Former MoviePass Executives Charged With Multiple Fraud Counts By Feds – Deadline

Just over a month after the United States Securities and Exchange Commission prosecuted two former top executives of MoviePass and its parent company, Helios + Matheson, for fraud, the Department of Justice today unveiled a indictment charging those same executives, Theodore Farnsworth and J. Mitchell Lowe, each with one count of securities fraud and three counts of wire fraud. If found guilty, they face a maximum sentence of 20 years in prison on each count. At the time of the alleged fraud, Farnsworth was the president and CEO of Helios + Matheson, and Lowe was the CEO of MoviePass.

The duo “would have engaged in a scheme to defraud investors through materially false and misleading representations regarding the business and operations of HMNY and MoviePass in order to artificially inflate the price of HMNY shares and attract new investors. “, according to the indictment.

Specifically, the indictment alleges that Farnsworth and Lowe “falsely asserted that MoviePass’ $9.95 ‘unlimited’ plan – in which new subscribers could view ‘unlimited’ movies at theaters with no dated dates. ‘ban for a fixed monthly fee of $9.95 – has been tested, durable and would be profitable or break even on subscription fees alone. Farnsworth and Lowe allegedly knew that the “unlimited” plan at 9, $95 was a temporary marketing gimmick to grow new subscribers.

The digital ticketing company sought to popularize the purchase of fixed-price tickets, a tool widely used in many international markets, but ran into major operators and then its customers after deciding to offer an unsustainable monthly price . After reducing the monthly price from its previous levels of $40 to $50 per month, the company still had to fulfill customer orders for the tickets. An inability to meet growing demand led to outages and service interruptions at the height of the 2019 summer box office season.

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