MoviePass to Relaunch on Labor Day in Beta Form With Pricing Ranging From $10-$30 a Month The only way to use the service is to sign up on a waitlist beginning Thursday
MoviePass has a new look with a black card. MoviePass.
The former CEOs of MoviePass and its parent company have been charged in a securities fraud case
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- Lowe and Farnsworth have been charged in a securities fraud case by the Department of Justice.
- Both were charged with one count of securities fraud and three counts of wire fraud.
- Farnsworth surrendered himself to authorities in Washington, DC, on Friday.
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The former CEOs of MoviePass and its former parent company, Helios and Matheson Analytics (HMNY) — Ted Farnsworth and Mitch Lowe — have been charged in a securities fraud case, according to court documents.
Per a Department of Justice statement, the court documents allege that Farnsworth and Lowe “engaged in a scheme to defraud investors through materially false and misleading representations relating to HMNY and MoviePass’s business and operations to artificially inflate the price of HMNY’s stock and attract new investors.”
The DOJ statement says:
“Farnsworth and Lowe are each charged with one count of securities fraud and three counts of wire fraud. If convicted, they each face a maximum penalty of 20 years in prison on each count.”
Farnsworth surrendered himself to authorities in Washington, DC, on Friday, his rep confirmed.
Stacy Spikes founded MoviePass with Hamet Watt in 2011, creating a service that let moviegoers see a certain number of movies each month in theaters for a monthly fee. After struggling to stay afloat for years, the company in 2017 was bought by HMNY.
Under the leadership of Farnsworth and Lowe, the company launched a $9.95-a-month subscription that allowed people to see a movie a day. Within two days, subscriptions went from 20,000 to 100,000. In less than a year, MoviePass had over 3 million subscribers. However, the company also blew through hundreds of millions of dollars.
The indictment alleges Farnsworth and Lowe falsely claimed that MoviePass’ $9.95 plan “was tested, sustainable, and would be profitable or break even on subscription fees alone,” while knowing it was a “a temporary marketing gimmick to grow new subscribers and, in turn, artificially inflate HMNY’s stock price and attract new investors,” according to the DOJ statement.
Additionally, the indictment alleges that Farnsworth and Lowe made false claims that HMNY “possessed and used technologies – like ‘big data’ and ‘artificial intelligence’ platforms – to generate revenue by analyzing and monetizing the data MoviePass collected from subscribers,” the DOJ statement says.
The court documents allege Farnsworth and Lowe “directed MoviePass employees to implement numerous tactics to prevent certain subscribers from using the purportedly ‘unlimited’ service for which they had paid to try to ease MoviePass’s cash shortfalls,” the DOJ statement says.
Per the DOJ statement, the indictment also alleges that Farnsworth and Lowe “made these materially false and misleading representations in press releases, SEC filings, interviews on podcasts and on television, and in print and online media.”
“The Department of Justice is committed to protecting the public from being exploited by criminals for their personal profit,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s criminal division in a statement. “As these charges make clear, the Department, together with our law enforcement partners, will hold corrupt C-Suite executives who engage in securities fraud accountable for their actions.”
“Attempted scams of this nature erode the public’s faith in our financial markets,” said Assistant Director in Charge Michael J. Driscoll of the FBI New York Field Office in a statement. “The FBI is committed to ensuring these types of frauds and swindles are uncovered and the perpetrators are held responsible for their actions in the criminal justice system.”
“The indictment repeats the same allegations made by the Securities and Exchange Commission in the Commission’s recent complaint filed on September 27th against Mr. Farnsworth, concerning matters that were publicly disclosed nearly three years ago and widely reported by the news media,” Chris Bond, spokesman for Farnsworth, told Insider in a statement. “As with the SEC filing, Mr. Farnsworth is confident that the facts will demonstrate that he has acted in good faith, and his legal team intends to contest the allegations in the indictment until his vindication is achieved.”
Lowe’s lawyer did not immediately respond to a request for comment.
MoviePass to Relaunch on Labor Day in Beta Form With Pricing Ranging From $10-$30 a Month The only way to use the service is to sign up on a waitlist beginning Thursday.
MoviePass, the movie theater ticket subscription startup that had a meteoric rise and fall, will relaunch in beta form on Labor Day, Insider can exclusively report.
Insider reported last November that MoviePass cofounder Stacy Spikes had bought the company back after its parent company, Helios and Matheson Analytics (HMNY), went bankrupt. Since then Spikes and his team have been diligently working on a relaunch of the popular service.
MoviePass cofounder Stacy Spikes. J. Countess/Getty
Beginning at 9 a.m. ET on Thursday, a waitlist will open on moviepass.com for those wishing to join the beta version.
The waitlist will be open for five days on a first come, first served basis. It will be free to sign up with MoviePass — all that’s required is an email address and zip code. Once the waitlist closes, the initial group of beta users will be notified on Labor Day (September 5) and will be offered three price tiers to choose from.
Prices will vary depending on the user’s home market, but general pricing will be $10, $20, or $30 a month. Each subscription option will give the user a number of credits to use each month to see movies. There won’t be an unlimited option during the beta version.
Users who make the cut for the beta will also be given 10 friend invites to use MoviePass.
According to MoviePass, the service has partnerships with 25% of theaters in the US. Users of the beta version will be able to order movie tickets through the app or can wait for their MoviePass card to come in the mail and use that at any theater box office that accepts MasterCard.
The card will be black, as MoviePass is scrapping its previous red branding. Insider was given an exclusive first look at what the card will look like:
MoviePass has a new look with a black card. MoviePass.
Spikes founded MoviePass with Hamet Watt in 2011, creating a service that let moviegoers see a certain number of movies each month in theaters for a monthly fee. After struggling to stay afloat for years, the company in 2017 was bought by HMNY.
Under the leadership of HMNY CEO Ted Farnsworth and new MoviePass CEO Mitch Lowe, the company launched a $10 a month subscription price to see a movie a day. Within two days, subscriptions went from 20,000 to 100,000. In less than a year, MoviePass had over 3 million subscribers.
With Farnsworth and Lowe at the helm, MoviePass blew through hundreds of millions of dollars, and Spikes — who said he’d raised concerns internally about the sustainability of the $10 price point — was fired in 2018.
Former MoviePass CEO Mitch Lowe, left, and former Helios and Matheson Analytics CEO Ted Farnsworth. Getty / Dave Kotinsky / Stringer
Mark Wahlberg’s non-fiction production company Unrealistic Ideas is currently developing a documentary on the rise and fall of MoviePass based on award-winning reporting by Insider.]]>