It pays to do the right thing.
According to Complex, two former MoviePass executives are facing federal charges for allegedly deceiving investors. The company’s previous CEO Mitchell Lowe, and Theodore Farnsworth, who formerly held the title of CEO of its parent company Helios and Matheson have been charged with securities fraud.
“As alleged, the defendants deliberately and publicly engaged in a fraudulent scheme designed to falsely bolster their company’s stock price,” said FBI New York Field Office Assistant Director Michael J. Driscoll in an official press release. “Attempted scams of this nature erode the public’s faith in our financial markets.”
The claims against the executives also include making false claims in an effort to both defraud investors and inflate stock.
Among the tactics was the previous $9.95 unlimited plan offered by the service. Per reports, Lowe and Farnsworth “falsely claimed” that the plan had been tested and proved to be a sustainable endeavor for the company.
Another revelation included in the findings is that the pair made statements about technology that would be provided through the service. However, those said technologies were never in their possession.
As previously reported by AfroTech, the site went from bankruptcy to drawing in thousands of users on its waitlist for a comeback after Stacy Spikes purchased the company earlier this year.
He played a significant role in launching the organization prior to his non-voluntary exit in 2018 after the company was sold to the now-defunct and aforementioned analytics firm Helios and Matheson.
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At this time, Lowe and Farnsworth have been charged with three counts of wire fraud, which includes a single count each of securities fraud. If convicted, they could spend up to 20 years in prison for each count.
This news comes on the heels of reports in June 2021 that the men had reached a settlement regarding their deceptive practices.
It included violations of the Restore Online Shoppers’ Confidence Act. The pair has also been sued by the U.S. Securities and Exchange Commission.