By Lukas I. Alpert
Prosecutors say MoviePass’s top executives hid from investors that the unlimited movie ticket service was losing tons of money in order to inflate its stock price
There really is no such thing as a free ticket.
The former chairman and chief executive of MoviePass have been charged with criminal securities fraud for allegedly lying about whether the unlimited film ticket service actually worked and hiding huge losses from investors in order to boost its stock price, according to a federal indictment announced Friday.
Ted Farnsworth, 60, and J. Mitchell Lowe, 70, were charged with falsely claiming that MoviePass’s offer of unlimited tickets for just $9.95 a month was sustainable and could even be profitable, when they knew it was just a marketing gimmick aimed solely at boosting subscriber numbers.
By inflating the number of subscribers, the pair were able to entice new investors to pump up the company’s stock price.
In reality, the company was hemorrhaging huge sums of money by giving away so many low-cost tickets. MoviePass filed for Chapter 7 bankruptcy protection in January 2020.
Also read (from Aug. 22): MoviePass relaunch: The controversial platform for frequent moviegoers is making a comeback
“The defendants deliberately and publicly engaged in a fraudulent scheme designed to falsely bolster their company’s stock price,” said Michael Driscoll, of the FBI. “Attempted scams of this nature erode the public’s faith…
