Former MoviePass CEO Pleads Guilty to Fraud, Faces Up to 25 Years in Prison

Ted Farnsworth, the former CEO of MoviePass and the guy who had the bright idea to charge $9.95 a month for unlimited film screenings, has admitted to defrauding investors in the subscription company. According to the Justice Department, Farnsworth pleaded guilty One count of securities fraud and one count of conspiracy to commit securities fraud face up to 25 years in prison.

If you’re unfamiliar with the MoviePass story, Farnsworth isn’t the founder of the company, which UrbanWorld Film Festival founder Stacy Spikes started as a relatively modest subscription service designed to entice people to go to the movies. Farnsworth headed the analytics firm Helios & Matheson, which Purchased a majority stake in MoviePass in 2017 and finally pushed the company to give moviegoers the ability to watch a movie a day for just $9.95 per month.

Farnsworth’s plan successfully amassed a large number of customers—More than three million people Signed up for the service. And that’s where the trouble started. While Farnsworth hit the press trail to tout the business boom and claim the company would profit from selling customer data, behind the scenes, MoviePass Hemorrhaging cash. It didn’t take long for MoviePass to back down on its promise of unlimited filmgoing, just as it had started Blackout Institute on Popular Films, Experiencing outages in its servicesAnd Prices and plans change with slight notice.

It was pretty obvious that the MoviePass Unlimited plan was doomed to fail the moment it launched, but Farnsworth claimed to investors that the price was sustainable and would be profitable on subscription fees alone. Apparently not, since the DOJ found that MoviePass lost money from the scheme. As for Farnsworth’s customer data play, it was all smoke and mirrors, too. The Justice Department said its analytics company “does not have the ability to monetize MoviePass’ customer data.” In the end, MoviePass never had a revenue stream outside of subscriptions—and it was costing the company so much money that Farnsworth ordered employees to throttle it to prevent users from using their payment plans.

After Farnsworth MoviePass has gone bankruptHe apparently ran the playbook again with another company called Vinco Ventures. According to the DOJ, Farnsworth and his co-conspirators siphoned cash from investors by lying about the location of the business, all while funneling the cash directly into their own pockets.

Farnsworth will be sentenced later this year. Meanwhile, MoviePass is back under the ownership of its founder Stacy Spikes and it Supposedly profitable (Although users of the Service Regular complaints about errors and problems).