Mitchell Lowe, the former CEO of MoviePass, was indicted over fraud charges for allegedly defrauding investors with false claims on the company’s movie-a-day subscription model.
On Friday, November 4, the Department of Justice issued a press release detailing the charges against Mitchell Lowe and his co-defendant Theodore Farnsworth, the former CEO of Helios and Matheson, the parent entity of MoviePass.
The Justice Department said Mitchell Lowe and his co-defendant were charged with one count each of securities fraud and three counts each of wire fraud. The charges alleged that the accused engaged in illegal activities “to artificially inflate the price of HMNY’s stock and attract new investors” while the company was actively losing money.
According to the indictment, Farnsworth, 60, and Lowe, 70, knowingly schemed to deceive MoviePass investors by producing misleading proof on the sustainability of the site’s “unlimited” plan that offered customers the ability to view one movie a day for a $10 fee a month.
The new business model that eventually led to the company’s downfall was misrepresented to the investors, who were told that it was sustainable and tested in the markets to churn out profits.
In 2017, Mitchell Lowe, the MoviePass CEO, offered an all-you-can-watch subscription plan priced at $9.95 per month that exponentially exploded. The plan multiplied its initial 20,000 members to more than 3 million....
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