Filmmaker Faces Fraud Charges After Using Netflix’s $11M to Trade Crypto and Stocks

An American filmmaker has been arrested and charged with fraud after allegedly using the $11 million that Netflix gave him to trade in crypto and stocks instead of funding a TV show in the science fiction genre.

Carl Erik Rinsch was charged with fraud and money laundering by the Department of Justice on March 18. The charges were made public in a New York federal court document. Rinsch could spend up to 20 years in prison if convicted.

First, Netflix’s name wasn’t in the complaint. However, the DOJ said that an unnamed streaming company later found to be Netflix had given Rinsch $11 million in March 2020 so that the sci-fi TV show “White Horse” (later changed its name to “Conquest”) could pay its actors, edit, and make a storyboard.

Officials say Rinsch put about $10.5 million of the money into a brokerage account and “made several extremely risky” trades with it. One of these was buying call options on a biopharmaceutical company, which lost him over $5.5 million.

The indictment says that Rinsch was misleading Netflix by telling them that Conquest was “moving forward really well” while losing them money.

Crypto Betting Paid Off, But Not for Long

Prosecutors claimed that the Los Angeles filmmaker was more successful with crypto. He earned several million dollars in February 2021. With this money, he traded almost $3.8 million worth of furniture and antiques. He also bought five Rolls-Royces, a Ferrari, watches, and luxury clothes valued at over $3 million.

Source: DOJ

There was no mention of Netflix as the streaming company behind Conquest in the indictment from the US Attorney’s Office. However, a known newspaper wrote in November 2023 about Netflix’s dispute with Rinsch over Conquest and said that Netflix cancelled the show in early 2021 because Rinsch’s behavior became “erratic.”

Another newspaper reported that Netflix gave Rinsch around $55 million, but prosecutors say he received only $44 million.

Crypto Gains, But Legal Losses

Besides that, US prosecutors say Rinsch spent about $1.8 million on credit card bills and $1 million on lawyers’ fees to sue Netflix for more money and pay for his divorce.

It was alleged that Rinsch committed wire fraud, laundered money, and committed five counts of doing business with money that came from doing certain illegal things.

A person can get up to 20 years in prison for each fraud and money laundering charge.They can also face up to 10 years in prison for each money transaction charge.

Judge Jed Rakoff of the federal court in New York received the case after Rinsch’s arrest on March 18.

The Associated Press reported on March 18 that Rinsch’s attorney, Annie Carney, reportedly turned down comments outside court.

Carl Erik Rinsch took Netflix’s money to create a sci-fi show but mostly used it to gamble instead. He lost money in stocks, made profits in crypto, and spent millions on luxury items. Now, he faces serious fraud charges, and if convicted, he could spend decades in prison. This case is a big warning for companies handing out large sums without strict monitoring.