By Allison Morrow, CNN Business
The tale of Zachary Horwitz made headlines this week after he was sentenced to 20 years for bilking investors out of $650 million by peddling bogus licensing deals with HBO and Netflix.
Ironically, it is just the kind of juicy swindler story you might binge watch on those platforms: Horwitz, a 35-year-old actor who had bit roles in a handful of low-budget films over the past decade, pleaded guilty last fall to committing federal securities fraud and running an illegal operation known as a Ponzi scheme. For years, prosecutors say, Horwitz used his investors’ money to fund a lavish Hollywood lifestyle — until his scam unraveled.
Ponzi schemes, explained
In short, a Ponzi scheme is a type of financial fraud that uses money from new investors to pay off earlier ones.
The term comes from the 1920 swindler Charles Ponzi, but in recent years has become synonymous with the crimes of Bernie Madoff, the mastermind behind the largest financial fraud in history, who died in prison last year.
Although Ponzi schemes have a long history, they are far from a bygone threat, experts say. In fact, they remain a major risk to investors in an era of soaring stock markets and wild surges in newfangled assets like NFTs and cryptocurrency.
“Fraudsters really feed on times of uncertainty, financial distress, upheaval, times of change, and those are really the times that we’ve been living in the past few years,” says Kathy Bazoian…
