A Hollywood screenwriter and director was arrested on Tuesday accused of defrauding Netflix of $11 million for a science fiction series that was never aired, using the money for cryptocurrency investments and luxury purchases including a fleet of Rolls-Royces and a Ferrari.
Carl Erik Rinsch - perhaps best known for directing the movie 47 Ronin - has been charged with wire fraud and money laundering in what federal prosecutors allege was a scheme to defraud the streaming giant.
According to the prosecution, Netflix initially paid around $44 million for the purchase of an unfinished series called White Horse from Rinsch, but ended up disbursing an additional $11 million after he claimed he needed the extra money to finish the series.
Instead of using the extra money to complete the production, Rinsch transferred the money to a personal account, where he made a series of unsuccessful investments that caused him to lose nearly half of the $11 million in two months, according to prosecutors.
The filmmaker then invested the remaining money in the cryptocurrency market, which turned out to be profitable, and Rinsch proceeded to transfer the profits to a personal bank account, as per the accusation.
Subsequently, Rinsch spent around $10 million on personal expenses and luxury items which, according to prosecutors, included approximately $1.8 million in credit card bills; $1 million on lawyers to sue Netflix for more money; $3.8 million on furniture and antiques; $2.4 million on five Rolls-Royces and a Ferrari; and $652,000 on watches and clothing.
Rinsch, 47 years old, was arrested in West Hollywood, California and had an initial court appearance on Tuesday.
He appeared in a federal court in Los Angeles dressed in a turtleneck sweater, jeans, and shackles on his arms and legs. He did not plead guilty and only spoke to answer the judge's questions. When asked if he had read the charges against him, he replied that he had not read them "from start to finish," but told the judge that he understood the charges.
Magistrate Judge Pedro V. Castillo ordered his release on Tuesday after he agreed to post a $100,000 bond to ensure his appearance in a New York court, where the charges were filed.
His newly appointed attorney, Annie Carney, declined to comment outside the court. During the hearing, she mentioned that she had not yet seen the evidence of the charges against Rinsch. Regarding the conditions of his release, she stated that "the allegations in this case are purely financial."
A date for Rinsch's appearance in the New York court has not been set yet.
Netflix declined to comment.