Ted Farnsworth, the architect of MoviePass‘ doomed $9.95-a-month subscription plan, pleaded guilty Tuesday to defrauding investors in the company.
Farnsworth also pleaded to a conspiracy charge for a second scheme involving a non-existent video sharing platform, which the government alleges he secretly organized while under investigation in the MoviePass case.
Farnsworth, 62, has been in federal custody since his bond was revoked in August 2023.
“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 via email.
Farnsworth was indicted in the MoviePass case in November 2022 on charges that he lied to investors about sources of revenue and the sustainability of the company.
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On Dec. 27, a judge accepted a settlement in a parallel civil case brought by the Securities and Exchange Commission. Under that agreement, Farnsworth was barred from serving as an officer of a publicly traded company.
MoviePass rapidly expanded in 2017, after it rolled out its all-you-can-watch theatrical subscription service. The company quickly grew to 3 million subscribers, but lost hundreds of millions of dollars before declaring bankruptcy in 2020.
Farnsworth was CEO of Helios & Matheson Analytics, the publicly traded parent company of MoviePass. Mitchell Lowe, the CEO of MoviePass, pleaded guilty in September.
Though the company’s financial model was obviously unprofitable, both executives repeatedly claimed in interviews in 2017 that the company could profit by leveraging customer data. Behind the scenes, the government alleged that the executives took measures to attempt to throttle the service, forcing high-volume users to reset their passwords and verify their ticket purchases.
Farnsworth was initially charged with securities fraud and three counts of wire fraud. The government filed a superseding complaint last month, charging him with securities fraud and conspiracy to commit securities fraud.
The latter charge pertained to the separate scheme involving another publicly traded company, Vinco Ventures. According to an SEC complaint, Farnsworth secretly controlled the company, which raised $120 million between 2021 to 2023 for a purported media distribution platform, taking out millions for himself. The company peaked at $12.49 per share in 2021, but shares are now worth a fraction of a penny, according to the complaint.
Farnsworth’s $1 million bond was revoked after the government accused him of using company funds to pay men whom he met on an escort site.
Since declaring bankruptcy, MoviePass has relaunched under different ownership with a different business model.