The United States Securities and Exchange Commission has secured a final judgment in federal district court against Zachary Horwitz, an individual the SEC sued for allegedly orchestrating a $690 million Ponzi scheme.
The SEC’s enforcement complaint contends that Horwitz falsely represented to investors that he had a successful history of selling movie rights to two well-known media companies, Netflix and HBO, when in in truth, he never sold such movie rights and did not otherwise engage in business with them. Horwitz, per the SEC’s allegations, presented investors with fabricated contracts and electronic communications concerning the claimed Netflix and HBO deals, and promised investors profits of approximately 35%. The SEC further claimed in its court papers that Horwitz, in typical Ponzi scheme fashion, for several years used investment funds from new investors to pay “returns” to earlier investors. On an even more sinister level, the SEC also alleged that Horwitz misappropriated investor capital for his own personal benefit and use, namely buying a multi-million-dollar property and taking jaunts to Las Vegas.
The Court’s final judgment permanently enjoined Horwitz from future violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In addition to injunctive relief, the Court ordered Horwitz to pay disgorgement of approximately $62 million, which represents his ill-gotten gains resulting from his alleged fraudulent conduct as specified in the SEC’s complaint, along with prejudgment interest of around $11 million. However, because Horwitz was criminally indicted and ordered to pay restitution by the criminal court, the SEC disgorgement sum, and prejudgment interest amount were deemed paid-in-full by virtue of the criminal restitution order requiring him to pay over $230 million to his Ponzi Scheme victims.
Notably, the SEC did not impose a civil penalty against Horwitz, which is a standard financial remedy in most SEC cases, particularly in fraud cases. However, it is quite common in situations where a defendant simultaneously settles both a SEC and parallel criminal case, the SEC will usually waive the imposition of a civil penalty on the theory that incarceration constitutes sufficient punishment of the defendant and thus a civil penalty is unnecessary. A silver lining of sorts perhaps, but not much of one.
Ponzi Scheme Defense Attorney David Chase, Esq.
David Chase, Esq. is a SEC defense lawyer who previously worked at the SEC’s Enforcement Division holding the title of Senior Counsel. As a SEC investigation attorney, David represents those who have received a SEC Subpoena or are under SEC investigation around the country, including Chicago, New York and Los Angeles. David has experience in all SEC cases, including Ponzi schemes, insider trading and market manipulations, and often represents cooperators with the SEC seeking to cut a deal. Speak with David on a confidential basis toll-free at: 800-760-0912 or e-mail at: david@davidchaselaw.com, and you can visit David’s law firm’s website for more information and content at: www.securitiesfrauddefense.com.
