Filmmaker Faces Charges for Misusing Netflix Funds on Risky Investments

According to Cointelegraph, U.S. federal authorities have arrested filmmaker Carl Erik Rinsch, accusing him of misappropriating $11 million provided by Netflix for a science fiction TV show. Instead of using the funds for production, Rinsch allegedly engaged in risky stock and cryptocurrency trading. The Department of Justice (DOJ) unsealed an indictment in a Manhattan federal court on March 18, charging Rinsch with fraud and money laundering, offenses that could result in a prison sentence exceeding 20 years. The DOJ claims that Netflix, although not explicitly named in the complaint, allocated $11 million to Rinsch in March 2020 for the development of the sci-fi series "White Horse," later renamed "Conquest." However, prosecutors allege that Rinsch diverted approximately $10.5 million into a brokerage account, executing high-risk trades, including call options on a biopharmaceutical company, which resulted in losses exceeding $5.5 million. Despite these setbacks, Rinsch reportedly assured Netflix that the project was progressing smoothly. Prosecutors further allege that Rinsch experienced more success in cryptocurrency trading, earning several million dollars in February 2021. He purportedly used these gains to purchase luxury items, including nearly $3.8 million worth of furniture and antiques, five Rolls-Royces, a Ferrari, and watches and clothing valued at over $3 million. The U.S. Attorney’s Office did not identify Netflix as the streaming service involved in the indictment, but The New York Times reported on a dispute between Netflix and Rinsch in November 2023, noting that Netflix canceled "Conquest" in early 2021 due to Rinsch’s erratic behavior. The Times also reported discrepancies in the amounts paid to Rinsch, with Netflix allegedly providing $55 million, while prosecutors claim he received $44 million for the show, which remains unaired. Additionally, U.S. prosecutors accuse Rinsch of spending nearly $1.8 million on credit card bills and $1 million in legal fees to sue Netflix for additional funds and cover divorce-related expenses. Rinsch faces charges of wire fraud, money laundering, and five counts of engaging in monetary transactions with unlawfully derived property. Each fraud and money laundering charge carries a potential 20-year sentence, while the monetary transaction charges could result in a 10-year sentence each. Rinsch was arrested on March 18, and his case is assigned to New York federal court Judge Jed Rakoff. Rinsch’s lawyer, Annie Carney, declined to comment outside court, as reported by the Associated Press.