Former MoviePass CEO Pleads Guilty to Securities Fraud
Theodore Farnsworth, ex-CEO of Helios & Matheson Analytics (the parent company of MoviePass), pleaded guilty in federal court today of defrauding investors. According to Deadline, Farnsworth pleaded guilty to defrauding and conspiring to defraud investors in two publicly traded companies — MoviePass and Vinco Ventures — as well as lying about the capabilities of AI.
Principal Deputy Assistant Attorney General Brent S. Wible made a statement claiming Farnsworth “repeatedly lied to the public to artificially inflate these companies’ stock prices, defraud investors, and enrich himself and his co-conspirators.” They claim Farnsworth and his co-conspirators artificially inflated Helios stock from August 2017 through March 2019.
The DOJ also claims the former MoviePass CEO engaged in “AI washing,” pretending their artificial intelligence was capable of more than publicly claimed. Farnsworth “concealed that MoviePass’ subscription model was a money-losing gimmick and falsely claimed that HMNY used artificial intelligence to monetize MoviePass’ subscriber data, among other misrepresentations,” Wible said.
When MoviePass said its Any Movie Any Time for $9.95 subscription model would be profitable, it seemed too good to be true. Indeed it was. Farnsworth claimed the model was tested and sustainable, but knew all along the plan would lose money. MoviePass also claimed to be able to use “big data” to monetize the data from MoviePass subscribers. Again, that was completely untrue. Farnsworth faces a maximum sentence of 20 years in prison for securities fraud, and five years for conspiracy to commit conspiracy fraud. A sentencing hearing has not yet been scheduled.
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