Hollywood director charged with defrauding Netflix of US$11m

A Hollywood writer-director was arrested on charges that he swindled US$11 million (HK$85.8 million) from Netflix for a sci-fi show that never aired, instead steering the cash toward cryptocurrency investments and a series of lavish purchases that included a fleet of Rolls-Royces and a Ferrari.

Carl Erik Rinsch - perhaps best known for directing the film "47 Ronin" - has been charged with wire fraud and money laundering over what federal prosecutors allege was a scheme to defraud the streaming giant.

Prosecutors said Netflix had initially paid about US$44 million to purchase an unfinished show called "White Horse" from Rinsch, but eventually doled out another US$11 million after he said he needed the additional cash to complete the show.

Rather than using the extra money to wrap up production, Rinsch quietly transferred the money to a personal brokerage account, where he made a series of failed investments that lost about half of the US$11 million in two months, according to prosecutors.

The filmmaker then dumped the rest of the money into the cryptocurrency market, which proved to be a profitable move, with Rinsch eventually transferring the earnings into a personal bank account, according to an indictment. From there, Rinsch spent about US$10 million on personal expenses and luxury items in a spending spree that, according to prosecutors, included about US$1.8 million on credit card bills, US$1 million on lawyers to sue Netflix for more money, US$3.8 million on furniture and antiques, US$2.4 million for five Rolls-Royces and one Ferrari, and US$652,000 on watches and clothes.

Rinsch, 47, was arrested in West Hollywood, California, and had an initial court hearing on Tuesday.

He appeared in a federal courtroom in Los Angeles in a turtleneck sweater and jeans with shackles on his arms and legs.

He did not enter a plea and spoke only to answer a judge's questions. When asked if he had read the indictment against him, he said "not cover to cover" but told the judge he understood the charges.

US Magistrate Judge Pedro V Castillo ordered that he be released later the same day after he agreed to post a US$100,000 bond to assure he'll appear in court in New York, where his indictment was filed.

Rinsch's New York court date had not yet been set.

Associated Press