Two former leaders of MoviePass have both been indicted on U.S. securities fraud charges for allegedly deceiving investors.
Mitchell Lowe, the former CEO of MoviePass and Theodore Farnsworth, former CEO of parent company Helios & Matheson, were each charged with one count of securities fraud and three counts of wire fraud.
The charges reportedly repeat the allegations filed in a civil complaint in late September by the Securities and Exchange Commission. Both cases allege the pair falsely claimed their subscription model had been market tested and would be sustainable over the long run.
Michael J. Driscoll, the assistant director of the FBI’s New York field office, said in a statement on Friday:
“Attempted scams of this nature erode the public’s faith in our financial markets. The FBI is committed to ensuring these types of frauds and swindles are uncovered, and the perpetrators are held responsible for their actions in the criminal justice system.”
The indictment also alleges false claims of the use of AI and ‘big data’ to monetize subscriber information, along with false claims of developing multiple revenue streams and dwindling costs.
MoviePass recently announced that it would relaunch with a different business plan and new ownership.
Source: Variety
