Former MoviePass CEO Pleads Guilty to Fraud, Faces Up to 25 Years in Prison

Ted Farnsworth, the erstwhile CEO of MoviePass and feline who had the agleam thought to complaint $9.95 per period for unlimited movie screenings, has admitted to defrauding investors successful the subscription company. According to the Department of Justice, Farnsworth pleaded blameworthy to one number of securities fraud and 1 number of conspiracy to perpetrate securities fraud and volition look up to 25 years successful prison.

If you’re unfamiliar with the MoviePass story, Farnsworth is not the laminitis of the company, which was started by Urbanworld Film Festival laminitis Stacy Spikes arsenic a comparatively humble subscription work designed to entice radical to spell to the cinema a small much often. Farnsworth was the caput of analytics steadfast Helios and Matheson, which bought a bulk involvement successful MoviePass successful 2017 and yet pushed the institution to connection filmgoers the quality to spot 1 movie per time for conscionable $9.95 per month.

Farnsworth’s program successfully pulled successful tons of subscribers—more than 3 cardinal people signed up for the service. And that’s wherever the occupation started. While Farnsworth deed the property way to tout the roar successful concern and assertion that the institution would crook a nett by selling lawsuit data, down the scenes, MoviePass was hemorrhaging cash. It wouldn’t instrumentality agelong earlier MoviePass started backtracking connected its committedness of unlimited filmgoing, arsenic it started to institute blackouts connected fashionable films, experiencing outages successful its services, and changing prices and plans with small warning.

It was beauteous evident that MoviePass was doomed to neglect the infinitesimal the unlimited program was introduced, but Farnsworth claimed to investors that the terms was sustainable and would beryllium profitable connected subscription fees alone. Turns retired no, arsenic the DOJ recovered MoviePass mislaid wealth from the plan. As for Farnsworth’s lawsuit information play, that was fume and mirrors, too. The Justice Department said that his analytics institution “did not person these capabilities to monetize MoviePass’ subscriber data.” In the end, MoviePass ne'er had a watercourse of gross beyond its subscriptions—and that was costing the institution truthful overmuch wealth that Farnsworth instructed employees to throttle users to forestall them from utilizing the program they paid for.

After Farnsworth drove MoviePass into bankruptcy, helium seemingly ran the playbook again with different institution called Vinco Ventures. Per the DOJ, Farnsworth and his co-conspirators pulled successful currency from investors by lying astir the lasting of the business, each portion diverting currency straight to their ain pockets.

Farnsworth’s sentencing volition instrumentality spot aboriginal this year. Meanwhile, MoviePass is backmost nether the ownership of its laminitis Stacy Spikes, and it’s reportedly profitable (though users of the work regularly complain astir glitches and issues).