Former MoviePass executives are now facing federal charges in connection with allegedly deceiving investors.
Per a report from CBS News over the weekend, ex-MoviePass CEO Mitchell Lowe and Theodore Farnsworth, the former CEO of MoviePass parent company Helios and Matheson, have both been charged with securities fraud.
“As alleged, the defendants deliberately and publicly engaged in a fraudulent scheme designed to falsely bolster their company’s stock price,” Michael J. Driscoll, Assistant Director in Charge of the FBI’s New York Field Office, said in a press release issued last week. “Attempted scams of this nature erode the public’s faith in our financial markets.”
Lowe and Farnsworth are accused of making a number of false claims in an effort to defraud investors and inflate stock, with the headlines-spurring service’s prior $9.95 unlimited plan among them.
According to prosecutors, both execs “falsely claimed” that the plan had been tested and would be a sustainable endeavor for the company. They are also alleged to have made claims regarding various technologies despite, as accused, not actually having said technologies in their possession.
In addition to a single count each of securities fraud, both Lowe and Farnsworth have been charged with three counts of wire fraud. If convicted as currently charged, both men face as much as 20 years behind bars for each count.
In June of last year, Lowe and Farnsworth were announced to have reached a settlement regarding deceptive practices including violations of the Restore Online Shoppers’ Confidence Act. The two ex-execs, notably, have also been sued by the U.S. Securities and Exchange Commission.
