Ted Farnsworth, who designed the unsuccessful $9.95-per-month MoviePass subscription scheme, admitted guilt on Tuesday for misleading investors regarding the company.
Additionally, Farnsworth was charged with conspiring in another scheme unrelated to the MoviePass case. This alleged scheme centered around a fictitious video-sharing platform that authorities claim Farnsworth covertly orchestrated even while being investigated in the MoviePass case.
Farnsworth, 62, has been in federal custody since his bond was revoked in August 2023.
Today, Mr. Farnsworth acknowledged his actions and admitted guilt, with his lawyer, Sam Rabin, confirming this via email, stating it was a significant move on his part to own up for his behavior.
In November 2022, Farnsworth faced accusations in the MoviePass affair for allegedly misleading investors regarding the income streams and long-term viability of the business by providing false information.
On December 27th, a court approved a settlement in a concurrent civil lawsuit filed by the Securities and Exchange Commission. As part of this deal, Farnsworth was prohibited from holding any executive positions within publicly-traded corporations.
2017 saw MoviePass rapidly grow in size, following the launch of their unlimited movie theater subscription service. In a short span, they amassed a user base of 3 million members. However, the company’s financial losses mounted to hundreds of millions, eventually leading to bankruptcy in 2020.
Farnsworth served as the CEO for Helios & Matheson Analytics, which is a publicly listed corporation that oversees MoviePass. In September, Lowe, who was the CEO of MoviePass at the time, admitted guilt.
Despite the evident lack of profitability in the company’s financial structure, the executives maintained in interviews back in 2017 that they could turn a profit by utilizing customer data. However, according to government allegations, these same executives secretly implemented strategies to slow down the service for heavy users, requiring them to repeatedly reset their passwords and verify their tickets.
Originally, Farnsworth faced charges for securities fraud and three instances of wire fraud. However, the government recently added a supplementary accusation last month, alleging him not only with securities fraud but also with conspiring to commit securities fraud.
The final accusation centered around a different business strategy involving Vinco Ventures, another publicly traded corporation. As stated in an SEC lawsuit, Farnsworth covertly controlled this company that reportedly amassed $120 million from 2021 to 2023, allegedly for a proposed media distribution network. The suit claims Farnsworth withdrew millions for personal use. In 2021, the company’s stock peaked at $12.49 per share, but now, according to the complaint, it is barely worth a penny.
Farnsworth’s million-dollar bond was withdrawn following allegations by the government that he had utilized business funds to compensate individuals he encountered on an adult services website.
After filing for bankruptcy, MoviePass reemerged under new management and a revised business strategy.
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2025-01-07 22:16