Former MoviePass executive Ted Farnsworth pleads guilty to defrauding investors
Jamie McCarthy/Getty
- Ted Farnsworth pleaded guilty to defrauding investors in MoviePass and Vinco.
- Farnsworth has been in prison since August 2023.
- MoviePass's $10 plan led to its popularity but was unsustainable, causing bankruptcy.
Ted Farnsworth pleaded guilty on Tuesday to defrauding investors in the movie-ticket subscription service MoviePass, the US Department of Justice announced. He bought the company in 2017 while CEO of Helios and Matheson Analytics (HMNY).
Farnsworth, 62, also pleaded guilty to a conspiracy charge for a second scheme related to a video-sharing platform he was involved with while under investigation for MoviePass.
Farnsworth has been in federal custody since August 2023.
"Farnsworth was anxious to accept responsibility for his conduct," Farnsworth's lawyer, Sam Rabin, told Business Insider in a statement. "The most important step in doing that was to plead guilty to the crimes with which he is charged. He did that today."
The Department of Justice charged Farnsworth and then MoviePass CEO Mitch Lowe with securities fraud in 2022. The DOJ alleged that Lowe and Farnsworth "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 also recently charged Farnsworth and others with using "the same strategy to defraud" investors in Vinco Ventures, another publicly traded company.
MoviePass/Reuters
Lowe, the former MoviePass CEO, pleaded guilty to securities fraud conspiracy in September 2024.
The rise and fall of MoviePass
In 2017, HMNY became the parent company of MoviePass. Farnsworth and Lowe launched a $10-a-month plan that made the service very popular. As subscriptions soared into the millions, HMNY's stock skyrocketed.
However, the $10 plan — which allowed subscribers to see a movie a day in theaters — was not sustainable, and the company burned through hundreds of millions of dollars. By 2020, both MoviePass and HMNY went bankrupt.
MoviePass founder Stacy Spikes, who was ousted by Lowe and Farnsworth from MoviePass in 2018, bought back the company in 2021.
MoviePass — under Spikes' leadership — is currently available nationwide.
The story of the rise and fall of MoviePass is chronicled in the documentary "MoviePass, MovieCrash," which was released in May and is based on BI's award-winning reporting.