As reported by
Both the DOJ and the SEC allege that Farnsworth and Lowe claimed that MoviePass’s “unlimited” plan, where customers could pay $9.95 a month to see unlimited movies in theaters, had been market tested and proven to be sustainable. The model turned out to be anything but, with MoviePass losing money,
The DOJ alleges that Farnsworth and Lowe made these false claims in order to bolster the stock price of Helios & Matheson and attract more investors, knowing full well that the $9.95 unlimited plan was a “marketing gimmick.” Farnsworth and Lowe also allegedly made fraudulent statements about using “big data” and “artificial intelligence” to monetize subscriber data without actually having access to or using these technologies.
The FBI New York Field Office is investigating the case. Said Assistant Director in Charge Michael J. Driscoll: “attempted scams of this nature erode the public’s faith in our financial markets. 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.”
Chris Bond, a spokesman for Farnsworth, said in a statement that Farnsworth would be fighting the charges. “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,” said Bond.
As of now, Farnsworth and Lowe do not seem to be part of the new, yet-to-be-officially launched version of MoviePass.