MoviePass executives are charged with fraud in unsurprising news

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MoviePass may be able to get some publicity for its plans to relaunch after the U.S. Securities and Exchange Commission sued two former executives. According to a report from DeadlineThe SEC filed suit against J. Mitchell Lowe, Theodore Farnsworth, and J. Mitchell Lowe on one count each for securities fraud and three charges of wire fraud.

Investigators suspect that Farnsworth & Lowe attempted to artificially inflate stock to attract investors. MoviePass was owned by Helios + Matheson (HMNY) at the time Lowe and Farnsworth were executives. Indictment states that they “allegedly 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.”These claims relate to the discontinued subscription service for movie tickets monthly, and not the impending revival.

Farnsworth and Lowe are specifically indicted for MoviePass’ $9.95 per month old subscription tier. This was described as “unlimited,”Subscribers can see as many films as they wish in theatres. The SEC believes the duo “falsely claimed that”This service “was tested, sustainable, and would be profitable or break even on subscription fees alone. Farnsworth and Lowe allegedly knew that the $9.95 ‘unlimited’ plan was a temporary marketing gimmick to grow new subscribers.”

Whether you know it or not, this is what actually happened. MoviePass wanted to introduce fixed-price ticket purchases for U.S. theaters. It had previously done this in other countries. The company was quickly rebuffed by theater companies in the U.S., and couldn’t keep up with its business. It changed its terms frequently and increased its prices throughout 2018, with some tiers reaching $40 and $50 respectively.

MoviePass’s original version was shut down by Farnsworth and Lowe in September 2019. HMNY filed for bankruptcy a few months later. MoviePass’ founder Stacy Spikes was approved by a bankruptcy judge to buy the company back at a reduced price. He has teased a relaunch with new, sustainable terms throughout 2022.
Spike’s relaunch offers three subscription tiers – $10, $20 or $30 per month, with some variation in different markets.

Subscribers can get up to five movies per month at these rates. MoviePass’ beta test was launched in August. This allows customers from certain markets to sign up to a waitlist and try it out. Waitlist It is now liveIt is also available in Kansas City, Dallas, and Chicago.

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