MoviePass's Ex-CEO Faces up to 25 Years for Financial Fraud Charges
In a recent turn of events, Ted Farnsworth, the ex-CEO of MoviePass' parent company Helios and Matheson Analytics (HMNY) and Vinco Ventures, has confessed to committing securities fraud. On January 7, 2025, in the Southern District of Florida, Farnsworth admitted guilt to one count each of securities fraud and conspiring to commit securities fraud. His potential imprisonment, stemming from the securities fraud charge, reaches a staggering 25 years, while the conspiracy charge could see him serving up to five years.
If you're new to this saga, allow me to fill you in. Farnsworth didn't initiate MoviePass, which began as a modest subscription service aimed at revitalizing cinema visits. HMNY, led by Farnsworth, acquired a majority stake in MoviePass in 2017, leading the company to offer its subscribers unlimited movie screenings for $9.95 a month. The strategy proved successful, with over three million subscribers hopping on board.
The honeymoon, however, was short-lived. MoviePass was losing significant sums of money due to its unlimited plan, which Farnsworth argued was sustainable and profitable. The DOJ disagreed, revealing that MoviePass incurred losses due to its plan, and the customer data monetization Farnsworth boasted about was merely a facade.
Behind the scenes, MoviePass struggled with popular film blackouts, service outages, and abrupt price changes. The plan's destruction was imminent from the get-go, and Farnsworth's claims of its sustainability and profitability couldn't save it. MoviePass eventually filed for bankruptcy.
Farnsworth apparently believed in pushing his luck, as he attempted a similar stunt with Vinco Ventures. According to the DOJ, Farnsworth and his cohorts deceived investors and siphoned cash for their personal benefits. Farnsworth's sentencing is scheduled for later in the year, while MoviePass, now under its founder Stacy Spikes' ownership, claims profitability. Regrettably, users still report experiencing disappointing glitches and issues with the service.
In the future of technology and artificial-intelligence, innovative companies continue to emerge, such as Vinco Ventures, which was once led by Ted Farnsworth. Despite advancements in tech, ethical considerations remain crucial, especially in the use of data, a lesson learned from Farnsworth's securities fraud case.