Feds charge former MoviePass execs with securities and 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. 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. 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.
According 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. 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.
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. The indictment accuses them of making the claim even though …read more
