Ponzi schemes, a relatively famous form of investment fraud, are problematic for many different reasons. They undermine the faith of investors by making people constantly worry about fraud. They can also cost individuals, investment funds and businesses millions of dollars when they finally collapse.

Named for one of the earliest and most famous examples of this specific kind of business fraud, the Ponzi scheme can leave investors with nothing. Although those who buy into a Ponzi scheme earlier often profit as the people running the scheme allocate new investments to pay off prior investors, there will inevitably never be enough money to reimburse everyone who gets swept up in a Ponzi scheme.

Although commonly associated with the East Coast and large financial institutions, a recent and still-developing case here on the West Coast highlights how Ponzi schemes and investment fraud could affect industries beyond just mainstream banking.

There is a federal investigation related to an alleged entertainment investment scheme

Streaming videos are one of the most frequently consumed forms of media in the United States. The market and demand for such content have exploded in recent years. There is a constant demand for fresh content on mainstream streaming services, and an aspiring actor may have used that to defraud hundreds of millions from investors.

Allegations from the Securities and Exchange Commission (SEC) include that Zachary J. Horowitz and 1inMM Capital, LLC tricked investors into putting money into his company by alleging they had developed relationships with HBO and Netflix for the distribution of upcoming films produced by the studio and that the company held licensing rights to properties these platforms had agreed to distribute.

Unfortunately for the investors hoping to earn a return by backing movies set to release to major audiences, neither the actor nor the LLC has any formal relationship with these major distribution platforms or the rights to specific, already-contracted films according to the SEC.

Financial crimes can have a devastating impact on victims

Investment fraud like running a Ponzi scheme can devastate individuals and create widespread skepticism about authentic investment opportunities. The SEC announced its investigation last month and will potentially pursue enforcement actions against those responsible for this situation.

Others, like the attorneys here at The Law Offices of Jeffrey A. Feldman, have begun actively investigating this situation to help those affected by it take appropriate action. Those who believe they have a claim related to this fraud investigation can contact our office for information about their rights.