Netflix filmmaker accused of $11M fraud, spent funds on crypto and stock speculation

Federal prosecutors have charged filmmaker Carl Erik Rinsch with fraud and money laundering, alleging he misused $11 million from Netflix to fund high-risk stock and cryptocurrency trades instead of developing a sci-fi television series.

The US Department of Justice (DOJ) unsealed the indictment in a Manhattan federal court on March 18, revealing accusations that Rinsch diverted funds meant for production expenses into speculative investments.

If convicted, he faces up to 20 years in prison.

Netflix funding diverted into risky trades

Netflix had initially provided Rinsch with financing in March 2020 for White Horse, later renamed Conquest, covering essential production costs such as storyboarding, casting, and post-production.

However, authorities allege that rather than using the money for its intended purpose, he transferred approximately $10.5 million into a brokerage account, making high-risk trades, including call options on a biopharmaceutical company.

The investments reportedly led to massive losses exceeding $5.5 million.

Despite the financial depletion, Rinsch allegedly assured Netflix that production was progressing as planned.

His fortunes briefly improved in early 2021 when he profited from cryptocurrency trading, but instead of reinvesting in the project, prosecutors claim he spent lavishly on luxury assets and personal expenses.

Extravagant spending spree linked to crypto profits

According to the DOJ, Rinsch used his cryptocurrency gains to purchase nearly $3.8 million worth of furniture and antiques, along with five Rolls-Royces, a Ferrari, high-end watches, and over $3 million in designer clothing.

The indictment further alleges that he spent nearly $1.8 million paying off credit card bills and allocated $1 million in legal fees for various lawsuits, including one against Netflix and another related to his divorce.

Reports indicate that Netflix had paid Rinsch $55 million for the sci-fi project before canceling it in early 2021 due to concerns over his erratic behavior.

Legal battle and criminal charges

Rinsch faces serious legal consequences, including one count of wire fraud, one count of money laundering, and five counts of engaging in unlawful monetary transactions.

The wire fraud and money laundering charges each carry a potential 20-year prison sentence, while the unlawful monetary transaction charges could result in up to 10 years per count.

Following his arrest on March 18, his case was assigned to US District Judge Jed Rakoff in New York.

The legal proceedings will determine whether Rinsch’s actions constitute financial misconduct on a significant scale or whether he can mount a defence against the charges.