![]() The SEC sued MoviePass for fraud back in September and also accused the executives of misleading investors about the viability of the company's $9.95-per-month business model. Farnsworth is confident that the facts will demonstrate that he has acted in good faith, and his legal team intends to contest the allegations in the indictment until his vindication is achieved." Farnsworth, concerning matters that were publicly disclosed nearly three years ago and widely reported by the news media. In a statement made to The Verge, the spokesperson for Farnsworth said: "The indictment repeats the same allegations made by the Securities and Exchange Commission in the Commission's recent complaint filed on September 27th against Mr. If you'll recall, MoviePass had to settle with the FTC in 2021 over allegations that it invalidated subscriber passwords on purpose to give it sufficient reason to freeze accounts of frequent users. Farnsworth and Lowe were also accused of implementing various tactics to prevent certain subscribers from being able to use their "unlimited" service. The business did not have a non-subscription revenue stream that would make it self-sufficient or offset its losses, according to authorities. ![]() The indictment accuses them of making the claim even though they knew that HMNY did not have the technology or the capability to monetize subscriber data.Īnother allegation against the executives is that they'd made false representations that MoviePass was earning considerable money from multiple revenue streams. ![]() In addition, the executives allegedly claimed that HMNY had "big data" and AI technologies that could be used to generate revenue for the company by analyzing data collected from MoviePass subscribers. They also falsely claimed that the business model was tested to be sustainable and that it was possible to become profitable on subscription fees alone, the feds said. Federal authorities accuse them of making materially false and misleading claims regarding MoviePass' business in press releases, interviews and even SEC filings in a bid to artificially inflate HMNY's stocks and entice new investors.Īccording to the newly unsealed court documents, Farnsworth and Lowe allegedly knew from the start that the business' $9.95 "unlimited" plan was a temporary gimmick to attract new subscribers and, hence, artificially inflate HMNY's stock prices. Mitchell Lowe and Theodore Farnsworth, who used to be the chairman of the service's former parent company Helios and Matheson Analytics (HMNY), have been charged with one count of securities fraud and three counts of wire fraud. The former executives in charge of MoviePass have been indicted in what the Justice Department calls "a scheme to defraud investors." Ex-MoviePass CEO J.
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