Former MoviePass CEO pleads guilty to fraud and faces up to 25 years in prison

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

If you’re not familiar with the MoviePass story, Farnsworth is not 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 more often. Farnsworth was president of analytics firm Helios and Matheson, which It bought a majority stake in MoviePass in 2017 and finally pushed the company to give moviegoers the ability to watch one movie a day for just $9.95 a month.

Farnsworth’s plan attracted many subscribers—More than three million people Subscribe to the service. And here the problem started. While Farnsworth was taking to the press to tout the boom in business and claiming that the company would make money by selling customer data, behind the scenes, MoviePass was Bleeding cash. It won’t be long before MoviePass starts backing away from its promise of unlimited movie viewing, as it has already begun Imposing a blackout on popular films, It suffers from an interruption in its servicesand Prices and plans change with little warning.

It was pretty clear that MoviePass was doomed to fail the moment the unlimited plan was introduced, but Farnsworth claimed to investors that the price was sustainable and would be profitable on subscription fees alone. Turns out not, as the Justice Department found that MoviePass lost money from the plan. As for Farnsworth’s manipulation of customer data, that was just smoke and mirrors, too. His analytics firm “does not have these capabilities to monetize MoviePass subscriber data,” the Justice Department said. In the end, MoviePass never had any revenue stream beyond its subscriptions, and it was costing the company so much money that Farnsworth instructed employees to clamp down on users to prevent them from using the plan they paid for.

After Farnsworth It led MoviePass to bankruptcyIt looks like he’s running the playbook again with another company called Vinco Ventures. According to the Department of Justice, Farnsworth and his co-conspirators extorted money from investors by lying about the company’s standing, all while funneling money directly into their own pockets.

Farnsworth is scheduled to be sentenced later this year. Meanwhile, MoviePass is back under the ownership of its founder, Stacy Spikes, and it is It is said profitable (Although users of the service Complains regularly About glitches and issues).