By Connor Hart
Ted Farnsworth pleaded guilty to defrauding investors, admitting to his role in MoviePass' ill-fated $9.95-a-month subscription plan.
From August 2017 to March 2019, Farnsworth, who at that time served as chief executive of MoviePass' parent company Helios & Matheson Analytics, made false and misleading representations of the companies' business and operations that artificially inflated Helios' stock, the Justice Department said.
Farnsworth's attorney didn't immediately respond to a request for comment on Tuesday.
Farnsworth, alongside former MoviePass CEO J. Mitchell Lowe, was charged in November 2022. Lowe pled guilty and entered a plea agreement in connection to his role in September.
MoviePass, a subscription service for movie theaters, made a splash when it launched in 2017, giving users the opportunity to watch a movie a day in a theater for $9.95 a month under its unlimited plan. The business model proved to be disastrous for investors, and the service was ultimately shut down in 2019.
Farnsworth claimed that the company's plan was tested, sustainable and would be profitable or break even on subscription fees alone. The Justice Department, however, said Farnsworth knew the plan was a "temporary marketing gimmick" that lost money.
He additionally claimed that Helios possessed and used technologies, such as "big data" and "artificial intelligence," to generate revenue by analyzing and monetizing the data that MoviePass collected from subscribers despite knowing these claims to be false, the DOJ said.
James Dennehy, assistant director in charge of the FBI New York Field Office, called the service too good to be true.
"They were in fact part of a securities fraud scheme," he said. "As he admitted today, Farnsworth's ploys and boasts were actually lies and misrepresentations designed to boost stock prices."
After later joining Vinco Ventures, Farnsworth employed the same strategy, defrauding investors of that company between November 2020 and September 2024, according to the DOJ. Farnsworth's guilty plea on Tuesday was in connection to charges of defrauding and conspiring to defraud investors in two public companies.
Write to Connor Hart at connor.hart@wsj.com
(END) Dow Jones Newswires
January 07, 2025 15:30 ET (20:30 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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