Mallory quickly filed for divorce. According to her filings, their joint accounts had been frozen by the authorities; the only money in her name was a checking account with a balance of $100.75. Horwitz was charged with thirteen counts of fraud, in the service of what prosecutors called an “intricate illusion”—the largest Ponzi scheme in Hollywood history. He had raised more than six hundred and ninety million dollars by deceiving hundreds of investors, beginning with his closest friends. A woeful actor onscreen turned out to have been an astonishingly convincing performer in life.
The extent of the lie was almost too great for Mallory to grasp. Her husband never had any deals with HBO or Netflix. He had never even met Howard Schultz. When Zach left for late-night meetings, there were no meetings. The only thing real was his slender imprint on the screen. In her filings, she wrote, “I loved him. I idolized him. Zach is a masterful manipulator and liar and brainwashed and gaslit me into believing he was this perfect man, something he made everyone around him feel. Only a sociopath can live the sort of deceptive life Zach lived for nearly ten years.” Mallory’s father bought her and the children one-way tickets to Indiana. On May 1st, she flew home.
Horwitz got out on bail: a million dollars, posted by his mother. For a week or two, the case made headlines worldwide, but he stayed out of sight, telling his kids that he was working as a dog-walker. Among people who knew him, the reaction that I encountered most often was disbelief that he was bright enough to manage such a scheme. “I don’t know how the fuck he was capable of it,” one of his closest friends told me. Another associate said, “If you had asked me if this man even had Photoshop downloaded to his computer, I would’ve told you, ‘Absolutely not.’ ” More than a few surmised that his Latin American distribution network must have been a front for a drug cartel.
The government didn’t agree. The S.E.C. named him as the sole defendant, noting that he alone had controlled the bank accounts at 1inMM. When I told Verrastro, the F.B.I. agent, that many people were perplexed nobody else was charged, he said he couldn’t go into detail about that decision. But he hastened to add, “The one thing that’s clear in this case is there was no one above him. He is the main guy.”
As with many frauds, the prosecution triggered a series of lawsuits, as investors fought over the remaining assets and accused one another, as well as various banks and law firms, of failing to spot the crime. Alexander Loftus, a lawyer representing some of the investors, filed suits against Horwitz’s friends in Chicago. “When you’re acting like a broker, it’s your job to see if this is good or not before you sell it,” he told me. Ultimately, Loftus said, the friends in Chicago agreed to give up more than nine million dollars—though they maintain that they acted in good faith. “My family members who trusted me, they’re not savvy,” deAlteris said. “I thought that I was being fairly objective with how I approached it. My family members weren’t. One chip became two chips, which became all their chips.” Their lawyer, Brian Michael, told me, “It’s inconceivable that they would’ve questioned a fraud that was rooted in a friendship long before Zach went to Hollywood, that they allowed their own families to participate in.”
In the end, there was surprisingly little money to recoup. A receiver, appointed by the court to hunt for assets, reported that an “unknown” sum might be “hidden.” But lawyers involved in the case told me that Horwitz expended most of the money keeping the scheme going. The rest he used to pay for jets and yachts and the pursuit of stardom: prosecutors listed $605,000 to Mercedes-Benz and Audi, $174,000 to party planners, $54,600 for a “luxury watch subscription” service. Six months after his arrest, confronted by extensive evidence of his deceptions, Horwitz pleaded guilty.
On the afternoon of February 14, 2022, I attended the sentencing in a federal courtroom in L.A. Horwitz arrived early, in a tailored blue suit and brown wingtips. His mother and other relatives filled the rows behind the defense table. Prosecutors declared, in a written argument to the judge, “It is difficult to conceive a white-collar crime more egregious.” They noted that Horwitz had begun his scheme by “betraying the trust of his own friends, people who lowered their guard because they could not possibly imagine that someone they had known for years would unflinchingly swindle them and their families out of their life savings.”
Victims had been invited to submit descriptions of the impact on their lives. One investor, identified as a sixty-four-year-old who lost $1.4 million, described coming out of retirement to pay for food and shelter: “I cry every day and have stopped seeing friends or family because of the shame of this financial loss and have a now severe distrust of other human beings. If it was not for my spiritual beliefs, I would have committed suicide.” Another wrote, “I am the mother of a 46-year-old special needs daughter. . . . I will never be able to earn what has been taken from me and my daughter but the emotional damage . . . is even greater.”
Some victims chose to speak in person. Robert Henny, a lanky screenwriter with two young children, stepped to the microphone. “I don’t live an extravagant life style,” he said. “My career could hit bumps and we’d be O.K. Even after my wife’s cancer diagnosis, we were O.K. For fifteen years, we lived frugally.” They had lost $1.8 million in the scheme. “For the first time, we are not O.K. I don’t know if we ever will be,” he said.
When it was Horwitz’s turn to speak, he stood before the judge, his shoulders hunched and hands clasped. “I became the exact opposite person from who I wanted to be,” he said. He wept and paused to collect himself. “I am destroyed and haunted every day and night by the harm that I have caused others.” He asked the judge for a lenient sentence, one that would allow him to “return to my young boys when they are still boys.”
The judge, Mark C. Scarsi, was unmoved. He applied the maximum sentence that prosecutors had requested: twenty years in prison. (Elizabeth Holmes, the founder of the disgraced biotech startup Theranos, was sentenced to eleven years; Sam Bankman-Fried, the billionaire founder of FTX, is serving twenty-five.) As the sentence was announced, Horwitz stared into the distance and then up at the ceiling.
After the courtroom emptied out, Henny stopped at the bathroom. As he was preparing to leave, the door opened and Horwitz walked in. “We look at each other,” Henny recalled. “And he goes, ‘Hey, I just want to tell you, I’m so sorry.’ ” Henny, who is six feet four, towered over him. “You took everything from us,” he said.
One of Horwitz’s relatives poked his head in the door and said, “Hey, are we all good here?”
Horwitz reassured him, “Yeah, we’re O.K.,” and the door closed again.
Henny could have asked him why he did it, or how he lived with himself. But, as a writer, he was interested in only one thing: “How did you think you were going to get out of this? What was your endgame?”
Horwitz paused, and then said, “I didn’t have one.”
Until the end, Horwitz seemed to have believed that one of his identities was going to save him—actor, producer, investor. Something had to work. Fake it till you make it.
One morning last November, I took a cab out to the Federal Correctional Institute at Terminal Island. It sits on a peninsula at the far end of an industrial strip, south of Los Angeles, jutting into the waters of the harbor. The facility is surrounded by barbed wire and gun towers, but tauntingly close to the city. Walking inside, I could hear seagulls and the distant rumble of cranes on the docks.
I had exchanged letters and e-mails with Horwitz since his sentencing, in which he agreed to keep the “lines of communication open” but wouldn’t say “anything specific.” He seemed more interested in projecting a narrative of rehabilitation. He described a shift in his mind-set and said, “I am healthier for it every single day.” He imagined teaching a class to fellow-inmates, called “Emotional Intelligence Through Acting,” that would give them a “safe space to express vulnerability.”
I had stopped by the prison hoping to get Horwitz to speak more frankly about his crimes. In the visiting room, he wore a khaki shirt tucked into khaki pants, his hair cropped. He was relaxed and unfailingly polite. But, for all his talk of expressing vulnerability, he was still unwilling to answer questions on the record. In an e-mail later, he told me that publicity doesn’t help, because “all the wounds keep getting ripped open and additional salt being poured on top.”