Ex-Moviepass CEO Admits To Lots Of Fraud

Back in 2022, you might recall that ex-Moviepass executives Theodore Farnsworth and J. Mitchell Lowe were charged by the DOJ for wire and securities fraud, after it was found they'd repeatedly misled investors about the profitability of their all you can eat" movie ticket efforts.

Lowe this week pleaded guilty to a securities fraud conspiracy to bilk company investors out of hundreds of millions of dollars. Farnsworth is set to go on trial next week. For what it's worth, Lowe's cooperation with investigators is expected to get him a lighter sentence, and his lawyers claim he feels really bad about the whole thing:

Mitch is a good man who is looking to move forward with his life," said his attorneys, Margot Moss and David Oscar Markus, in a statement. He has accepted responsibility for his actions in this case and will continue to try to make things right."

Originally, the MoviePass business model seemed like a semi-sensible idea, though back in 2012 we were quick to wonderif it would ever actually make a profit. Under the model, users paid $30 a month in exchange for unlimited movie tickets at participating theaters, provided they signed up for a full year of service.

There were, of course, caveats: you could only buy a ticket per day, and could only buy one ticket per movie. It also prohibited users from viewing 3D, IMAX, or XD films. Still, the proposal was widely heralded by many media outlets as a savior for the traditional, brick and mortar, sticky-floor movie industry. The problems really began when the company lowered its monthly price to $10 to goose growth.

In 2019, a four-monthinvestigation by Business Insiderfound that MoviePass had been bleeding money for years, and misleading investors for much of that time. Not only was the idea never really profitable, the company couldn't even manage to acquire enough plastic to keep up with membership card demand. All the while, company execs were wasting money on lavish parties and nonsense.

Showcasing the width and depth of the dodgy effort, at one point Farnsworth and Lowe genuinely thought it would be a good idea to actuallychange user passwords so paying customers couldn't use the service, thinking this would let them get their head above water. Things... didn't work out.

If you haven't seen it yet HBO (Max) has a decent documentary on the collapse, illustrating how original concept creator Stacy Spikes (who has since relaunched the effort) was generally screwed by Lowe's and Farnsworth's mindless, ethics-optional rush toward impossible scale.