Securities and Exchange Commission v. Zachary J. Horwitz

I. INTRODUCTION

On April 5, 2021, the Securities and Exchange Commission (“SEC”) filed this civil enforcement action against defendants Zachary J. Horwitz (“Horwitz”) and linMM Capital, LLC (“linMM”) (collectively, “defendants”). Dkt. 1 (“Compl.”). The complaint alleges two claims for: (1) violation of Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78](b), and SEC Rule 10b-5, 17 C_F_R. §240.10b- 5(b); and (2) violation of Section 17(a) of the Securities Act of 1933 (the “Securities Act’). Compl. 83-93. In brief, the SEC alleges that between March 2014 and December 2019, defendants conducted a fraudulent offering of securities which was also a Ponzi scheme, all in violation of the federal securities laws. Compl. § 4. According to the SEC, defendants misrepresented to investors that promissory notes issued by linMM would be repaid using the proceeds from movie licensing deals with major media companies, whereas those licensing deals did not exist. Id. On April 6, 2021, the Court issued an order granting the SEC’s application to freeze “all assets, funds or other property of Defendants,”…