Source: Cointelegraph Original: "{title}"
U.S. federal authorities have arrested and charged a filmmaker, accusing him of using $11 million in funding provided by Netflix for stock and cryptocurrency speculation instead of financing the production of a sci-fi television series.
The U.S. Department of Justice unsealed an indictment on March 18 in Manhattan federal court, stating that Carl Erik Rinsch has been charged with fraud and money laundering, potentially facing up to 20 years in prison.
The DOJ alleges that Netflix (not directly mentioned in the complaint) provided Rinsch with $11 million in March 2020 to create storyboards, pay actors, and edit materials for the sci-fi TV show "White Horse" (later renamed "Conquest").
However, prosecutors claim Rinsch transferred approximately $10.5 million into a brokerage account and engaged in a "series of extremely high-risk" trades, including a bullish options investment in a biopharmaceutical company, resulting in losses exceeding $5.5 million.
According to the indictment, while losing Netflix's funds, Rinsch assured the streaming giant that the progress on "Conquest" was "going very smoothly."
Prosecutors stated that the Los Angeles filmmaker had better luck in cryptocurrency trading, earning millions in February 2021 through crypto transactions, which he used to purchase nearly $3.8 million worth of furniture and antiques, five Rolls Royces, a Ferrari, watches, and over $3 million in luxury clothing.
Excerpt from the lawsuit against Carl Erik Rinsch. Source: U.S. Department of Justice
The U.S. Attorney’s Office did not mention Netflix as the streaming company behind "Conquest" in the indictment, but The New York Times reported in November 2023 on a dispute between Netflix and Rinsch regarding "Conquest." The report noted that Netflix canceled the show in early 2021 due to Rinsch's "unusual" behavior.
The New York Times reported that Netflix paid Rinsch $55 million, while prosecutors stated that he actually received $44 million for the production of the show, which has yet to air.
U.S. prosecutors also accused Rinsch of spending nearly $1.8 million on credit card bills and paying $1 million in legal fees to sue Netflix for more funding and cover divorce-related expenses.
Rinsch is charged with one count of wire fraud, one count of money laundering, and five counts of engaging in monetary transactions in property derived from specified unlawful activity.
Each count of fraud and money laundering carries a maximum sentence of 20 years, while each count of monetary transaction carries a maximum sentence of 10 years.
Rinsch was arrested on March 18, and the case has been assigned to Judge Jed Rakoff in New York federal court.
The Associated Press reported on March 18 that Rinsch's attorney, Annie Carney, declined to comment outside of court.
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