What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing. You might think that, after the high profile cases of bernie madoff and other ponzi schemes, people will become more aware and know that if a proposed investment return sounds too good to be true, it probably is but greed and the tendency to suspend disbelief is a part Of human nature and that will never change even to this day, the sec uncovers massive ponzi schemes worth tens or even hundreds of millions of dollars on an almost monthly basis. Ponzi schemes peaked around the time of 2008, with bernie madoff and alan sanford, but u.s investors have still lost more than one billion dollars every single year since then, in similar scams, any successful ponzi scheme has two key characteristics. Firstly, they offer abnormally high investment returns to entice prospective investors.

Secondly, the organizer of the scheme has to have some credibility so that people think they're legit often they claim to use obscure and exotic investment strategies. This makes it more believable that they can achieve extraordinary returns. Today, we're looking at an alleged 690 million dollar ponzi scheme, orchestrated by a hollywood actor by the name of zach avery zack avery was born as zack horowitz in berkeley california. In 1986.

he played football in college, but an injury derailed his hopes of joining the nfl. He eventually moved to hollywood in the hopes of making it big as an actor and changed his stage name to zach avery. The acting industry is very competitive and only a tiny percentage of aspiring actors achieved any serious success throughout the mid-2010s. He landed roles in a few d-list movies that weren't shown in major theaters.

He also got an uncredited role as a medic in the 2014 hit movie, fury which starred brad pitt. By this point it became apparent how difficult it was to rise the ranks in hollywood. For every brad pitt there are thousands of young actors who will only ever play peripheral roles and scrape by on a near minimum wage salary. But zach wasn't about to give up on his ambitions.

In hollywood, he thought a better way to make money is to produce movies instead of just acting to this end, he co-founded one in a million or one in mm productions with the half-hours brothers who were already established players in the movie production industry, one in mm Produced small films, starring up-and-coming actors, one of their biggest films was a horror movie called hell is where the home is which starred zach avery as one of the main roles. Unfortunately, the movie was a complete flop. It got a 5 out of 10 rating from imdb. A 42 rating from metacritic and a 60 rating from rotten tomatoes.

Only 66 percent of google users like the movie, which is really bad because viewer reviews are usually more forgiving than professional critics. In light of one in mm's failures at movie, production zack thought of a new way to make money in 2015. He started one in mm capital, which was in the business of buying film rights and selling them to hbo and netflix at huge profits. To be clear, one in mm capital was separate from one in mm productions.

There is no indication that the havelis brothers had any involvement in or knowledge of 1 mm capital's activities. Zack's pitch to investors was simple. He would buy up regional movie rights from various owners and sell them to netflix or hbo for a huge profit. According to the sec, he promised investment returns in excess of 35 percent.

He claimed that the investments were safe, because one in mm capital would receive confirmation from netflix or hbo about how much they would pay for their rights before they spent anything acquiring them. This seems like a pretty good deal. 35 returns with no risk. This should have raised red flags from the beginning.

If netflix was willing to pay a fixed sum of money for the rights to a movie, then why wouldn't they just go and buy it directly from the movie's owner? Why would they need to pay zack avery's company 35 to do it for them? Surprisingly, the investors in one in mm capital never asked this question and the fund grew to almost 700 million dollars. Part of this is because zack avery forged documents, supposedly from netflix and hbo, which showed that these deals were legit. Many of these documents were signed by netflix or hbo employees who did not exist, and while he was a dealers actor, he did have involvement in hollywood. So it seemed somewhat plausible that he would have connections in the film industry which would allow him to find these deals.

According to an affidavit reviewed by vice news, zak told investors which movie rights won in mm capital was buying. One of the movies was a 2008 romantic comedy called the hottie and naughty featuring paris hilton. It got a six percent rating by rotten tomatoes and only 43 of google users liked the film by all accounts. It was a complete flop.

It cost nine million dollars to produce and only made 1.5 million dollars in global box office revenue. It was basically just a vanity project by paris, hilton as it was produced by paris, hilton entertainment. It seems laughable that netflix would want to buy the rights to a movie like this, and it just goes to show how little due diligence, one in mm's investors did, as they shelled out hundreds of millions of dollars to finance these supposed deals. Of course, the whole operation was a complete scam.

They had no relationship with either netflix or hbo and never bought any movie rights. According to the department of justice, zach avery used the money to fund his own lavish lifestyle, including the purchase of a 6 million mansion near la he also bought high-end automobiles trips to las vegas, luxury watches and flights on private jets. He would use money from new investors to pay the principal and interest payments to existing investors. Of course, this type of scheme necessitates the scheme to grow indefinitely, as the promised investment returns compound exponentially.

According to a department of justice complaint, the scheme started to run out of money in 2019 and they started to miss scheduled payments to investors in a desperate attempt to keep things afloat: zach fabricated, correspondences with netflix and hbo employees, which gave excuses as to why the Payments were late, but this could only last so long. On april 6, 2021 zack avery was arrested and is being charged with wire fraud by the us attorney's office in the central district of california. In total, the scheme raised over 690 million dollars, the sec enforced, an emergency asset freeze on all of zach avery's accounts, so they can hopefully return some of the money to the victims. But a lot of this money has already been spent by zack personally or paid out to early investors who got in on the ground floor.

Zach now faces up to 20 years in prison, of course, he's innocent until proven guilty and is entitled to his day in court, but based on the evidence put forward by the sec and department of justice. Things are not looking good for him. Obviously, the status part of the story is the victims who lost hundreds of millions of dollars, but another sad aspect is the fact that zach's acting career actually started to have some success. In recent years.

In the early years, he mainly played unaccredited generic roles, such as a thug in ged, an unaccredited medic in fury demon, number three in feign and so on, but from 2017 onwards he played legit roles that were credited in a significant part of movies. He played the main character in the 2020 film last moment of clarity, while the reviews of this movie were mixed, it's a legit motion picture and was produced by lionsgate in 2020 and 2021. He starred in four movies playing significant roles. His acting career has been all but destroyed by his legal troubles, but had he been able to keep up performing, he might have been able to eventually fulfill his original dream of becoming a famous actor had his acting career showed more promise in the early years.

It's possible that he wouldn't have felt the need to orchestrate his one in mm scheme which ultimately cost him everything every year. There are countless ponzi schemes operating and unsuspecting investors lose billions of dollars. If you're ever getting pitch an investment opportunity, it's always important to check whether the investment company is registered with a financial regulator such as the sec or finra also run a sanity check as to whether the proposed returns seem reasonable. The more exotic or obscure the investment strategy is the more likely it is that it's a scam.

In 2021, the number of investment scams has exploded with most of them centered around the largely unregulated cryptocurrency space. So now more than ever, you have to be extremely careful about who you give your money to alright guys that wraps it up for this video. What do you think about zach avery's alleged ponzi scheme? Why do you think so many investors fell for it? Let us know in the comments section below if you enjoy this content, make sure to subscribe, so you don't miss future uploads as always. Thank you so much for watching and we'll see in the next one wall, street millennial signing out.

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