Scamfluencers - The Hollywood Ponzi Scheme | The Talented Mr. Avery | Part One

Episode Date: April 18, 2022

Zach Horwitz owns a sandwich and smoothie shop in Chicago, but dreams of moving to Hollywood to make it as an actor. Luckily, Zach knows a thing or two about creating high-stakes fantasy worlds, just like in the movies. So he crafts an opportunity of a lifetime out of thin air that lands him and his girlfriend, Mallory, in Los Angeles. Mallory is his biggest supporter, and for a while, it seems like Zach is finding fast success… until he bites off more than he can chew. Over the next three episodes, Scaachi and Sarah will explore the meteoric rise of a Hollywood wannabe best-known for his headline-making arrest.Support Our Sponsors!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Hey, Prime members, you can listen to scam influencers ad-free on Amazon music. Download the app today. What do you think of when I say Hollywood scam? I think of 3D movies. Like, I have to pay five extra dollars to wear some dumb glasses that don't work. And then I have to give them back after.

Okay, well, you're setting the bar really, really high, but I feel like I can still clear it. I have a bunker story about a wannabe actor who pulled off one of the biggest scams in Hollywood history. By pull off, I mean, he lived the high life while lying to his friends, his family, and the world until it all came crashing down. I can't wait to hear it, baby.

It's early morning April 6, 2021 in Los Angeles. Super early, like 6 a.m. And Mallory Horowitz is fast asleep in her $6 million house in a bougie neighborhood near Beverly Hills. But she joltes awake when someone pounds on the front door. Mallory is in her 30s, and she's pretty successful. She's a hair stylist, and she's marrying to an actor and movie producer named Zach Horowitz. The two of them have this picture-perfect life.

Two beautiful kids, luxury cars, fancy vacations. Zach is still fast asleep beside her. So Mallory thinks that maybe she's just dreaming, but the banging doesn't stop. The walls are literally shaking. And then she hears a deep voice from outside the front door yelling, FBI open up. Her one-year-old son Cameron screams from his nursery.

So she leaps out of bed and she runs to the hall. And outside the window, a swarm of FBI agents with guns surround the house. She grabs Cameron and runs down the stairs. And she calls for her husband, but there's no response. When she opens the front door, the agent's flood in. It is a full-on raid, and she's escorted to a van. She watches in shock as her husband is purplocked across the yard in handcuffs.

Mallory is panicking. The FBI continues to rifle through her home. Zach is led into a squad car and driven away. In just a few minutes, Mallory's world has been turned upside down, and she has no idea what's happening. Okay, at this point I'm really getting real housewives of Salt Lake City vibes, like when Jen Shaw gets arrested at the Beauty-Leavenly's parking lot.

Yeah, it's a very similar energy, very surprising, it seems. Exactly. And that's what the story is all about, because the house, the cars, the fanciifications, the Hollywood deals, and Zach's acting career, their family, their whole life, Mallory is about to find out it was all a lie, and Mallory wasn't the only person Zack was lying to. That's why the FBI is at their door, and Zack's lies is what this story is all about. all about. fall of FTX and its founder, Sam Bankman Freed. Listen to Spellcaster on Amazon Music or wherever you get your podcasts. Wondery's new podcast, Disantel, wades into the glorious mess of celebrity beef. Each episode explores a different iconic celebrity feud, and asks, what does our obsession with

these feuds say about us? Follow Disantel wherever you get your podcasts. You can listen to ad free on the Amazon music or Wondery app. From Wondery, I'm Sachi Pull. And I'm Sarah Haggi. And this is Scam Flensers. Sarah, oh no, you're rubbing your hands together. I know. I have such a good story for you today. Okay, here we go. No, listen, you're gonna like it. This is one of my favorite kinds of scams, and I know you're gonna enjoy it too because

it happens in Hollywood. This is a story about a struggling actor named Zach Orwitz. He goes to LA because he wants to make it really big in the movies, but to become a famous Hollywood actor, when you have no name and no power and no influence, you're gonna have to get all three somehow. And that's when he concocted a huge scam.

And this one, Sarah, is a three-part episode. Oh, a trilogy. I feel like we're like, you're talking like a movie term now. Yeah, I mean, well, there's that much for us to cover. It has B-movie plots and bad acting, and you know what? It ends in a boulevard of broken dreams. There's even gonna be a special appearance

by a famous coffee mogul. I am unsure how that fits into the scheme of a Hollywood scam, but now I'm extra interested. Okay, I'm really excited to tell you about it, because this is the story of one of the biggest Ponzi schemes in Hollywood history, and it took a shit ton of influence and some really big balls to pull off.

This is episode one, I'm calling it the Talented Mr. Avery. Oh, that is good and also very ominous. Ooh, thank you. Okay, Sarah, you're probably wondering why the FBI is raiding a no-name actor's home. It's on my mind. Well, before I can tell you why, we have to dial back a full decade.

To what brought Zach and Mallory Horowitz to LA in the first place? Let me set the scene for you. Zach and Mallory are living in Chicago. The Wimdy City, as they call it. It's 2011 and they both just graduated from Indiana University. And they moved here to Chicago to make one of Zach's dreams come true. They're opening a juice bar slash sandwich and smoothie shop called Fuel. And I would be remiss to not tell you that the restaurant is named Fuel,

but it's spelled F-U-L and the U has has an Oomlaut, and it's in all caps. Sounds like an app. Yeah, if it was fiction, somebody would tell us we were being ridiculous. Yeah. Zach also has this other dream, which is much more exciting, I think. He wants to be an actor.

He's been doing comedy shows on local theater, but right now, Zach and Mallory are focused on the juice bar. They opened it together, and Zach has even asked some of his friends to move to Chicago to help run it, but that's all about to change, because Zach has some news, big news. I like to picture Zach asking Mallory to meet him at fuel.

So indulge me, you're gonna pretend that you're Mallory, okay? Okay. It's freezing cold, obviously, because it's Chicago. Mallory hurries into fuel after closing. She takes off her scarf and her gloves and then you can sweater. Yeah, it's cold.

And Zach is folding and unfolding a piece of paper. He's looking nervous. And so she asks him, what's up? And he tells her that he got a letter from, wait for it, Howard Schultz. Sarah, do you know who Howard Schultz is? Yeah, he's the Starbucks guy. He's like a billionaire and he was one of those random people

who was really rich and won to run for president. That's him. So Howard, I'm just gonna call him Howard as if I'm like really old friends with this billionaire. Yeah, he's howy to me. Well, Mallory knows that Zach has been in touch with howy about possibly investing in fuel. And in the email, he does tell Zach

that he's really impressed with the business plan. But Howie says that he doesn't want to invest in fuel, he wants to invest in Zach. Okay, so he doesn't want to invest in this like, thing that could potentially be a chain. He wants to invest in this entrepreneur who just started. Yeah. He just started it? Like months ago?

It's an investment in an individual's vague potential. Amazing. Being a man rules. Well, Zach Shul's Mallory the email and the final few pages are an employment contract. It's from Howard's Venture Capital firm, Maveron. Can you take a look at their website and explain what Maveron is? Yeah, okay. So the first thing you see is like this giant writing that says,

step aside, status quo, and it says, we fund the brand upstarts, the disruptors, the slayer of the old consumer guard. Yeah, it's corporate word salad, but they do fund consumer facing startups, including some brands that you've probably already heard of, like All Birds and Pinkberry. Yeah, okay. But the point is, these guys clearly know business, and they see something in Zach, just like Mallory does. In the email, how it says that he wants to hire Zach.

He wants him to lead up Maveron's Entrepreneur Outreach Program. This is exactly the job a white bro would get. Like, Entrepreneur Outreach Program, I can totally see a guy I know getting a job like that outreach program. This is exactly the job a white bro would get. Like entrepreneur outreach program, I can totally see a guy I know getting a job like that for opening fuel. Right. It's also the kind of gig that you or I would never be offered if we ran.

Oh my God, never. Smoothie, coffee, chocolate shop, or whatever it is. No, no. Obviously I would take it. I'd be like, hell yeah. But there's one catch. Okay, so they like need like a kidney or a soul or something? Not quite. Maveron is in LA.

So taking this job would mean leaving Chicago. It would also mean that they'd have to leave fuel. It's barely off the ground. And that got all these people to move to Chicago to help run it. But Zach says it's their chance at something bigger. He has to take it. They have to take it.

Mallory is 100% on board. Life's looking really good for them. They're in their early 20s, they're in love, and the founder of Starbucks is giving them a glitzy new gig. What could possibly go wrong? So much, so could possibly go wrong? So much, so much can go wrong. Exactly.

Okay, Sarah, we're gonna cut to New Year's Eve. Zach and Mallory pack up their stuff, they say go by to their friends, and then they hit the road with their rot-wilder Lucy. It's probably snowing, obviously, Chicago. But they're headed to the California Sun. Wow, they're really doing it. They're really doing it.

Zach has this incredible job. And Mallory is going along for the ride. Plus, she has her own dreams. Her mom owns a hair salon, and she grew up helping her out. So she's thinking about studying cosmetology. She picks up her phone, and she types out a tweet, cruising with my best friend to a new place to call home. Yeah.

Okay, this isn't going to end well, as we know from the beginning of this, but there's something that is just so pure about that tweet. I'm just like the hopefulness. I'm just so endeared to that. Well, babe, in Hollywood, you either end up on the walk of fame

or the boulevard of broken dreams. Poor Mallory. Poor Mallory indeed. So by spring time, they've settled into a new apartment with their dog, the American Dream. And then one morning, Zach grabs his keys and he kisses Mallory goodbye. And he tells her he's heading to the Maveron office for a day jam packed with meetings. But really, he's going to the school of entertainment,

which is an acting school. He's doing his acting and the like, start-up stuff at the same time. Here's the thing about that whole Maveron deal. There was never a job. What? No. The job never existed.

Wait, so there was no email from Howie, like the one he should know, there's nothing. No, that was a lie. He invented the entrepreneur outreach program. Yeah, basically. No dog. The dog is real. But pretty much everything else that we talked about around Maveron, around the email,

around Howard Schultz getting in touch, all of that isn't true. That's nuts. Like they moved. Why would Zach do all this? The whole thing is just a ploy to get Mallory to move to LA. Because remember, Zach has big plans to become an actor. He wants to be an A-list big screen Hollywood actor. And I mean, Zach is really hoping

that this is gonna happen for him. And that's why he's at the school. He's here to audition. Okay. I googled it. Apparently they offered two class tracks. There's an agent management training course and then something called a business of acting class.

I assume that that's the course that Zach took. Do you wanna read the description for us? It is a boot camp workshop-styled course where you will learn how to kick start a career within a month of landing in Hollywood. Easy peasy. Okay, so let's go back to the audition. It's going to be taped and after all of his years spent dreaming, Zach is finally doing it. And one by one the students wait for their turn and then finally, Zach takes the stage. I actually have a clip of the audition. It's still on YouTube.

Do you want to set it up and maybe describe what Zach looks like before I hit play? Okay, he's standing in front of a black wall. He's actually pretty good looking, like high school jock. He's a real beefcake, honestly. I'm in Zachary, I'm a scenic management, and I'll be reading for you. Wow, it's been awhile.

Are you a brilliant figure thatures that take you here. That's Captain Town. Oh, hello, coffee. So imagine you are the casting director. Would you hire this guy? I'm going to be nice here for the sake of having been bad at something before. I know he just started. He doesn't need a lot of work.

But he says his name is Zach Avery. We know him as Zach Horwitz. Is Horwitz a lie? No, not really. I mean, Zach Avery is his screen name. It's what he's using for his acting career. The manager drops this video on YouTube before Zach even has a chance to see it. When Zach does get the link, he hits play and he watches himself and his stomach sinks.

Because he knows it's not good. In fact, the audition is downright terrible. So he tries calling the manager to get him to take the video down. But this guy has disappeared. And the video is still on the internet till this day. It is eternal. Oh my gosh, as a writer, we've been there before, like, oh yeah.

Like just like having something online that is so deeply bad and being like, I want to get this deleted, knowing you can't. I mean, look, creative work is really hard and they're not all going to be winners, but it's even worse because you have to remember that Mallory doesn't even know any of this is happening. She thinks Zack is still at his high-paying job, hob-nobbing with billionaires all day. Oh God. But Zack is not ready to give up on his dream. He swears that he will never be at the mercy of anyone else ever again. I feel like this is like his villain origin story. This is where it all begins.

Yeah, man, Zach is the Joker. Oh, no. So Sarah, I know that you're like a big Hollywood hobnover. Yeah, and I'm actually currently in Hollywood waiting to get discovered, but go on. You said that with such a straight face that it was really upsetting. If you're in LA right now, then you know better than anybody. It's all about who you know. Zach wants to know everyone he possibly can. And he's starting with his mom's friend's daughter,

who knows some indie filmmakers. Zach jumps at the chance to meet them for dinner. It's like a very tenuous connection. Have you ever talked to anybody in LA and they're like, oh yeah, my friend's dad's brother sister is Madonna. Yeah. Well, Julio and Diego Halivus are brothers. They're in their 20s. They were born in Mexico and they moved to Florida as kids before landing in LA. Julio's a producer and Diego's a director. And at this point, they've made a handful of short films. Last year, they released their first feature, Game Time. It's a basketball movie set in New York. It's low budget with no name actors, but hey, you gotta start somewhere, right?

Yeah, a basketball movie in New York is a great place to start for many people. And Zach is really excited about meeting these guys. If the dinner goes well with them, then maybe he can get a part in their next project. But at first the brothers are really not interested in Zach. He's just another aspiring actor looking for a break. But Zach considers himself more than just an actor.

I mean, arguably he's not really an actor at all, but one thing he is for sure is a salesman. So to close the deal, Zach has to understand what people want and figure out how he can fit into their story. So he starts spending time with Julio and Diego, and they bond over a shared love of sci-fi and horror movies. And they all agree that, yeah, if they had more creative freedom, they could make something really good. But first, they need funding. You can't make a movie without money, and Zach can't become a star without a movie. And that's when Zach tells them about his connections. And he basically repeats the lies he told Malorie that he's working with Howard Schultz at Maveron.

Okay, why is Zach so obsessed with Howard Schultz? Out of all the billionaires in the world, it's like he's searing in online about Howard Schultz. If I had to guess, I would say it's because Howie, as you and I, call him, isn't that recognizable even as a billionaire? Props to Zach for finding a billionaire that is recognizable by name, but not in any other way. Well, it works, and the brothers are obviously

really intrigued. And then, Zach tells them that Schultz has been talking about getting into the movie business. He even wants to partner with him on a production company. Imagine that. And that's when Zach asks them, do they want in? I could see Indy Filmmakers thinking like,

this is my big break. How could I say no to this? Well, unsurprisingly, the brothers are in. Please don't do this. If someone says they know a billionaire and they want to fund your indie movie career, don't do this. I mean, Hagi, the theme of this entire show is please don't do this. But Zach does this, and this is where his lies start to take on a life of their own. He told the brothers he was getting backing from Schultz and his partner,

and that he could bring in money. A lot of money. So far, Zach's lies have all been bluster, but now he's got a deliver. Oh, how is he going to get this Howard Schultz money? Please don't do this. Please don't do this. Please don't do this. I feel like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I'm like I Things are looking pretty rosy, except for one thing. Powered Shultt seems to expect that her boyfriend needs to be available 24-7. He's always texting at random hours, and then, Zach has to take off to go to some bar or restaurant and he always comes home really late. Okay, and at this point, Mallory has still never met Howie.

Like, isn't she starting to get at least a little bit suspicious? I mean, she might be, but Zach shows Mallory the text and the emails. has still never met Howie. Like, isn't she starting to get at least a little bit suspicious? I mean, she might be, but Zach shows Mallory the text and the emails, and they all have official Maveron signatures. And at one point, Mallory even emails back and forth with Howard Schultz. Who is sending the text he was receiving from Howard Schultz? Oh, Sarah, Zach wrote those texts.

He's writing texts to himself. They are texts written by Zach that go to Zach that he schedules using an app pretending to be our friend, Howie. The Starbucks billionaire. OK, this is so nuts. So he's catfishing his girlfriend. Exactly.

But this also goes all the way back to their days in Chicago too. The beautiful days of fuel. Yeah, remember when his scam was just a smoothie coffee shop thing? So dainty. Life was so simple. Like if this man put that energy into anything legitimate, he would be the president. I guess I'm at this point wondering where is he? He's not at that acting school anymore.

Terrific question. According to Mallory, he's a big drinker. And at some point, he also starts taking Adderall and Xanax every day, and they fight about it a lot. Mallory has thus far been extremely supportive of everything he's doing. So I guess this is like really snowballing into something bigger.

Well, Zach is really getting into a long con here, but he really does believe that one day all of this will be worth it, that he's gonna get his big break and they're all gonna be living the dream. And he takes a really big step towards making that a reality. It's a reality that's one in a million. He and the halivest brothers start a production company

and they call it one in M.M. Is M.M. just like a abbreviation of million that I've never heard? I googled all over the place trying to find more about the company and let me tell you, there's very little. But I was able to find one page lucky for us. There's a mission statement. Do you want to read it? Yeah, I'll read it. We believe filmmaking is telling the story that simply must be told. We thrive on breaking through barriers. We make the audiences believe that the impossible is possible.

We believe that when odds are one and a million, we must be that one. I mean, it's straight up sounds like they are going to reverse climate change. Yeah, they believe in miracles. So Zach and the brothers start reaching out to Hollywood players. And that is when they pair up with this guy

named Gustavo Montedon. He's a former Fox executive with decades of experience distributing content in Latin America. One in MM will acquire the movies and Gustavo's company will distribute them. He's the real deal. Their company is gonna buy English language films to distribute in Spanish-speaking countries.

Okay, that sounds surprisingly legitimate. Like, that's actually a real business model that could happen. Yeah, it is. And there's actually a bunch of companies that do this exact thing. And for a while, Zach does try to make this an honest business. The company even gets a pretty good right-up and variety about the partnership. I mean, everything's coming up, Zach. He's even gets a pretty good write-up in variety about the partnership.

I mean, everything's coming up, Zach. He's even starting to get some roles. What? I mean, they aren't big ones, but it's something. He plays Demon 3 in a halivist brother short film called Fane. That actually doesn't count. He gets the role of basketball player in another short film called Nameless. He doesn't count. He is an uncredited extra in a Brad Pitt movie called Fury. If you think it can't get worse, it can, and it will. The dying's not done. The killing's not done. This is like Tobias Funkay from a rest of development

playing frightened inmate number one. I'm sure he went method for all of those roles. But then Zach and the brothers pair up to shoot their first film as one in MM Productions with Zach as the lead, obviously. It's a short sci-fi thriller called Shifter, and Zach plays a man who transfers his mind into a clone while struggling to fight the establishment,

or I don't know, something like that. I'm gonna make you listen to his catchphrase. I'm bringing the you listen to his catchphrase. I'm breathing the whole system down. Do you think they wrote that and they thought, this is like our, I'll be back. I mean, I don't know. Every time I have to think about people who kind of get into the creative field,

including myself, I am not excluding my own experience in this, doing creative work is so fucking embarrassing and it's humiliating. But at the moment, it does seem to be working because one in MM has a pretty good year in 2013. I found six movies. I've never heard of any of them, but they all have ratings.

And one of them was directed by Rob Zombie and starring his daughter. So that's a name you recognize, right? Yeah. Rob Zombie's a real person. So Zach took a shot at running a legitimate production company. But none of the movies they make or distribute actually pay off. It takes time to build a business, but Zach doesn't want to wait.

So now he's got to find another way to make money, and he has to do it fast. Okay, picture this. Sack is standing at the top of Runyon Canyon, taking in the breathtaking view of Los Angeles. His dog Lucy sits next to him, panting a little from the climb. Runyon is a trail in the Hollywood Hills, just west of the Kodak theater, where they hold the Oscars.

Wow, he's so close to his dream. Runean Canyon is a place to be seen and to see other people. There's paparazzi pictures of Justin Bieber and Channing Tatum walking their dogs here. Maybe one day they will be snapping photos of Zach as well. Anything is possible. Anything is possible. Well, Zach and Mallory are here with their friends Jake Wunderland and Jake's fiance. Jake's a day trader from Chicago. He's got that wholesome midwestern look, you know, he's all teeth and friendly eyes. And the two couples went to school together at Indiana University.

But today, they're here to just get away from it all. Zach pulls Jake aside. He says he has an opportunity for him, an investment. Oh my God. He tells him about his new production company, and the fancy names attached to it. Let me guess, Howard Schultz. Exactly, our best friend, Howie. And then Zach moves into the pitch. He tells Jake that he is a production company that

distributes movies to international territories. This is the way it works. He buys the rights to low- low budget sci-fi in horror movies to stream in Latin America. Then he turns around and licenses those rights to big streamers, like HBO and Netflix, so they can show those movies in those territories. Are you following so far? Yeah, it's like selling HBO the right to stream that Rob Zombie movie in Mexico. Right, exactly. And Zach tells Jake it's a sure thing.

He's already got agreements in place with HBO, Sony, and Netflix. Zach even has the movie ready, something called DeSale, which he plans to sell to Sony Pictures. If Jake invests, he stands to make a 35% return in one quarter. The return is guaranteed. It's the opportunity of a lifetime. Wait, this isn't real, right? Oh, it is super not real.

Okay, because I'm no finance, bro, but I've watched enough shark tank to know that 35% is actually a lot of money to make back on an investment in less than one year. That is very ambitious, and I'm surprised that no one's catching onto that. I'm really impressed that you've clearly been reading Kevin O'Leary's biography. Shut up. Well, yeah, it is suspicious, and it should feel suspicious,

because it's kind of crazy. But Zach and Jake go way back. They're really good friends. Jake has no reason not to trust him. And Zach is now kind of moving forward in his scam, because not only is he getting other people involved, he's getting his friends involved. Oh no.

Zach says he will personally guarantee the investment. If the deal goes south for whatever reason, he'll pay Jake back no matter what. So Zach tells Jake to take his time, think it over. He emails him some licensing agreements to back up the deal, all totally fake, of course. Okay, so he's sending fake licensing agreements to his actual friend.

This is very criminal. Yeah, Jake is in. And when he gets back to Chicago, he wires Zach the money. $37,000. Zach is elated. It's one in M.M.'s first investment and a super promising one. Because remember, Jake has the finance world credibility and the connections to open up a whole new network

of potential investors. Zach tells Jake he will not regret this investment. And then, with a few clicks of a mouse, Zach crosses the scam rubicon. He transfers Jake's money into his own personal account. Wow, let's play a scam siren. There's no turning back from this. Once you transfer funds into your personal account,

you cannot go back from that period. Yeah, I can't tell you that things are going to get much better from here. Zach's friends have decided to invest in him, and Mallory has decided that she's going to as well. In October 2014, after six years together, they tie the knot, and they do it in style, at the four seasons hotel in Los Angeles. Okay, so clearly this is a wedding that costs a lot of money. What I'm wondering right now is where is his buddy, Howard Schultz, who is constantly in contact with him

and also constantly in contact with Mallory, it seems like wouldn't your business partner who's like texting you at night to come by and like work on something be at your wedding? Like you should be his best man. Well, Sarah, billionaire's are busy. He's probably at a TED talk. Yeah.

Well, this lavish wedding is more than Mallory ever dreamed of. She wears a long veil and a sat in dress with tears of tool. Mallory and Zach say, I do under a flower covered trellis surrounded by friends and family. Mallory grew up in a class, and she's had a job since she was 14. At this point, she's finished training at Vidal Sassoon

and is working as a stylist at the Ritzie Ken Pavis salon. Her boss does hair for celebrities like Lady Gaga, Oprah, Selene Dion, and David and Victoria Beckham. So at this point, Mallory is actually the only one with a glamorous LA job. Yes, twist, women work more than men. Wow, you know, she kind of just moved there to support her man,

and she's a one working at this amazing salon. Good for Mallory. God bless, if anybody has to be a billionaire in this story which I generally don't think anybody should be, but if someone needs to be, I hope it's Mallory. Absolutely. Well Mallory beams and pictures next to her husband, and she has no idea that he's been lying to her this whole time. And now she is legally tied to him, and the wedding is a chance for Zach to project success, to show his friends and family that his dreams are coming true. But the only way to make them really come true is to convince more of them to invest.

Now I feel like a... So this is where the scam goes deeper. Zack's got other investors on board now, which means that his early investors actually makes some money like Jake. Jake makes nearly $13,000 in a single quarter off his investment in one and M.M. Just like Zach promised.

And presumably, Zach used other investors money to pay Jake back. He's borrowing from Peter to Paypal. So, money taken from today's investors is used to pay off debts to yesterday's investors. It's like classic Ponzi scheme, basically. Yep, and Jake's hooked. Over the next few months,

Jake starts convincing friends and family to pull their money to invest in Zach's company as well. And Jake even forms a whole new company to funnel funds to Zack. He names it Shytown Capital. Shytown gives Zack nearly $300,000 to buy the rights to a movie called Los Alvedados. If you Google translate it, it means the forgotten. $300,000?

Yeah, man. And the thing that's really sad here is that the money isn't from a bunch of high-rolling investors. It's just from Zach's college buddies, and their parents, and their aunts, and their uncles, and their grandparents. It's from people who are trusting him with their life savings.

It's people who don't have any more money other than what they've given him. And why shouldn't they trust him? Jake told them that Zach is a sure bet. Before long, the guys who make up Shytown Capital have loaned more than $860,000. And then, get this, Jake completely quits his day job to focus entirely on investing in one in M.M. That means finding even more friends and family, it's people handing over their retirements, their entire life savings. And then one day, Jake gets a package in the mail.

It's from Zach. It's the annual report for one in M.M. along with a bottle of Johnny Walker Blue. You know, my dad's an immigrant from India and one of the first status symbols he ever sort of recognized was Johnny Walker Blue and he always talks about it. Like it says that you've made it. It's like 200 bucks a pop.

That's how expensive alcohol is. Yeah. That's why I'm poor. Well, Jake flips through the report and I actually have a copy of it. Do you want to read the summary? Yeah, sure. We are ecstatic to report that over the past year,

we have acquired and successfully distributed 49 films through the one in MM Capital Banner without incurring a single loss in the process. It's so hard for any company to even break even. And this guy is just kinda like, no loss is here. Yeah, I mean, it's all fake. And then over the next few years, Jake and his friends in Chicago

and their downstream investors, loanzac $485 million. Oh my God. But that is an astounding amount of money. Well, as the money rolls in, Zach starts spending accordingly. He spent $165,000 on high end cars, $137,000 on private jet trips,

$125,000 on trips to Las Vegas, and $55,000 on a luxury watch subscription. He sits courtside at Laker Games, he orders bottle service. He is living the life that I am supposed to lead. So wait, is he funneling the money into his own personal account still? Yeah, so for the time being,

Zach is bringing in enough new money to pay back earlier investors. He wants to project success. So he can keep the money coming in so that he can ban growl movies for him to star in. So acting is still the end goal? Yes. And do I ever have the movie role to share with you?

Two doctors and white coats walk down the hallway of a psychiatric hospital. All the patients have been poisoned to death except one. The doctors are headed to his padded room to find out what he knows about this terrible tragedy. They open the door, he's sitting on the floor, an eerie light flicks on. He's got wrinkled skin and platinum blonde hair and eyebrows. Hello doctor, thanks for taking the time out of your busy schedule. We have no record of your admission. We have to believe you infiltrated this facility. Why would I want to do that?

Is that Zack? Yes, but he's wearing tons of makeup and he looks obviously completely different from his typical jock self. Why is this movie? It's a film by the Hall of his brothers. One in MM produced it. It's called The Laughing Man.

It's a fan fiction short based on the Joker and Harley Quinn. So it is basically a villain origin story. Yes, as I said, Zach is the Joker. These brothers seem like they're in my wheelhouse. I have to play you this one really, really gross part. Oh, please. So some of you scam fam might want to cover your ears

for the next eight seconds because the sound effects are really disturbing. The Joker is going to slice off his own face. The ladies and gentlemen, I have a confession to make. I hold more than a purely professional interest in this case. The truth is, I too was a victim of Dr. Hott. No. Sadly, it is in fact written all over. Right, please. Displol the skin. These lovely teeth are the unfortunate side effect of Dr. Han's psychopharmacological eye jigs.

Okay, this is going a bit further than I thought it would. The Laughing Man does go viral and it gets over 6 million views. Well, Keen Phoenix, who is what I'm thinking when I see this? Well, this is a real turning point for the Hall of Us brothers and one in M.M. And Zach's finally the lead man in something that a lot of people watch. He's gotten a small taste of fame, and he's hooked. He wants more, and he's willing to do anything to get it. It's March 2017, and Rommick Yegnazari sits in front of his computer in Las Vegas, typing

an email to Jim Russell. Rommick is a home loan officer, and Jim is a steel company executive. They're friends and tennis partners and business partners. And in the past, Romick and Jim have made some real estate loans together. But now, Romick wants to pivot to something new, something flashier, the movies. No!

Don't do it, don't go into movies. Stick to real estate. Well, Romick is referred to Zach through a mutual friend who's already an investor. And Romick is super thirsty. And Zach makes one in MM sound like a slam dunk. Romick tells Jim that they need to get in now while they can. And all it'll cost them is $554,000.

What? Yeah, it's a lot of money. And Jim is a hard sell. He's an experienced business man, and he can't shake the feeling that this investment is a little too good to be true. But Romick shows him the contracts and emails from HBO, but Jim is still skeptical.

Romick says that Zach doesn't even need their money. He's actually doing them a favor. He could get the money from the bank, but he's gonna let them make the loan so they can cash in on the returns. Classic reverse psychology. I don't even need you. They're really playing hard to get here.

Yeah. But Jim is still nervous. It's a lot of money, so he emails Romic for reassurance. He writes, I better not lose money on this deal. I am trusting you to make sure the contracts have been reviewed by an attorney and are 1000% secure. Jim, follow your gut. This isn't real.

Well, Romick writes back, I have your back as always, and when you make 15 points, you will want to do more. So Jim sends the money. Half a million dollars. Well, listen, Jim and Romick have been in business together for a while, and they obviously trust each other quite a bit. If you can't trust your tennis partner, who can you really trust? Well, what we know for sure is you can't trust Zach, because Jim is just one of hundreds of investors who will become ensnared in this scam.

But little does Zach know that hooking this one Vegas investor, that's gonna ultimately be his undoing. Hey, prime members, you can listen to scam influencers ad-free on Amazon Music. Download the Amazon Music app today, or you can listen ad-free with Wondery Plus and Apple podcasts. Before you go, tell us about yourself by completing a short survey at Wondery.com slash survey.

This is episode one of our three-part series, The Hollywood Ponzi Scheme. I'm Sachi Cole. And I'm Sarah Haggi. We use many sources in our research. A few that were particularly helpful were the LA Times article, a rising actor, fake HBO deals, and one of Hollywood's most audacious Ponzi schemes by Michael Finnegan. And Forbes magazines, how Indiana University Bros. fueled a Hollywood actor's $690 million Ponzi scheme by Nathan Varty. 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 Armageddon wrote this episode, additional writing by Sachi Kohl and Sarah Haggi. Brian Taylor White is our producer. Charlotte Miller is our associate producer. Sarah Enny is our story editor. Our senior story editor is Rachel B. Doyle. Jen Swan is our senior producer. Our senior story editor is Rachel B. Doyle. Jen Swan is our senior producer.

Our music supervisor is Scott Velasquez for FreeZonSync. Our audio engineer is Sergio Enriquez. Adrienne Tapia provided audio assistance. Our sound design is by Joe Richardson. Our executive producers are Janine Cornelow, Stephanie Jens, and Marsha Lui for Wundery.