MoviePass may relaunchHowever, scandal still surrounds former CEOs of the movie streaming service.
According to Variety, the former CEO of MoviePass’s parent company Helios & Matheson Analytics Inc., and the former CEO of MoviePass Mitchell Lowe have each been charged with four counts of fraud: one count of securities fraud, and three counts of wire fraud. They each face a maximum sentence of 20 years imprisonment if they are convicted.
The The charges were rescinded by the Department of JusticeFriday, November 4th, just over a full month after the Securities and Exchange CommissionFarnsworth & Lowe were charged with fraudulent behavior.
SEC and DOJ allege that Farnsworth claimed that MoviePass’s $9.95/month unlimited plan (where customers could view unlimited movies in theaters) had been tested on the market and was sustainable. MoviePass ended up losing money because the model was not sustainable. Customers are allegedly being prevented from seeing moviesEventually, it will be shutting down in 2019.
The DOJ alleges that Farnsworth and Lowe made these false claims in order to bolster the stock price of Helios & Matheson and attract more investors, knowing full well that the $9.95 unlimited plan was a “marketing gimmick.” Farnsworth & Lowe also allegedly made false claims about using “bigdata” and “artificial insight” to monetize subscriber’s data, without actually having access or using these technologies.
The FBI New York Field Office has been investigating the case. Said Assistant Director in Charge Michael J. Driscoll: “attempted scams of this nature erode the public’s faith in our financial markets. The FBI is determined to ensure that these frauds and swindles of any kind are exposed and that the perpetrators are held accountable in the criminal justice system.
Farnsworth spokeswoman Chris Bond said that Farnsworth would not be facing the charges. Bond stated that Farnsworth, like the SEC filing, is confident that the facts will show that he acted in good faith and that his legal team will contest the allegations in his indictment until he is vindicated.
Farnsworth or Lowe don’t appear to be part the newly launched MoviePass version.
