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US federal authorities have arrested and indicted a filmmaker, accusing him of spending $11 million given by Netflix to gamble on stocks and crypto instead of using it to finance a science fiction TV show.
The Department of Justice said in an indictment unsealed in a Manhattan federal court on March 18 that it had charged Carl Erik Rinsch with fraud and money laundering, and he could face upward of 20 years in prison.
The DOJ alleged that Netflix, which wasnβt named in the complaint, gave Rinsch $11 million in March 2020 to finance the storyboarding, pay actors and edit footage for the sci-fi TV show βWhite Horseβ β later renamed βConquest.β
Instead, prosecutors allege that Rinsch moved about $10.5 million of the funds into a brokerage account where he βmade a number of extremely riskyβ trades, including call options on a biopharmaceutical company, which lost him over $5.5 million.
Rinsch was losing Netflixβs money while assuring the streaming giant that Conquest was βmoving forward really well,β according to the indictment.
Prosecutors said that the Los Angeles filmmaker had better luck with crypto, making several million dollars trading cryptocurrency in February 2021, which he used to purchase nearly $3.8 million worth of furniture and antiques, five Rolls-Royces, a Ferrari, watches and luxury clothing items worth over $3 million.
The US Attorneyβs Office didnβt cite Netflix as the streaming company behind Conquest in the indictment, but The New York Times reported on Netflixβs dispute with Rinsch over Conquest in November 2023, where it said Netflix canceled the show in early 2021 after Rinschβs behavior turned βerratic.β
The Times reported that Netflix paid Rinsch $55 million, while prosecutors alleged he received $44 million to produce the show, which is yet to air.
US prosecutors also accused Rinsch of spending nearly $1.8 million on credit card bills and $1 million in legal fees to sue Netflix for even more money and to cover costs related to his divorce.
Related: Microsoft warns of new remote access trojan targeting crypto wallets
Rinsch was 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.
The fraud and money laundering charges each carry a maximum sentence of 20 years, while each of the monetary transactions charges carries a maximum sentence of 10 years.
Rinsch was arrested on March 18, and his case was assigned to New York federal court Judge Jed Rakoff.
The Associated Press reported on March 18 that Rinschβs lawyer, Annie Carney, declined to comment outside court.
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