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A former CEO of MoviePass’ parent company pleaded guilty to a securities fraud scheme in the Southern District of Florida.
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Theodore Farnsworth, 62, of Miami, engaged in schemes to defraud investors in Helios & Matheson Analytics Inc. (HMNY) and Vinco Ventures Inc. (Vinco) from August 2017 through March 2019 and November 2020 through September 2024, respectively.
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Farnsworth made materially false and misleading representations relating to HMNY’s and MoviePass’ business and operations to artificially inflate the price of HMNY stock and to attract new investors. He falsely claimed that MoviePass’ subscription model was a money-losing gimmick and that HMNY used artificial intelligence to monetize MoviePass’ subscriber data, among other misrepresentations.
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Farnsworth knew that the ‘unlimited’ plan was a temporary marketing gimmick to attract new subscribers and, in turn, to artificially inflate HMNY’s stock price and attract new investors. In reality, MoviePass lost money from the ‘unlimited’ plan.
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He also made false and misleading representations about the positive impact that multiple revenue streams (other than subscription fees) were having on MoviePass’ profitability and self-sufficiency. At the time, however, Farnsworth knew MoviePass did not have non-subscription revenue streams that would make MoviePass self-sufficient or otherwise offset the losses MoviePass experienced as a result of the unprofitable ‘unlimited’ plan.
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The charges in this case represent one of the Criminal Division’s first ‘AI washing’ cases. Farnsworth pleaded guilty to charges of defrauding and conspiring to defraud investors.
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Farnsworth, who briefly served as Vinco’s CEO, agreed to cooperate with the investigation and pay restitution.
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Principal Deputy Assistant Attorney General Brent S. Wible stated that Farnsworth concealed the truth about MoviePass’ subscription model and lied to investors to artificially inflate the stock price.
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FBI Assistant Director in Charge James E. Dennehy stated that Farnsworth’s claims about MoviePass were part of a securities fraud scheme.
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Theodore Farnsworth’s real full name is: Theodore Farnsworth
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His exact criminal charges are: defrauding and conspiring to defraud investors
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He was charged in: Southern District of Florida
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The exact date of his plea is not specified, but he pleaded guilty to charges of securities fraud and conspiracy
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The outcome of his case is: he pleaded guilty and agreed to cooperate with the investigation and pay restitution
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Key Facts
- State: Florida
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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