On Friday, a federal indictment that was unsealed stated that former executives at MoviePass as well as their parent company had been charged with fraud. Former CEO of Helios & Matheson—Theodore Fransworth and Mitchell Lowe former CEO of MoviePass have been charged with misleading investors and making false statements about subscription service, in order to raise the stock price of Helios & Matheson Analytics, the parent company of MoviePass.
According to the document from the Department of Justice (DOJ), 60-year old Fransworth and 70-year old Lowe knew that the $9.95 price of unlimited movie plan, released in 2017, could not offset losses. The indictment stated that the plan was launched so that they could grow their subscriber base, inflate the stock of Helios & Matheson and get new investors.
The former CEOs Fransworth and Lowe have been charged with one count of securities fraud and three counts of wire fraud. These charges can amount to a maximum of 20 years in prison, if they are found guilty.
On Friday, a representative for Framworth said that he had surrendered to authorities in Washington D. C. Lowe’s lawyer has not as yet responded, when asked for comment.
Earlier in September, the Securities and Exchange Commission had accused the pair as well as Khalid Itum, a former MoviePass executive for the making as well as approving false invoices that helped him to personally benefit.
In. 2017, movie theaters had balked at the business model of MoviePass as well as its entry into the business. The unlimited movie plan that was considered unsustainable had to be dismantled in September 2019.
In late 2021, co-founder Stacy Spikes regained ownership of the company. However, a new version of the pass is yet to be released. Reports say that there is a beta version in Dallas, Kansas City and Chicago.
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