A little over a month after the U.S. Securities and Exchange Commission sued two former top execs at MoviePass and its parent company, Helios + Matheson, for fraud, the Justice Department today unsealed an 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 convicted, they face a maximum penalty of 20 years in prison on each count.
At the time of the alleged fraud, Farnsworth was Helios + Matheson’s Chairman and CEO, and Lowe was MoviePass’s CEO. The duo “allegedly engaged in a scheme to defraud investors through materially false and misleading representations relating to HMNY and MoviePass’s business and operations to artificially inflate the price of HMNY’s stock and attract new investors,” according to the indictment.
Specifically, the indictment alleges Farnsworth and Lowe “falsely claimed that MoviePass’s $9.95 ‘unlimited’ plan – in which new subscribers could see ‘unlimited’ movies in theaters with no blackout dates for a flat monthly fee of $9.95 – was tested, sustainable, and would be profitable or break even on subscription fees alone.
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