him, for their family, for newborn baby Jackson? No.

You know what? I'd quit my job if my husband that I trusted said he had $40 million in the bank. Yeah, I mean, I guess I'd probably do the same. But Mallory doesn't know it yet, but she's about to become even more dependent on Zach's lies. And she's not the only one that he's got wrapped around his finger.

Sarah, things on the business side really heat up in the following month. Do you remember our friend Ramek? He was the super gung-ho investor in Las Vegas who convinced his friend Jim Russell to get in on Zach's movie deals. Yeah, he's the tennis friend who might ruin Jim's whole life. Well, I actually have a picture of Ramek that I absolutely have to show you. Can you describe it for us? Yeah, let me take a look here. Oh, okay.

- Okay, I wasn't expecting him to look like this. He looks moneyed. He's wearing like a wine colored velvet jacket. He's wearing kind of fancy leather shoes. And he is with an absolute 10, who I desperately want to be on one of the Real Housewives franchises. If there's a Real Housewives of Las Vegas coming up, I want her on it. - He really does look like a house husband. That's a really good point.

And Ramek is thirsty.

Ever since he and Jim met with Zach in LA a few months ago, Ramek has been champing at the bit to invest more. And he's pushing Jim to get in deeper too. So the same month that Jackson is born, Jim and Ramek set up a company with the other investors in the Las Vegas group. This way they can pool their funds to make bigger investments. And they call it, I swear to God, this is what they decided to call it, the movie fund. No. Yes. No.

I mean, creativity is not like a highly valued trait amongst investors. Then hire someone to do the branding. They should have called us. Well, right after they formed the company, the movie fund investors buy four more movies for a total price of $2.2 million. That is a lot of money. But they stand to make $400,000 in profits from the deal. Wow. I mean, that's a lot.

especially for all these things that aren't real. None of this is real. So much money for fake shit. So obviously, Jim wants to track his investment. A couple months later, Jim asks to see one in MM's quarterly financial statements, but Zach says he can't share them. And I have the response that Zach sends back to Jim. So Sarah, do you want to read it? Okay, here it goes.

Yeah. And you can tell that Zach is a little freaked out by Jim's request. But as you can imagine, Jim is not happy to hear this. About 20 minutes after hearing from Zach, he writes his own email to Ramek. Do you want to read it?

It goes, Well, I

I really like how Jim is starting to get feisty, but Ramek, on the other hand, he is still a true believer in the house of Zach Horowitz. - No! - Yeah. And here's Ramek writing back to Jim. I'm gonna read this one. I'm gonna spare you the indignity. "It would have taken him," him meaning Zach,

These are the words of someone who wants to believe a lie so badly. Like, he's created this logic where if Zach showed them proof, it would actually be a lie. Yeah.

If there's one thing we're learning is that there's always someone willing to go through incredible mental gymnastics to make a scam feel possible. And Ramek is so in.

But he and Jim go way back. So Ramek pulls together some documentation to soothe Jim's anxiety. He finds a corporate registration for 1&MM, and Ramek gets bank statements from another investor in their movie fund group. And those show that Zach has been paying him back on time for more than two years. But get this, Ramek tells Jim that Zach even put him in touch with someone at HBO to confirm the deals.

Okay, let me guess. He faked a bunch of emails from HBO. Yes, he absolutely did. I think Zach has proven that he will not hesitate to fake communications with multi-billion dollar corporations. Okay, so did he create someone?

Oh, it's so bad. He faked a bunch of emails. He pretended to be Jennifer Bowen. She's a real senior VP for international distribution at HBO. And I'm sure she is absolutely thrilled about this. So does Jim end up believing all this?

Well, he's definitely concerned that something stinks here. So he actually writes back to Romick. Okay, why don't they just get on the phone? I mean, if they did that, then I wouldn't have all these very nice emails to read to you on a podcast. Yeah, I feel like they did that to be really considerate of us. They knew we'd be doing this in the future. Everything is for us. So here's Jim's response to Romick.

I am still bewildered as to why he doesn't just send the financials. It is so much easier than all this crap. Red flag. Thank you, Jim. Finally, someone is saying the words red flag. Well, still, Zach is paying them back on time. So even after all of that, Jim goes ahead and wires the money for more deals. Ramek reassures him. This is the goose that lays the golden egg.

Let's just hope they keep coming month after month. So it's early 2018 and Zach's life seems to be coming up roses on all fronts. He's got a new baby at home and a new film to promote. And it's one in MM's first feature. Oh my God. I actually forgot there were real movies involved in this. Ooh, ooh, buckle up. This one is a sci-fi film about time travel called Curvature. Doesn't that sound sexy? No.

Okay. Well, it's a step up from their previous projects and they even have a big star on board, Linda Hamilton. Get it.

Get out of here. Linda Hamilton from Terminator. Do you know two Linda Hamiltons by chance? I just wanted to make sure it wasn't like Linda Hamilton with a Y because that seems like something Zach would actually do. It does, but it is that Linda Hamilton, I promise. And she doesn't have a very big part. It's more of a cameo, but clearly it's a huge get for Zach and the brothers.

Zach plays an engineer who's trying to help his colleague understand why her future self has traveled back in time to change the present. And in this role, Zach has longer hair. He's dressed up in a button down under a cardigan and he's got these big glasses on. He's like a jock trying to go geek. You need a doctor, someone who can explain what's happening to you. I don't think a doctor can explain what's happening to me. The movie is released widely enough to be reviewed by some major publications.

But these reviews are not kind. Here's one from The Hollywood Reporter. Well, this clearly isn't like Oscar bait. And Diego Halivas, the director, he does some press for the movie, including some morning TV. Diego Halivas, the director,

Diego talks about Zach's co-star in the film. In the movie, she does double duty. She plays her present day character and her future self who's traveled back in time. At one point, you got two versions of the same character. And there's days where Lindsay would have to play two different characters. So she would just have to internally find a switch and find, you know, how to play one versus the other one.

All right, two versions of the same character. Sounds a bit like our boy, Zach. Well, there is Zach Avery, the actor, and then there's Zach Horwitz, the con man. But it's all the same guy. It's the same guy who's lying to his wife, his best friends, his business partners, and his investors. It's the same guy who will do anything to keep them from finding out that he's running a Ponzi scheme. ♪

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In March 2018, right after his sci-fi movie comes out, Zach and Mallory go house hunting for an even bigger place that can accommodate a growing family. Why do I have the feeling that Zach's idea of bigger is like gonna be this Kardashian Calabasas home? Yeah, I mean, you're not far off. They end up finding a place in Beverlywood. It's got good schools and private parks and it's walking distance from Beverly Hills. And this house is indeed huge.

Huge. Six bedrooms, eight bathrooms. Wow. A toilet for every butt. Presumably some of them heated. Eight bathrooms. I cannot imagine eight bathrooms. Like what would your life be like? Would you use a different toilet every day? Yeah, I mean, the mind truly reels.

There's a pool with a cabana, a home gym, a screening room with theater seats, a wine cellar that can hold a thousand bottles. So this is peak rich nonsense. Well, the price is very reasonable. I mean, the house is listed for $5.9 million.

And they put in an offer in cash. And this cash, by the way, is obviously investor money because of course it is. Wow. And to really settle into their new digs, Zach dropped $700,000 on a celebrity interior decorator. No, I think that's a typo. I think you mean $70,000. No, I'm saying $700,000. Okay, mad respect. The scammer is getting scammed. Well, Zach likes living large on money like that.

And just to remind you, it comes in part from his longtime friends and their relatives. This is people's retirement accounts. And he's even getting some kind of legit movie roles as well. Around this time, he has a role in a movie that he didn't produce. It's a film about the Soviet ballet dancer Rudolf Nureyev called The White Crow. It shoots in Serbia and it's directed by a little known person named Sarah. Are you ready for this?

No. Ralph Fiennes. Get out of here. I swear to God. I'm genuinely shocked that Ralph Fiennes is being mentioned in this story. Yeah, the dark Lord himself, the feature of my 2002 made in Manhattan sexual awakening. Ralph is here. English patient. Made Manhattan. Okay.

Zach got the job through a friend, and it's a pretty minor part, but hey, everything's coming up Milhouse. Zach always knew he had what it takes to make it in Hollywood, or at least in Beverlywood. And now he's ready for his starring role.

Okay, Sarah, it's 2018 and Zach is filming a movie called Last Moment of Clarity. Amazing. It's a much meatier role than what he's done in the past. And in this movie, he plays a guy who saw his fiance get murdered by the Bulgarian mob, which as I'm sure you can imagine has fucked him up quite a bit. I saw something that I wasn't supposed to see. And they sent those two guys over to our apartment. Georgia! Georgia!

I've been hiding in Paris ever since. And here, finally, a kiss from Daddy. Sam, you must get out there and do something. You waste all your time on that internet, cutting up those newspapers and putting them together. Whatever it was, it's been over. This is blowing my mind. Like...

Coming from that audition we first watched, I never in a million years thought anyone would cast him in a speaking role. And now I have to watch him act alongside Brian Cox. I do like imagining Brian Cox holding himself back from like getting in a fistfight with Zach because I'm sure he absolutely hated him. No, no chance anyone liked him.

Well, they shoot in Paris and this is huge for Zach. It would be hard for me to not ask, what are the reviews like? Well, one review says, Avery gives such a dull, unappealing performance that the movie has a void at the center of its story. Oof. And here's a quote from The Guardian.

That is harsh, but true. Yeah. You don't even know how true. Because Last Moment of Clarity is produced by Andrew Levitas.

a friend of 1&MM, and Levitas has a production company called Rogue Black, which Zach co-founded and he channeled $21.5 million to. Okay, this makes me feel a little bit better because now I know Zach didn't get this based on merit. Yeah, the world is not a meritocracy, Sarah. No. So neither Levitas nor Rogue Black are in legal trouble related to Zach's Ponzi scheme.

But yes, these acting roles are very much pay to play. I am at a true loss that this guy still wants to be in movies. Like he could quietly be Ponzi-ing, but he wants to be out there. Yeah, he does. Because Zach is working with big name actors and that's really important to him. His dream of Hollywood stardom feels more within reach than ever before.

So Zach's acting career may be taking off, but there are some signs that cracks are starting to show, at least in his psyche. Zach sits down with a website called The Hollywood News to talk about his character in the film. And it's a little eerie, like he might as well just be talking about himself. Let me read you a quote.

We all, on a daily basis, may do things or have actions that we're not necessarily proud of. A lot of the time, what we do is we just push it down and go to the surface level until we get caught. Then when you get caught, you feel so bad. But before that, you're just going about your life.

The interviewer asks Zach, what do you hope audiences take from watching this movie? And he says, it's kind of putting the mirror up to your face and having a little bit of self-reflection. That your actions do have consequences and sometimes they're absolutely horrible, like in the movie, and sometimes they're not as bad. But you have to be careful what you do.

Okay, Sachi, this is so weird. Do you think he's starting to feel guilty about scamming literally every single person around him? Like, I don't know, maybe he's doing some self-reflection. Babe, I don't know. I mean, maybe we're just projecting because it's comforting to believe that people can and will feel guilt when they do something wrong.

Or maybe this is just what happens when you carry around a big secret and you can't tell anyone. And even if he is starting to feel ashamed, we have to look at his actions. He's been hurting real people and for a really long time. It is so interesting to hear these quotes because it's kind of like, oh, he's fully compartmentalizing the harm he's been doing for years. Yeah, well, because of his lies, it isn't just Zach's emotional state that's crumbling.

After years of living high on the hog, he's about to come face to face with all the damage he's done.

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So to recap, by 2019, Zach has been running his Ponzi scheme for five years. And the reason investors keep giving him money is because he keeps paying them back on time with huge returns. So they don't even realize they're being scammed,

until the day the checks stop coming, which happens around Thanksgiving 2019. You know what? I actually can't believe it took five years for the checks to stop coming. A long time. It's a lot of money to actually get before it starts to fall apart. And on Thanksgiving? And on Thanksgiving. Okay, so here's how I picture this moment unfolding. Go with me here. It's time for my favorite thing, setting a scene. All right, I would love to see this. Join me. Join me on this journey.

So Zach is in his home office and there's a framed print on the wall behind him. And it looks like something you'd buy on Etsy. There's a motivational quote on it. Do you want to guess what it says?

I have a feeling it says live, laugh, love. It does not. It says when the odds are one in a million, be that one. It's his company motto, remember? Yeah, he has a motto of his fake company on his wall. That makes, that's exactly what I expect with Zach. Yeah, he doesn't seem too far off.

And you can even see it in the background of some of his interviews. And at this point, he's collected $690 million from investors as part of this scam. But now he's run out of money to pay their returns. He has a toddler, a $5.7 million house, and a $1.8 million Amex bill. And Mallory is pregnant again.

But Zach knows that he'll find a way to get through this. He has to. After all, when the odds are one in a million, he'll be that one. So he does what he knows how to do. He lies. He starts texting and emailing his investors. The

The payment delay isn't his fault, he says. It's HBO. They've been paying him late. They've breached their agreement. Sure. But also, that lie can really only sustain you for so long. Yeah. I mean, it's very Anna Delvey, you know? There's been an issue at the bank.

He tells them he's been working on an agreement with HBO. At this point, even Zach's Chicago friends, his college buddies, don't seem to understand what's going on. Remember Jake Wonderland, his college buddy who left his job in finance to raise funds for 1&MM? Yeah.

Well, Jake writes an email to all the other people sending him money to invest in Zach's movies. Oh, gosh. And yeah, all these people are just regular folks who put their life savings into these movie deals because Jake told them it was a sure bet. And so Jake's company emails them right around Christmas. Do you want to read it? Yeah.

He goes, first, let me be abundantly clear that your investment is completely safe and nothing is amiss other than a timing issue. Oh, gosh. I wonder if he actually means that or if he's starting to suspect he's been scammed. Like, I do get that a lot of pride is at stake. You know, he's the one who trusted Zach. All these people trusted him because he trusted Zach. Like, he has to believe that it will come through.

But also, they're old friends, right? This isn't just like some guy he knows. This is like his old buddy. These guys went to each other's weddings. They go way back. Yeah, now I'm thinking about like Jim Russell out in Vegas. Like he must be so livid to hear his payment has been delayed. Like I knew it. Yeah, Jim is not happy about this. Not at all.

And now he's finally going to follow up on all of Zach's red flags. Oh my God. Come on, Jim. We're rooting for you. You can do it. You can bring Zach down. We need Jim to be our hero. Please, please, Jim.

Sarah, this might be a controversial stance, but if I had just defaulted on my investors and I owed them millions of dollars, I perhaps would not run around doing interviews with reporters. No, no way. I would just honestly run away. I would become a fugitive in some country that has no extradition agreement with the United States. Yeah. Well, neither of us are Zach, so his approach is markedly different.

Just a few weeks after he stops paying his investors, Zach talks to an Australian journalist. Her name is Lauren Yates, and she's an independent reporter who hosts a YouTube show called Rave It Up. And today we're going to be chatting over Skype with American actor Zach Avery. Zach, welcome to Rave It Up. It is a pleasure to have you on the show today. How are you going? Thank you so much. Everything's going very well. Happy to be here. Actually, everything is not going well for Zach.

He owes his investors millions of dollars. But on Skype, he's all smiles. He's wearing a backwards baseball cap and a gray hoodie. He talks to Lauren about finding his creative passion, going on auditions, and working with actors like Kate Beckinsale and Olivia Munn. You know, when the job's finished and you're just auditioning and waiting for that next gig,

Do you personally kind of stress about that, especially now with a family and looking after them financially? Do you have also another job on the side just to help yourself out? Yeah, no, I mean, thankfully I can support myself completely with acting as of the last couple of years, which has been great.

This is so rich coming from Zach. In what universe would anyone see how this guy lives and think like, yeah, this guy I never heard of has made all this money from acting. Yeah, he's affording all of his private jet trips from curvature. He doesn't even mention one in MM at all. And that's because that's Zach Horowitz's company. And in this interview, Zach Horowitz doesn't exist. Only Zach Avery, the up-and-coming actor balancing film shoots and fatherhood exists.

The man who talks about hustling to succeed against all odds. You're always thinking about the next job. You're always thinking about the next gig. And it's helped a little bit, honestly, having a kid because you can focus on that. You can say like, you know, that's what's really kind of important right now. And we're OK today and we'll figure it out. But reality is, is you got to buy the milk. You got to buy the diapers. So you have to work at some point. He's such a bad actor, but he's such a good liar that he could say this and sound convincing.

Maybe he is a good actor. Is that really where you're landing? Yeah, I think he can win an Oscar for playing Zach Avery. Maybe if there were Oscars for lying. Okay, back to the interview. Lauren wraps up with one final question. Knowing what you know now, what would you tell your 14-year-old self? Ooh, that's a tough one. I would tell him that...

Everything happens for a reason that you're going to go through trials and tribulations. You're going to do things that you think are leading you in the wrong direction, but they will all teach you something along the way that you'll use in the future and you'll be all right, kid. Don't worry about it. I mean, I think both of the Zaks need to worry about it. Big time.

And Zach Avery may be flying high, but for Zach Horwitz, shit is about to hit the fan. Investors are breathing down his neck. And his wife is about to find out that he's been scamming her all along. Okay, Sarah, it's early 2020, about a month after Zach stops paying investors back. And Jim Russell is pissed. You don't say.

Over the last few years, he's made 108 loans to Zach and won an MM for movie deals. And now Zach is in default. So finally, Jim gets his lawyer involved. Yes, Jim, get his ass. Well, the lawyer is going to get his ass. He sends a letter on behalf of the group. It reads, Dear Mr. Horwitz, my firm represents Movie Fund LLC regarding its demand for payment.

Essentially, he says 1MM's outstanding balance is $8,746,227.81. Oh my God, Zach owes them more than $8 million. Yeah, that's crazy. But you know what? He has $40 million in the bank. It's chump change.

Well, it gets worse. Interest accrues thereafter at $25,879.13 per day. Which means Zach owes them more than $25,000 for each additional day payment is late. And I'm not kidding.

And I'm really not great at math, but that's like a lot of money per day. - That is an insane amount of money per day. And I think Zach needs to sell some watches or rent out some rooms in his house. - Yeah, he probably will because the letter also says that Zach has five business days to pay before they take other action, like seizing his assets. - Oh shit, Jim is not messing around. - No, he's not.

And there are a few lines in this letter that I really love. One of them says, our client expressly reserves all rights and remedies at law, equity or otherwise. And then this next part is in all caps. Please govern yourself accordingly. Damn. Damn.

If I got a letter like that, I would be terrified. It's such a petty way to be like, get your shit together. I would get diarrhea on the spot. I would poop myself on one of those heated toilets for sure. Wow. But also I have to say, I thought about it and I have gotten an email that ended with govern yourself accordingly. And I looked at him the other day to remind myself. And it was just from some guy who wanted to sue me because he didn't like my tweets. I hope he wins.

Honestly, me too, because I have not learned how to govern myself accordingly. I'm going to bankroll that lawsuit. Please do. In any case, Zach is terrified when he gets the letter. But he tells himself he just has to buy some time. Because the other option is to lose everything. The life, the acting career, and the family he's built. And he can't let that happen. He won't. He still has some tricks up his sleeve.

For five years, he's run an incredibly successful Ponzi scheme. And now he's going to have to put his acting skills to the test in the most high stakes exchange of his life.

This is episode two of our three-part series, The Hollywood Ponzi Scheme. I'm Sachi Cole. And I'm Sarah Hagee. We use many sources in our research. A few that were particularly helpful were Michael Finnegan's LA Times article and Nathan Vardy's Forbes magazine story.

And just a quick note about our scenes. In most cases, we can't know exactly what took place, but everything in our show is grounded in research. Susie Armitage wrote this episode. Additional writing by us, Sachi Cole and Sarah Hagge.

Brian Taylor White is our producer. Charlotte Miller is our associate producer. Sarah Enni is our story editor. Our senior story editor is Rachel B. Doyle. Jen Swan is our senior producer. Our music supervisor is Scott Velasquez for Friesan Singh. Our audio engineer is Sergio Enriquez. Adrian Tapia provided audio assistance. Our sound design is by James Morgan. Our executive producers are Janine Cornelow, Stephanie Jens, and Marshall Louis for Wondery.

If you like Scamfluencers, you can listen to every episode early and ad-free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts. Prime members can listen ad-free on Amazon Music. Before you go, tell us about yourself by filling out a short survey at wondery.com slash survey.