MoviePass Executives Facing Up to 80 Years in Prison Over Fraud Indictment Theodore Farnsworth and Mitchell Lowe are being charged for defrauding investors on multiple counts in an attempt to inflate stock prices amid a tumultuous financial time.
By Emily Rella •
Subscription movie ticket company MoviePass has hit another snag in its ever-contentious trajectory.
Two executives for the company — Theodore Farnsworth, former CEO of Helios and Matheson (the parent company of MoviePass) and Mitchell Lowe, former CEO of MoviePass — are being charged for defrauding investors on multiple counts in an attempt to inflate stock prices amid a tumultuous financial time.
The indictment claims that the two men "deliberately" conned investors with false information about the company's finances and internal workings so that stock prices would inflate to help the company avoid bankruptcy.
"As alleged, the defendants deliberately and publicly engaged in a fraudulent scheme designed to falsely bolster their company's stock price," Assistant Director in Charge Michael J. Driscoll of the FBI New York Field Office said in a release. "Attempted scams of this nature erode the public's faith in our financial markets. The FBI is committed to ensuring these types of frauds and swindles are uncovered and the perpetrators are held responsible for their actions in the criminal justice system."
Allegations also state that the two men were aware that the MoviePass unlimited pass (which cost consumers $9.95) had no real longevity and would not be a primary revenue driver other than working in immediacy to inflate new subscribers and mislead investors to believe the opposite.
Farnsworth and Matheson are also being accused of telling investors that MoviePass's cost of goods was "naturally declining" as well as blocking certain subscribers from having access to the "unlimited" plan, even though they had paid for it.
Both men are being charged with one count of securities fraud and three counts of wire fraud each. If convicted, they each could face up to 20 years in prison per charge.
The suit is not the first in the MoviePass saga.
The duo settled a civil suit with the SEC just two months ago after they were accused of preventing subscribers from using the MoviePass app and its services "as advertised", as well as breaching personal data.
MoviePass made an attempted comeback when it opened signups on Labor Day in select markets. It remains in a beta period.
