New York CNN Business —
MoviePass’s former CEO and the leader of its former parent company have been indicted on securities fraud charges for deceiving investors on the sustainability and profitability of the company’s movie-a-day subscription model, according to a Department of Justice release on Friday.
J. Mitchell Lowe, previous CEO of the movie ticket subscription service, and Theodore Farnsworth, former leader of the company’s now-defunct parent firm Helios & Matheson Analytics Inc (HMNY (HMNY)), allegedly schemed to defraud MoviePass investors by producing “materially false and misleading representations ” of business activities to boost stock prices and attract investors, according to the release.
“As alleged, the defendants deliberately and publicly engaged in a fraudulent scheme designed to falsely bolster their company’s stock price,” Assistant Director in Charge Michael J. Driscoll of the FBI New York Field Office said in the release. The men each face one count of securities fraud and three counts of wire fraud with a maximum of 20 years in prison. Farnsworth had a first appearance in DC District Court Friday after he voluntarily turned himself in.
Lowe and Farnsworth are accused of lying about the subscription’s “unlimited” plan that offered customers the chance to see any number of movies in theaters for a flat monthly fee of $9.95, telling investors that the system was tested, sustainable and able to churn profit or at least break even. Court documents...
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