The former executives in charge of MoviePass have been charged with “conspiracy to defraud investors,” according to the Justice Department. J. Mitchell Lowe, the former CEO of MoviePass, and Theodore Farnsworth, the chairman of the service’s former parent firm Helios and Matheson Analytics (HMNY), have been charged with one count of securities fraud and three counts of wire fraud. Federal officials accuse them of making materially false and misleading statements about MoviePass’ operations in news announcements, interviews, and even SEC filings in order to artificially raise HMNY’s stock and attract new investors.
According to recently disclosed court filings, Farnsworth and Lowe reportedly understood from the outset that the company’s $9.95 “unlimited” plan was a gimmick designed to attract new members and, as a result, artificially raise HMNY’s stock prices. They allegedly falsely stated that the business model had been examined for sustainability and that it was conceivable to become profitable only via membership fees, according to the feds.
