Theodore Farnsworth, the former chief executive of the parent company of MoviePass, pleaded guilty to securities fraud on Tuesday after federal prosecutors said he had misled investors about the company’s “unlimited” subscription plan.
Mr. Farnsworth, 62, of Miami, also pleaded guilty in the Southern District of Florida to conspiracy to commit securities fraud as the leader of another publicly traded company, Vinco Ventures, Inc. He tried to inflate its stock price and took millions of dollars from the company for himself, according to prosecutors and court records.
He faces a maximum of 20 years in prison for the securities fraud count relating to his leadership of MoviePass and a maximum of five years in prison for the conspiracy count relating to his leadership of Vinco.
“Mr. Farnsworth was anxious to accept responsibility for his conduct,” Sam Rabin, Mr. Farnsworth’s lawyer, said in an email on Tuesday evening. “The most important step in doing that was to plead guilty to the crimes with which he was charged. He did that today.”
In 2017, when Mr. Farnsworth was the chief executive of Helios and Matheson Inc., which had a majority stake in MoviePass, subscribers under its plan could watch “unlimited” movies in theaters for $9.95 a month.
Mr. Farnsworth and J. Mitchell Lowe, then the chief executive of MoviePass, told investors in interviews that their plan was not too good to be true, was tested and was sustainable, prosecutors said. All along, Mr. Farnsworth knew that the plan was not tested and he misled investors to boost stock prices, prosecutors said.
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