Ted Farnsworth, the creator of MoviePass’ ill-fated $9.95-a-month subscription plan, pleaded guilty on Tuesday to defrauding investors in the company.
In addition to the MoviePass case, Farnsworth also admitted guilt to a conspiracy charge related to a separate scheme involving a fabricated video-sharing platform.
Prosecutors allege that he orchestrated this second scheme while under investigation for his actions with MoviePass.
Farnsworth, 62, has been in federal custody since August 2023, after his bond was revoked.
“It was important for Mr. Farnsworth to accept responsibility for his conduct, and he took the first step by entering a guilty plea this day,” his attorney, Sam Rabin, said in an email.
Farnsworth was charged in November 2022 with lying to investors about the revenue sources and long-term viability of MoviePass. On Dec. 27, a judge approved a settlement in a related civil case brought by the Securities and Exchange Commission (SEC).
Under the terms of that settlement, Farnsworth was permanently barred from serving as an officer of a publicly traded company.
MoviePass gained rapid attention in 2017 when it launched its unlimited theatrical subscription service. The service quickly attracted 3 million subscribers but lost hundreds of millions of dollars, ultimately leading to its bankruptcy in 2020.
Farnsworth served as the CEO of Helios & Matheson Analytics, the publicly traded parent company of MoviePass. Mitchell Lowe, MoviePass’ CEO, pleaded guilty to related charges in September.
While the company’s financial model was widely seen as unsustainable, Farnsworth and Lowe insisted in public interviews that they could make the business profitable by leveraging customer data.
However, prosecutors alleged that behind the scenes, the executives implemented measures to restrict the service, such as forcing frequent users to reset their passwords and verify ticket purchases.
Farnsworth originally faced charges of securities fraud and three counts of wire fraud.
Last month, the government amended the charges, including securities fraud and conspiracy to commit securities fraud, relating to a separate scheme involving Vinco Ventures, another publicly traded company.
According to the SEC, Farnsworth secretly controlled Vinco Ventures, which raised $120 million between 2021 and 2023 for a supposed media distribution platform.
The complaint alleges that Farnsworth siphoned off millions for personal use. The company’s stock, which peaked at $12.49 per share in 2021, is now valued at less than a penny.
Farnsworth’s $1 million bond was revoked after the government accused him of using company funds to pay individuals he met through an escort site.
At the plea hearing on Tuesday, a status conference was scheduled for July 10.
Since its bankruptcy, MoviePass has been relaunched under new ownership and with a revised business model.