Former MoviePass CEO reportedly pleads guilty to securities fraud
Mitch Lowe, one of two MoviePass leaders indicted by the Justice Department in 2022, has pleaded guilty to securities fraud charges. The former CEO admitted to conspiring to deceive the public and investors about the service's sustainability. Variety reports that the details of Lowe's plea agreement haven't been made public.
Prosecutors claim Lowe knew from the start that the company's $9.95 unlimited" plan was a short-term gimmick to attract subscribers and inflate stock. He's also accused of making false statements in press releases, interviews and SEC filings about MoviePass' long-term viability.
Those statements included allegedly lying about the company's ability to become profitable on subscription fees alone and having tech that could generate revenue from customer data. He also claimed MoviePass was profiting from multiple revenue streams despite not having any income beyond subscriptions.
Prosecutors also accused Lowe and Ted Farnsworth, former CEO of MoviePass' parent company Helios and Matheson, of preventing subscribers from getting what was promised from the unlimited" subscription. The company settled with the FTC in 2021 over allegations that it intentionally invalidated subscriber passwords to freeze their accounts, blocking their ability to get the movie tickets the service promised. MoviePass and its parent company declared bankruptcy in 2020.
Although no sentencing date has been set, Lowe is free on bond and has a status conference court date scheduled in Miami for March 2025. The 72-year-old former executive faces a maximum of five years in federal prison.
Mitch is a good man who is looking to move forward with his life," Lowe's attorneys, Margot Moss and David Oscar Markus, said in a statement to Variety. He has accepted responsibility for his actions in this case and will continue to try to make things right."
Meanwhile, Farnsworth is still in custody. He was initially freed on a $1 million bond that was revoked in August 2023 after the feds accused him of misusing nearly $300,000 in company funds. Farnsworth's former boyfriend, who he met on an escort site, was paid $147,000, and received a Cadillac worth $144,000; after the pair split up, the feds say he falsely accused his ex of stealing the vehicle.
This article originally appeared on Engadget at https://www.engadget.com/big-tech/former-moviepass-ceo-reportedly-pleads-guilty-to-securities-fraud-201131284.html?src=rss