Let’s begin…

Pardons, abandoned convictions, new policies… It might seem like Trump’s D.O.J. is giving up on pursuing white-collar crime altogether. Well, not quite…

For the past week, I’ve been tucked into a sparsely attended federal courtroom watching the criminal trial of Carl Rinsch—the writer-director accused of extracting a small fortune from Netflix. Rinsch, of course, was famously hired to make a big-budget sci-fi series about A.I. clones, called White Horse. Instead, he wasted millions on a Ferrari, four Rolls-Royces, really nice bedding, Dogecoin, and various other purchases that seemingly had nothing to do with the show’s production costs.

I sat through this trial to puzzle out two mysteries that have nagged me since I first covered the case in September. First, what possessed Rinsch to torch his career and reputation so spectacularly? And second, why exactly are federal prosecutors in New York, who have charged him with wire fraud and money laundering, playing referee between Netflix and its runaway auteur?

The government’s contention is that Rinsch deserves prison time for deceiving Netflix—which is, separately, pursuing collection from him following an arbitration win. The criminal trial, which is wrapping today after seven days in a Lower Manhattan courtroom, was tedious, poorly lawyered on all sides, and—above all—bizarre. The Netflix witnesses, including then-vice president of original content Cindy Holland (now at Paramount overseeing streaming), came off alternately irritable and foggy. Everyone spoke into microphones tuned so low that the jurors practically leaned out of the box.

And then came the digressions, like prosecutors demanding a Beverly Hills salesman explain what’s so great about a $439,000 mattress. (“It’s Swedish and handmade!” he replied.) Judge Jed Rakoff, living up to his reputation as the most idiosyncratic federal judge in New York, couldn’t restrain himself: “The government is wasting time,” he declared. It wouldn’t be the last time he expressed that sentiment.

Eventually, I began to get a portrait of Rinsch. He’s hardly a petty fraudster, even by the government’s telling. He was repped by CAA and backed by Texas billionaire Dan Friedkin and Keanu Reeves, whom he befriended after directing 2013’s 47 Ronin, with a script that had sparked a bidding war. Rinsch shot hundreds of hours of footage around the globe for the new show, and Netflix was apparently so eager to work with him that they granted him final cut. And even though he was overbudget and behind schedule, Rinsch somehow persuaded Netflix to give him another $11.2 million, in March 2020, to finish White Horse—bringing the total project cost to $55 million.

Then Covid hit, and Rinsch split with his wife—who was also producing the series. (They’re technically still married; she testified for the government at trial.) Amid the chaos, Rinsch appears to have become distracted and largely stopped working. His attorney Benjamin Zeman told the jury that Rinsch was a “creative genius” who merely failed to deliver.

According to evidence presented at trial, Rinsch later began fretting about the tax implications of the Netflix funds and apparently developed a theory that luxury goods would hold their value through the pandemic. So he told an assistant to buy, buy, buy. “See Brewster’s Millions?” he texted this individual, referring to the 1985 Richard Pryor movie in which a man attempts to spend $30 million in 30 days. “Gotta spend like it’s on fire.”

Does that make sense? Not especially. Does it excuse what he did? Hardly. Holland testified that Netflix never would have handed him the money had it known how he would spend it. As for whether he committed wire fraud, that question is now with the jury.

How did Rinsch even end up on the D.O.J.’s radar? After all, for the feds to prosecute a fraud case isn’t an easy matter. Was it because The New York Times ran a splashy feature by a celebrated investigative journalist—or something else? For a moment, I thought it was because he’d approached an attaché, and then the F.B.I., while living abroad, over the failure of a Paris furniture shop to deliver chairs he’d bought during a spending spree. He’d introduced himself as “the Dogecoin whale.” (He sank some of Netflix’s money into Elon’s favorite cryptocurrency.) But no: At trial, one F.B.I. agent involved in that case admitted he’d never even heard of White Horse.

So why was Rinsch prosecuted? I’m not the only one asking. During breaks in testimony—outside the jury’s earshot—Judge Rakoff kept prodding prosecutors to explain their fraud theory. Arguably, these were the trial’s most illuminating moments. He even ordered up a mid-trial briefing, invoking a case from a decade ago in which the Second Circuit reversed him, wiping out a $1.2 billion jury verdict against Countrywide Home Loans over the subprime mortgage disaster. In that ruling, the appeals court held that the government had proven, at most, an intentional breach of contract—not criminal fraud. Why wasn’t Rinsch’s situation the same—merely a private dispute between Netflix and an unreliable filmmaker?

In opening statements, prosecutors suggested that Rinsch saw an “opportunity to make a killing” in the markets at the start of the pandemic and “deceived” Netflix to get money. But the evidence for that interpretation was lackluster, so the government fell back on another theory: Even if Rinsch didn’t take the $11.2 million with plans to misuse it, prosecutors argued, he made subsequent misrepresentations that frustrated Netflix’s ability to enforce its rights and allowed him to keep the money. He had “lulled” them, the prosecutors said, by telling the streamer that White Horse was “moving forward diligently” and that everything looked “awesome.”

Is that really the new standard? Are the feds going to police creative relationships and delivery promises this way? It’s hard to believe D.O.J. attention is shifting in that direction—especially in the Trump era. Then again, last week, when U.S. Attorney for the Southern District Jay Clayton was asked whether immigration crackdowns would divert resources from financial crimes, he promised there would be plenty of white-collar work ahead, adding with a straight face: “The defense bar shouldn’t worry about the breadline.”

On Tuesday, the trial delivered its most unexpected spectacle yet: Rinsch himself took the stand to explain what happened. Could this entire saga be one massive misunderstanding—an overreach by zealous prosecutors? Rinsch certainly tried to make that case. And while the standard defense-bar wisdom is to never put your client on the stand unless things have gone completely fubar, there are slightly different rules for white-collar cases because prosecutors must prove intent to secure a guilty verdict.

Rinsch’s explanation boiled down to this: He had spent vast sums of his own money filming White Horse, and Netflix owed him reimbursement. He insisted he had completed principal photography, which under the terms of his contract triggered an $11.2 million payment. In his telling, Netflix wasn’t fronting money for production—it was simply paying him back. And when he and his Hollywood lawyer told the streamer they needed the extra funds for things like reserving actors and locations, he meant that after being reimbursed, he would go out of pocket to begin work on a sequel. “I wanted to make a franchise,” he testified. “It wasn’t about one season. I saw five.”

It’s true that Rinsch had final cut, a fact he repeatedly emphasized on the witness stand at his lawyer’s prodding. But it’s also worth remembering that he tried this very line of reasoning in arbitration with Netflix, arguing that he didn’t need to deliver everything scripted, that he could save some material for Season 2. That claim was rejected. Yes, an arbitration over contract obligations differs from a criminal fraud trial, and the burdens of proof aren’t the same. Still, prosecutors pounced on inconsistencies between Rinsch’s prior testimony and today’s, even implying that he was performing a lie. “Your testimony is you didn’t need to spend $11 million [on the show]?” one asked. “You’ve acted before, right?”

The only thing this trial hasn’t offered is footage from White Horse itself. Netflix seems to have given up after Holland’s departure, telling Rinsch it was scrapping the series. On the stand, he held up a thumb drive allegedly containing the episodes, and it was entered into evidence. So perhaps the jurors will be treated to an exceedingly rare privilege: the chance to judge a Netflix show that might not ever see the light of day.

Thanks, Eriq. Send him feedback and tips at Eriq@puck.news or at EriqG.99 on Signal. I’ll be back in your inbox tomorrow,

Matt

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