Superseding Information, United States v. Farnsworth (S.D. Fla., December 23, 2024)
Summary
A Superseding Information in United States of America v. Theodore Farnsworth, Case No. 22-20521-CR-LEIBOWITZ(s), in the U.S. District Court for the Southern District of Florida, entered on the docket December 23, 2024 as Document 161. Count 1 charges securities fraud in connection with HMNY common stock, and the penalty sheet also lists Count#:2, conspiracy to commit securities fraud. It states that Farnsworth served as Chief Executive Officer and Chairman of the Board of Directors of HMNY, and alleges that Farnsworth and J. Mitchell Lowe, Chief Executive Officer of MoviePass, falsely represented that the $9.95 "unlimited" plan was tested and profitable. It alleges that Farnsworth negotiated bonuses of $1,000,000 and $1,500,000 for raising capital. The penalty sheet lists maximum terms of 20 Years for Count#:1 and 5 Years for Count#:2.
Summary drafted by a model from the text of the original file linked on this page and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Superseding Information, United States v. Farnsworth (S.D. Fla., December 23, 2024).”
Original at ecf.flsd.uscourts.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/superseding-information-usa-v-farnsworth-dkt-161-s-d-fla-b529141e45/
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Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 1 of 31
TS
Dec 23, 2024
UM TED STATE S DISTR ICT C O UR T
SO U TH ER N DISTR ICT O F FL OR ID A Miami
CASE NO .:22z20521-CR-LEIBOW ITZ(s)
15U.S.C.j78j(b)
15U.S.C.j78ff
17C.F.R.j240.10b-5
18U.S.C.j371
18U.S.C.j981(a)(1)(C)
l
i
IJNiTED STATESoFAMERICA
I
1 v.
!
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THjODOREFARNSWORTH,
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! D efendant
/
SU PER SED IN G IN FOR M ATIO N
TheUnited StatesAtlom ey charges:
G EN ER AI,AI,LE GATIO N S
Atvarioustimesm aterialto thisSupersedingInform ation:
Entities and Individuals
Helios& M athesonAnalyticsInc.(:1HM NY'')wasapubliclytradedcompanywith
oo ces in M iam i,Florida,and N ew York,N ew York. HM NY'S comm on stock traded on the
NASDAQ exchange tmtilin oraround Febnlaty 2019,after wùich itwas delisted from the
i
exchangeandbegantradinglçoverthecotmten''HM NY descrtbeditsproductofferingsasû;arange
oftechnology platformsfocusing on big data,artificialintelligence,businessintelligence,social
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listlning,andconsumer-centrictechnology.''
M oviepasslnc.(iiM oviepass'')wasapdvatelyheldcompanywithoflicesinNew
York,New York. M oviepassoffered a subscription servicethrough which subscriberspaid a flat
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 2 of 31
morlthlyfeein exchangeforacertain numberofmovieticketspermonth. Tousetheservice,a
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subjjcriberwouldselectam ovie,theater,and show' tim ethrough theM oviepassapplication on the
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subscriberssm e phone,and then use aM oviepass-branded debitcard thatwas loaded with the
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costlofthem ovieticketto pay attheselectedtheater
( . .
1 3 Vinco Ventures, Inc.(Cûvinco Ventures'') was a publicly traded company with
i
officesinFairport,New York.Vinco'scommon stocktraded ontheNASDAQ exchangetmtilin
t
or àround O ctober 2023, after w hich it w as delisted from the exchange and traded Ciover the
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cpuken''vincoventuresdescribed itselfasaselectiveacquisitionscompany focused on digital
' m edia and contenttechnologies.
4. ZASH GlobalM edia and EntertainmentCorporation (CGZASH'')wasaprivately
held com pany w ith officesin M iam iBeach,Florida.
5. ZVV MçdiaPartnçrs,LLC (G1ZVV'')wasajointventurebetween VincoVentures
J .
and ZASH thatVincoVenturesandZASH used to acquireinterestsin othercompnnies,including
LomotifPrivateLimited(ttomotif'),aSingapore-basedvideo-sharingandlivestreaming social
networking platfonn.
6. TheU.S.Securitiesand ExchangeCommission (G1SEC''),isallagency withinthe
executive branch of the federalgovernmentresponsible for regulating the securities m arkets,
including the issuance,m arketing atld trading ofsecurities. H M NY and Vinco Ventures securities
l .
I
w erç regulated by the SEC. Public com panies, like HM N Y and Vinco Ventures, provide .
i j '
nfonnationtotheSEC andinvestorsby 611.
112certain SEC Fonns,such astheForm 8-K andForm
! -
'' .
DEF!14A,w ith the SEC using the agency's Electronic Data Gathering, Analysis,and Retrieval
1
:
.
(GGEDGAW ')system.EDGAR isadatabaseavailabletoinvestorsandthegeneralpublicviathe
lntem et.
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Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 3 of 31
7. D efendantTH E OD O RE FA R N SW OR TH W as an individualwho resided in the
Southem D istrict ofFlorida and the N orthern D istrictof N ew York. FA RN SW O R TH w as the
Co-Folm derand Chairm an ofZA SH and aM anagerofZV V,and briefly served asChiefExecutive
O fficer ofVinco Ventures. Before ZA SH ,ZV V,and Vinco Ventures,FA R N SW O RTH served as
the 1
ChiefExecutiveOfficerand ChairmanoftheBoard ofDirectorsofHM NY BeforeHM NX
FM G! SW ORTH served asChainnan ofLTS Nutraceuticalslnc.(G<S''),theChiefExecutive
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Offig
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elofPurpleBeverageCo.tGTtlrpleBeverage''),andtheChiefExecutiveOfficerofXstream
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Bev'
9rageN etwork lnc. (GGXStream'').
8. J.M itchellLow ew asan individualwho resided in the Southern D istrictofFlorida
andèuertoVallarta,M exico.Loweserved astheChiefExecutiveOfficerofM oviepass.Before
joiningM oviepass,Lowewasaco-foundingexecutiveofNetflixandformerPresidentofRedbox.
C O UN T 1
SecuritiesFraud
(ISU.S.C.jj78j(b);78ff;17C.F.R.j240.10b-5)
The General A llegations section of this Superseding Inform ation is hereby re-
allejedandfullyincorporatedhereinby reference.
From atleastin oraroundAugust2017,and continuing through atleastin oraround
M arch 2019,withinthe Southern DistrictofFloridaand elsewhere,thedefendant,
TH E O D O RE FAR N SW O RTH ,
together with others known and unknown to the United StatesAttorney,did knowingly and
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w illfully,in cozm ection w ith the purchase and sale ofa seclzrity,thatis,cornm on stock issued by
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HM NX by useofthemeansandinstrttmentalitiesofinterstatecomm erce,andby useofthem ails,
:
directly and indirectly,use and em ploy,and cause others to use and em ploy,m arlipulative and
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 4 of 31
1
deceptive devices and contrivances,in violation ofTitle 17,Code ofFederalR egulations,Section
110b-5by:(a)employing,and causing othersto employ,devices,schemes,and artiucesto
240.) ,
defraud;(b)mnklng,and causing otherstomake,untruestatementsofmaterialfactandomitting
to stàte,and causing othersto om itto state,m aterialfactsnecessary in orderto m akethe statem ents
f
:
made,in the lightofthe circumstmwesunderwllich they weremade,notmisleading;and (c)
engaging,and causing othersto engage,in acts,practices,and colzrsesofbusinesswhich operated
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andWo
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uldoperateasafraudanddeceituponpersons,inviolationofTitle15,UrlitedStatesCode,
Sectl
ions78jand78f1)Title17,CodeofFederalRegulations,Section 240.10b-5.
l PU RPO SE O F TH E SCH EM E A N D A R TIFICE .
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Itwasthe purposeofthe scheme and artificefOrthe defendant,FARNSW ORTH
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and'
J.MitchellLowe,totmjustlyemichthemselvesatldothersby:(i)makingmateriallyfalseand
m isleading representationsto investorsrelating to the businesses and operationsofHM NY and
M oviepass,including HM N Y 'S and M oviepass's productofferings,teclm ology,and capabilities,
inordertoartificiallyincreasethepriceof Y commonstockandattractnew investments;(ii)
concealingfrom investorsthetruefacts;(iii)divertingtheproceedsoftheschemeandartificefor
their personal use and benefit through bonuses and m isuse of corporate funds for personal
expenses'
,and(iv)concealingtheschemeandartificefrom regulators,law enforcement,investors,
and the m edia.
M ANNER AND M EAN S OF TI'
IE SCHEM E AND ARTIFICE
7 The m anner and m eans by w hich the defendant soughtto accom plish the purpose ofthe
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schçm e and artifice included,butw ere notlim ited to,the follow ing:
To artificially inflate the price ofH M N Y com m on stock and increase the volum e
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of H M N Y shares traded by attracting new investm ents, FA R N SW OR TH and Lowe m ade
)
E
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Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 5 of 31
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m atçrially falseandmisleadingrepresentationsaboutthebusinessesand operationsofHM NY and
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M oli
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epass.Forexample,FARNSW ORTH andLowerepresentedthat:
a. M oviepass's new $9.95 çtunlim ited''plan was tested,sustainable,and would be
profitable orbreak even on subscription fees alone;
HM NY had teclmology and capabilitiesitwould use,and wasusing,to generate
revenueby analyzing andm onetizing M oviepass'ssubscriberdata;
M oviepass ylso had multiple non-subscription revenue strenm sthatwould m qke
M oviepassprofitableand even self-sufficientratherthan dependenton HM NY for
funding;and
M oviepass's costofgoods,asreflected in thenumber'oftickets each subscriber
ptlrchased using his or her subscription, w as naturally declining over tim e
consistentw ith FA RN SW O RTH 'Sand Low e's stated expectations.
Al1oftheserepresentations,which werem adeto artificially inflateHM NY'Sstock
price and increase the volum e of HM NY shares traded by attracting new investors,w ere
m aterially false and m isleading.ln tnzth and in fact,and as'FA RN SW O RT H and Low e knew :
The$9.95ttunlim ited''planwasatemporat'ym arketing gimm icktodrivesubscriber
grow th,and M oviepass w as losing m oney as a result;
b. HM NY did not possess the teclmology or capabilities to generate revenue by
analyzing M oviepass's subscriber data and had not integrated any HM NY
technology orcapabilitiesinto the M oviepassapplication;
M oviepass did not have non-subscription revenue stream s that w ould m ake
M oviepass self-sufficientorotherw ise offsetthe lossesM oviepassexperienced as
aresultoftheunprofitable $9.95 Gçunlim ited''plan;and
d. Behind thescenes,M oviepasswasactively preventing subscribersf' rom using the
purpörtedly tGulzlimited''setwiceforwhich they hadpaidbecauseFARNSW ORTH
and Low e personally directed M oviepass em ployees to (çthrottle''subscribers who
m ostfrequently used the service to buy m ovie tickets and then FAR N SW O R TH
and Low e concealed the tnze nattlre of their &Gtactics'' from investors mld
subscribers.
In furtherance ofthe schem e,FA RN SW O R TH and Low e m ade these m aterially
falsçandmisleadingrepresentationsinpressrefeases,SEC filings,intelwiewsonpodcastsandon
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f
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Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 6 of 31
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(
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telel
yision, and in printand onlinemedia,al1ofwhich wereintended toreach,and attim esdid in
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facti
reachjinvestors and the generalpublicthro'
ughouttheUnited Statek, including w ithin the
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Southern DistrictofFlorida,and elsewhere. FARNSW ORTH and Lowe appeared in the m edia
and review ed and approved the pressreleasesand SEC filings.
HMN Y%Acquisition ofM oviepass
7. By 2017,M oviepass w as experiencing financialdifficulties. M oviepasshad been
operating ata lossforyears and w asunableto obtain additionalfinancing. Low e w as on theverge
ofsfmtting down M oviepass'sbusinessoperationswhen hem etFARNSW ORTH .
8. On or aboutAugust 15,2017,atthe direction ofFARN SW ORTH and Lowe,
HMVY issuedapressreleasennnouncingthatHM NY hadagreedtoacquireamajorityownership
interestin M oviepass(theGW cquisition'').HM NY alsoannouncedthatM oviepasshadlaunched
a new nationw ide subscription program thatenabled new subscribersto see Elunlim ited''m oviesin
theaterswith no blackoutdatesfor a flatm onthly fee of$9.95. The strategic rationale for the
A cquisition,accordingtothepressrelease,wastoGcincreaseshareholdervalue''by using Y's
tGbig data'' and 'tartificial intelligence'' capabilities to m onetize M oviepass's subscriber data,
including from the new subscribers M oviepass expected to sign up as a result of the $9.95
çûunlim ited''plan.
9. A s a term of the Acquisition,M oviepass agreed, following the closing of the
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Acquisition,toapplyforlistingahdseektobegintradingontheNASDAQ ortheNew YorkStock
Exchangeby M àrch31,2018,andHMNY wouldremainthemajority shareholderofM oviepass.
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l 10. B egirm ing w ith the annotm cem entoftheA cquisitioù,FA R N SW O RTH alzd Low e
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launche'
d a campaign to artificially inflate the price of HM NY comm on stock by publicly
prom oting m aterially false and m isldading inform ation,as described below. FA R N SW O R TH
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Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 7 of 31
andityow e appeared fornum erousinterview son television,and in printand orllinem edia,avail>ble
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th i
roughoutthe U llited Statesand elsew here,including w ithin the Southern D istrictofFlorida. For
example,FARNSW ORTH wasintelwiewedbytheM iamiHeraldfoïan articletitled Ctl-lollp vood
IsBeing Run OutofM iami.'' FARNSW ORTH atld Lowe also issued,orcaused to be issued,
num erous press releases on behalf of HM N Y and M oviepass,m any ofw hich w ere dissem inated
through BusinessJrzircviatheInternettomediaousletsthroughouttheUnited Statesandelsewhere,
including w itllin the Southelm D istrict of Florida. M any of these interview s and press releases
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wertfiled with the SEC on Fonn DEF 14A and Form 8-K,respectively,and available onlinevia
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the SEC'SEDGAR website.
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Follow ingtheA cquisition,H'
M N Y raised hundredsofm illionsofdollarsfrom debt
and equity offerings.
12. FA RN SW O RTH 'S com pensation w as based, in part, on the sale of HIM N Y
securities. In oraround znid-December2017,FARNSW ORTH negotiated a $1,000,000 bonus
for his role in raising capitalup to thatpoint.A nd in or azound M arch 2018,FA R N SW O RTH
negotiated a $1,500,000 bonus for his role in completed offeringsofHM NY securitiestotaling
$190,000,000 in grossproceedssincem id-Decem ber2017.
13. FARNSW ORTH 'S em ploym ent agreem ent also provided for the paym ent of
m ulti-million-dollarbonusesbased on m ilestonestied to thestock priceofHM NY.
TkeDefendantandLoweM adeM aterially FalseandM isleadingRepresentationsAbout
M oviepass%SubscrktionM odel
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j 14. lnthecourseofnegotiatingtheAcquisition,FARNSW ORTH proposedtoLowe
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thajM oviepassslash itspricepointand oftkr an IGllnlimited''plan where,for$9.95 perm onth,
subscriberscould see Ctany m ovie,any theater,any day.'' On oraboutJuly 6,2017,Low e em ailed
M oviepass executives about FAR N SW O RTH 'S proposal, which Low e acknow ledged w ould
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 8 of 31
catpe M oviepassto lose m oney,m iting:
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! ok now fbrthe crazy idea Iw ould like each ofyou to tellm e w hy this is a
.
bad idea. Iwantto changeolzroneand only pricing to $9.95 perm onth.A
m ovieaday.Try itforFreeforeither2 weeksor1m onth.Pleasenoreason
totellm ehow much money we could lose.
ln re1sponseto Low ensem ail, and atvarioustim esthereafler,m em bersofthe M oviepassexecutive
1
team confinned to FARNSW ORTH and Lowethatthe $9.95 Eiunlim ited''plan waslmprofitable
and tm sustainable.
i
. Believing that H M N Y ,s stock price w as tied,in part,to M oviepass,s sujascrkbey
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cotms,FARNSW ORTH andLowelaunchedthe$9.95Gçunlimited''plan asamarketing gimmick
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toatiractnew subscribersandincreasethepriceofHM NY stock.In responseto questionsabout
whetherthe $9.95 tGunlim ited''plan wastttoo good to betrtze,''FARN SW ORTH and Lowem ade
materially falseand misleading representationsthatthe plan had been tested and was aprofitable
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and sustainable business m odel,when in factthey lcnew ithad notbeen tested and was neither
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profitablenorsustainable.
16. Forexam ple,on oraboutAugust 16,2017,FA RN SW O RTH and Lowe appeared
for a joint interview on Fox Business,dlzring which they were specifically asked whether
M oviepasswould losemoney on the$9.95 Ettmlim ited''plan.Loweprom oted them aterially false
narrative thatthe $9.95 Gltmlimited''plan would not lose m oney even though he had privately
acknowledged w eeks earlierthatitw as a CGcrazy idea''thatw ould lose m oney:
Low e:W e have figured outa w ay to give people a dealw herethey cannotbelieve w e can
even afford to give.
lnterview er:Yea,because you lose m oney.
Low e:Yea,no,w e actually don't.U h,and.
Interview er:H ow do you notlosem oney?
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Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 9 of 31
Lowe:W e have builta system thata'ttractspeople-apricepointthatatlractspeoplethat
only go threeto six tim esa year.
Lowe'srepresentationswerem aterially falseandm isleading because,in truth and
in fact,and asFARNSW ORTH andLoweboth knew,neitherHM NY norM oviepasshad tested
the $9.95 Gltm lim ited''plan,which had only been proposed for the first tim e internally weeks
before. FAR N SW O RTH and Low e also knew Low e's representations w ere m aterially false and
m isleading because,in reality,FARNSW ORTH and Lowe lcnew the $9.95 ilunlim ited''plan
w ould lose m oney.
18. On oraboutA ugust16,2017,Low e appeared fora printinterview for Variety conl,
w hich HM N Y filed w ith the SEC on Form D EF 14A ,and again prom oted the m aterially false
nm-
rativethatthe$9.95 ççtmlim ited''planwasprofitableandsustainable:
Interviewer:You are operating at a lossand subsidizing the tickets yolzrcustom ersbuy.
AM C claim sthat at som e pointyou willhave to raise yotlr prices or you'llgo out of
business.Arethey correct?
Low e:The answ eris no.They don'ttm derstand olzrbusiness m odel.
19. Low e'srepresentation w asm aterially false and m isleading because,in truth and in
fact,and asFARNSW O RTH and Low:both ktlew,the $9.95 CGunlimited''plan wasa temporary
m easurethatw asunprofitable.
On oraboutSeptem ber22,2017,FA RN SW O RTH appeared fora printinterview
withPipelineData,LLC (çcpipelineData''),which HM NY filedwiththeSEC onForm DEF 14A.
FARNSW ORTH repeated the materially false claim sthatthe $9.95 &çurtlirnited''plan had been
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testèd and proven profitable:
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i Interview er:How isthe$9 95 pricing going to w ork w ithin yourbusinessm odel?
.
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FA RN SW O RTH :M oviepass has been arolm d for five years,so we have a w ealth of
historicaldata.At$39,theaveragecustom erwould goto fotlrm oviesam onth.At$29,the
average dropped to three m ovies a month.W hen M oviepass wentto $19,the average
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 10 of 31
custom er went to two m ovies a m onth. So we think we can be profitable on the
subscriptionsat$9.95 andthen m aketherealmoney from theadditionalrevenue sources.
The sizeofourcustom erbasewillgiveusa lotofleverage.
Interviewer:So,you thinkyou can break even on the subscriptionsalone?
FA RN SW O RTH : I'm confidentthatw e will.W e already see it in our first 30 days at
$9.95.Usagewaseven lowerthanw eanticipated.
FARNSW ORTH 'Srepresentationswerem atetially falseand m isleading because,
in truth and in fact,and asFARNSW ORTH and Lowe both knew,no testing had been done on
I
the$9.
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95 Gttmlimited''plan anditwasatem porary gimm ick thatwastmprofitable.
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! W ithin w eeks of FA RN SW O R TH 'S Pipeline D ata interview , Low e pdvately
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inqttired aboutchanging the $9.95 Ecunlim ited''plan thathepublicly claim ed wassustainable. On
or aboutO ctober 6,2017,Low e em ailed a tenm of M oviepass executives to request(teveryones
gsicqfeedback onremovingtheaterswhochargeabove$12or$13.Thoughts?''lnresponse,one
M oviepass executivew rote:
Tricky situation.Thiscreatesa few differentissuesin afew differentareas.
First,itremovesa majority oftheatersin large markets:NYC,LA,DC,SF,Seattle,
Philadelphia.Acrossonlythetop 15majornetworksitimpacts,itaffects50% ofouruser
base.
***
Then w e getinto the press/publicity aspectofit.Basically,'
thatw ould giveAM C validation
thatthey w ere righta1lalong;thattllis is nota sustainable product and itcom pletely lcills
any credibility w e have lefl.
23. FARNSW ORTH and Lowe continued to make similar m aterially false and
m isleadingrepresentationsabouttheprofitability andsustainability ofthe$9.95Cculllimited''plan.
Forexnmple,on oraboutJanuary 9,2018,FARNSW ORTH and Lowe appeared for ajoint
interview on YahoolFinance. W hen asked dtlring thatintetwiew whether$9.95 wasSçtoo low of
a price point,''FA RN SW O RTH falsely responded,11N o,''while Low e m isleadingly added that
10
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 11 of 31
thèpricepointattractedm oviegoerswho only attended m oviesfivetim esayear.
. 24. In that sam e intelwiew, Lowe also made the m aterially false and m isleading
l'epresentation thatitw asCGnottnle ata11''thatM oviepassneededm ovietheatersto agreeto provide
M oviepasswithlowerticketpricestoturn aprofit(i.e.,toreducethedifferencebetweentheprice
M oviepasspaidforamoveticketandtheamotmtM oviepassreceivedfrom monthlysubscribers).
LoFe knew llisrepresentation wasm aterially false and m isleading when he made itbecause,as
desçribed in paragraph 23,Lowe had earlier explored the possibility of rem oving from the
subscription servicetheatersthatchargedm orethan $12 or$13 foram ovieticket.
25. On oraboutJanuary 16,2018- one week following the January 9,2018,joint
interview w ith Yahool Finance- ïuom texted FA R NSW O R TH and H M NY Executive
concelming thelossescaused by subscribers'useoftheserviceforwhich they werepaying and to
suggestM oviepasstenninatethe $9.95Giunlim ited''plan.
26. The nextday,on oraboutJanuary 17,2018,Low e again texted FAR N SW O RTH
about the need to change the $9.95 çhlnlim ited'' plan. In his private communication to
FARNSW ORTH, Lowe aclcnowledged that the $9.95 Etunlimited''plan always had been a
tem porary m easure and thatitw as notsustainable.
A pproxim ately one w eek later,on or about January 26,2018,Low e appeared
fora printinterview with The H ollywood Reporter,and again prom oted the m aterially false
narrativethatthe$9.95 çûunlim ited''plan wastested,sustainable,and profitable:
lnterviewer:Isthereapointwhenyou'lljustnotbeabletoaffordmoresubsgj.:.,
subscribersjbecauseyou'rebuyingthem toomanytickets?
Low e:N o.Idon'tknow why everybody believesthatour custom ersare w atching so
m any m ovies.A tsom e pointw e'llshare m ore data w ith you and yoil'llbe shocked....
***
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 12 of 31
lnterviewer:Isthereapointwhereyou'llneed to raisethepriceofasub?
Low e:W e don'tneed to raise the price.1 spent a yearstudying how 1can getpeople who
spend $50 ayeargoing to moviesto spend $120 ayear,and $9.95 isthe price pointthat
gets them into the theatersm ore oflen.
'
28. Lowe'srepresentationswerematerialiyfalseandmisleadingbecause,in truthand
in fact,and as FARNSW ORTH and Lowe both knew,no testing had been done on the $9.95
'
,
çGunlim ited''plan and itwasatem porary m easurethatwasunprofitable.lhdeed,bythetim eofthis
interview, FARN SW ORTH and Lowe had already agreed privately to abandon the $9.95
i
ttttlllirrlite(1:'ln1E:11.
1
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I on oraboutFebruary 18, 2018,whileappearing on an episodeoftheRecodeu edia
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podcast,Low e again falsely represented thatM oviepassçGtested like crazy tm tilw e w ere ready to
roll outthe$9.95plan.''AtthetimeLowem adethisrepresentation,heknew thatM oviepasshad
nottestedthe $9.95 ççtmlim ited''plan.
30. On or about April 13, 2018, M oviepass annotmced it was retiring the $9.95
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lGunlim ited''plml.FARNSW ORTH andLowe,however,continued tom akematerially falseand
t
m isleading representationsaboutM oviepass'ssubscription plan to artificially inflate the price of
'
.
HMXY'Sstock. Forexnmple,on oraboutApril27,2018,Lowe texted FARNSW ORTH to
suggestM oviepassreintroduce the $9.95 (sunlim ited''plan to artificially inflate HM NY'S stock
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price and cause investorswho speculated thatthe price ofHM NY would decline (commonly
)
'
referredto asGtshol'
tsellers''orGsshorts') toE1panic''-
.
Lowe:W ecouldblow peopleaway ifon W ednesday wedoUnlimited for$9.95
FA R N SW O R TH :1lcnow
Löw e:W e should
FARNSW ORTH:Changethewholestoryg.qlagreel.)Andjustkeepthrottleingg.)And
nottellanyone
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 13 of 31
Lowe:The shortswillparlic
:#
O .
FARNSW ORTH:Omg listentoyou!!!!Your(sicjstartingtoscazeme1oI
Low e:Learning
FA R N SW OR TH :Lo1
On oraboutM ay 2,2018,fewerthan threeweeksafteritwasretired,the$9.95 llunlim ited''plan
w as reintroduced forthis fraudulentpup ose.
TlteDefendantandLoweM adeM ateriallyFalseandM isleading RepresentationsAbout
6
i HMNYSDataAnal
kticsTechnolog.vandCapabilities
!
FARNSW ORTH and Lowe repeatedly m ade the m aterially false claim thatthe
strategic rationale behind H M NY 'S acquisition ofM oviepassw asto enable Y to leverage its
data analytics technology and capabilities to increase shareholder value by m onetizing
M oviepass'ssubscriberdata.
Forexnm ple,in H M NY 'SA ugust 15,2017,pressrelease,which w as dissem inated
to investors tllrough Business W ire and filed w ith the SEC on Fol'
m 8-K ,FAR N SW O RTH was
quoted as saying: (G1believe the technology platform sthatHelios and M atheson hasbuiltoverthe
yeaisare aperfectfitfortheM oviepassfamilyg.) With ol.
lrbig dataand adificialintelligence
platfolnnsandotherteclmologiesthatwe own,wewillbeabletobring a significanttechnological
advantage to M oviepass.''
'
These representations in H M N Y 'SA ugust 15,2017,press release w ere m aterially
)
falseî and m isleading because,in truth and in fact,and asFA R N SW O RTH and Low eboth knew,
!
HM N Y did notpossessorotherw ise Ctown''thetypesoftechnologiesdescribed in thepressrelease,
including (tbig data''and Elartificialintelligence''platformsorany othertechnologies capable of
m onetizing M oviepass's subscriber data.
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 14 of 31
i
l 34. Following the Acquiskion,FARNSW ORTH and Lowe repeatedly made the
f
m aterially false claim that HM N Y 'S technologies w ere being used to analyze M oviepass's
subscriber data and integrated into the M oviepass application. For example, on or about
Septem ber 14,2017,H M N Y issued a press release that w as dissem inated to investors and the
m arketonlinethrough Business JKrc,TheM iam iHerald website,and an 8-K filed with the SEC,
am ong otherm eans. The pressrelease stated:
U sing the H elios and M atheson A nalytics resottrces,M oviepass Inc.analyzes consum er
trends, patterns and activities to engage subscribers with m ovie related m erchandise,
advedising,andconcessionsrelevanttotheirM oviepass'experiences.HeliosandM atheson
believesitstechnology stack com binedwith theM oviepassbusinessmodelwilltransform
the m ovie going experience and create greatvalue for both com panies. ...Helios and
M atheson's technology learns individualm oviegoer'stastes and m akesl'ecom m endations
based on recorded preferences for specific gem'es,actors and even the opinionsof friends
w ith sim ilarlikings....
A lso in the pressrelease,FA RN SW O R TH w asquoted as saying:Gc-
l-his explains our sustainable
business model:Helios and M atheson is incorporating advertising m odels with the M oviepass
application using artificial intelligence, algorithms, and m achine learning so we can provide
studiosw ith m ore precise data fortheir advertising eflbrts.''
. 35. These representations in H M N Y 'S Septem ber 14, 2017, press release w ere
m atprially falseand misleading beoause,in truth and in fact,and asFARNSW ORTH and Lowe
l
both knew,HM NY didnotpossessthetypesoftechnologiesdescribed inthepressrelease,HM NY
had notused any ofitstechnologiesto analyze M oviepass's subscriber data,and H M N Y had not
integrated any ofitstechnologiesinto theM oviepassapplication.
i j6* OnoraboutOctober24720177HM NY issuedapressreleasethatwa'
sdisseminated
t
to i/vestorsandthem arketonlinethroughBusiness m rc,TheM ialniHerald website,and an 8-K
:
filed w ith the SEC,am ong otherm eans. The pressrelease stated:
14
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 15 of 31
FollowingHM NY'Spurchaseofamajoritystakein M oviepass,wilichrem ainssubjectto
the approvalofHM N Y 'S stockholders,HM N Y plansto further integrate its data analytics
capabilitiesw ith the M oviepass service to analyze m oviegoer'sbehaviorsand preferences,
w ith the goalof helping the film industry better understand what audiences w ant.W ith
HM N Y 'S capabilities,H M N Y believesthatM oviepass can bridge an intelligence gap for
them ovietheaterindustry so theentirefilm ecosystem can betterserveaudiencesin areas
ranging from productionto advertising.
In the pressrelease,FA R N SW O R TH w as quoted as saying:CûW lzen you apply com puterscience
and m achine learaing to an industry that w e believe has lacked significant innovation,useful
patterns start to em erge. Together, 1 believe H M N Y and M oviepass can offer im po/ant'
analyticsto m ovie sttzdiosand exhibitorswhile serving the interestsofm oviegoersin theprocess.''
These representations from H M N Y 'S October 24, 2017, press release w ere
m aterially false and m isleading because,in tnzth and in fact,and as FA RN SW O RTH and Low e
both knew ,HM N Y did notpossessthe typesoftechnologiesdescribed ih thepressrelease,H M N Y
had notused any ofitstechnologiesto analyzeM oviepass'ssubscriberdata,and HM NY hadnot
integrated any ofitstechnologiesinto theM oviepassapplication.
38. FAR N SW O RTH and Low e also repeatedly m ade the m aterially false
representation thatHM N Y 'Stechnologiesw erebeing integrated into the M oviepass application to
createarevenue stream based on aisNightattheM ovies''conceptwhereby M oviepassintegrated
i
I
data,aboutsubscribers'activitiesbefore and afterthey attended am ovie into itsbusinessm odel.
For exam ple,on or about O ctober 16,2017,Lowe appeared for all interview on F ox Business
!
during which he explained the IcN ightofthe M ovies''irlitiative:
lnterdew er:A nd you said thatyour com pany M oviepass is planning to m ake a profitby
selling user-data to U ber,H ollywood Studios,restaurants close to the theaters.B asically,
botlom line is,you say you're notselling data butyou're using the datato inform .
Low e:Right.You know,people w antto go to the m ovies m ore often butthey don'tw ant
to take therisk ofabad m ovie.So,w hatw e do atM oviepass isw e help them m ake a better
decisionasfarasenjoyingthemovie.Butgoingtothemoviesthere'smuchmoretoitthan
justgohlgstraighttothemovietheater.Yougotodinner.Youmighthavedrinks.Youmight
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 16 of 31
use U berorLyft.So,w e're going to help our subscriberto getto al1those businesses and
getdiscountand benefits and -
Interviewer:So,willUber pay forthat information? Do the Hollyw ood restaurants - 1
m ean,are they paying forthatdata?
Lowe:They will.A swe drivemore and m ore ofoursubscribersto theirbusinesseswe'll
take a share ofthe increm entalprofit.
Interview er:And how do you know w herepeople are going afterthey go to the m ovies?
Lowe:W ell,youknow,today withyotlrphonein yourpocket,peoplecantrack pretty much
whereyou are.You 1og on toFacebook,they know whereyou are.W hen you 1oginto our
app,w e know w here you are.Because w e autom ate yourm ovie subscription by essentially
w hattheateryou're close to.
39. Low e's representations w ere m aterially false because, in truth and in fact, and
FA R N SW OR TH and Low e both knew,neitherHIM N Y norM oviepasstracked or collected data
on the location ofM oviepasssubscribers atany pointwhen .the M oviepass application was
notactiveforthepurposeofsearching foranearby theaterorchecking into atheater. M oreover,
asFA R N SW OR TH and Lowe also ktlew,H M N Y had notused any ofitstechnologiesto analyze
M oviepass's subscriber data, and H M NY had not integrated any of its teclm ologies into the
M oviepass application.
D uring their January 2018, interview on Yahoo! Finance,
;
l
FAIJNSW ORTH and Lowe were specifically asked about the source of HMNY'S and
i
M oviepass'srevenues.FAR N SW O RTH and Low e prom oted them aterially false and m isleading
narrative thatHM N Y 'Sm onetization ofM oviepass's subscriberdata w as driving the com panies'
1
revenlles:
lntetwiew er:H ow are you possibly m aking m oney?
FAR N SW O RTH :Stzre.W ell,1thirlk,people ask us that allthe tim e.A nd w e've know n
fn'om day one,H elios is a ...analytics com pany.So w hen 1 first gottogetherw ith M itch,
and w e looked at a11the data,the analytics,whatitw as,that's really w hatm ade us m ake
the decision to investin M oviepass.
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 17 of 31
+
lnterviewel':Let'swork olzrway tluough a couple ofthe shol'targtlmentsoutthere. The
idea ofselling data istotally overvalued. There so m uch dataoutthere,nobody wantsto
buy it.You can'tm onetizethedatapart.''
FA R N SW OR TH :lçW hen w e look atthe data side,it's a di/erent story ...that's w here
you're m aldng yourm oney,on,on the data,the advertising.
Interviewer:So,whatdoesHelios& M atheson do?Becausewereporton the stock a11the
time,arldwejokeGtheyshouldjustchangetheirnametoM oviepass...'
FA RN SW O R TH : ...l-lelios is really a data analytics com pany,w hich really m ade the
perfectm arriage ofM oviepass and the data analytics ofhow w e're driving the revenues of
the com pany rightnow ....
41. Theserepresentationswerem aterially falseand misleadingbecause,in trtzth andin
fact, and as FARNSW ORTH and Lowe both knew, HM NY did not possess the types of
teclmologiesthatcould be used to monetize M oviepass's subscriberdata,HM NY had notused
any ofitstechnologiesto analyze M oviepass'ssubscriberdata,and HM N Y had notintegrated any
ofitsteclm ologies into the M oviepass application.
! 42. FARNSW ORTH andLowealso knew theserepresentationswere materially false
1
and m isleading because,in reality,dataanalyticswerenotdriving thecompanies'revenues. For
1
the fiscalyearthatended nine dayspriorto thatinterview,M oviepassrepol-ted only revenue from
subscriptions. ln the first quader of 2018, M oviepass reported revenues com posed
overwhelm ingly of subscription revenue. lndeed, after one M oviepass executive notified
FARNSW ORTH andLoweaboutclosingadeal,hejokedthatitwasin anamotmtthat&r oesn't
Pay anyone's salary yet.''
#J. On or about M arch 2,2018,Lowe spoke at the Entertainm ent Finance Foplm ,
giving a speech titled,Cr ata is the N ew Oi1:H ow W illM oviepassM onetize It?''Low e repeated
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 18 of 31
hisp aterially false claim thatM oviepass gathered data aboutits subscribersby tracldng,them
through theirsm artphonesaspal4ofitsEtN ightattheM ovies''initiative.Lowefalsely stated:
W egetan enorm ousam ountofinfonnation....becauseyou arebeingtracked in you. rGPS
by the phone,ourpatentbasically turns on mld offourpaym entsystem by hooking that
card to the deviceID on yourphone,so w ew atch how you drivefrom hom e to them ovies.
W e w atch w here you go afterwards,and so w e know the m oviesyou w atch.W e lcnow a11
aboutyou.
Aftertheinterview,when itwaspointedoutthattracking subscribersviolated M oviepass'sprivacy
policy,am ediabacklash ensued.
44. On or about M arch 2018, one of FA RN SW O RTH 'S assistants texted
FA RN SW O R TH a statem ent to m ake to a reporter, which FAR N SW O R TH approved. The
statem ent, w llich further supported FA RN SW O R TH 'S and Low e's m aterially false nal-rative
aboutHM NY'SuseofdataanalyticstomonetizeM oviepass'ssubscriberdata,readasibllows:
ltisamysterytomewhy somanypeoplearesulmrisedthatHMNY (abigdataanalytics
company)and M oviepassm'eusing datato innovatethemovieindustly ...Formonths
w e'vebeen hearing Ethow doesM oviepassplan to m ake a profit,''thisishow .The analysis
and 'understanding ofconsum erbehaviorisprecisely how w e are able to delivera m ovie a
day for$9.95 a month to 2 m illion subscribers....W hatw ewilldo istttt'
n yourdata into
valuablem arketplace inform ation so thatw e and everyonew ew ork w ith can createthebest
possible experience foraudiences,the studios,and theexhibitors. Thatsaid,Our gsic)
m em bers willalw ays have the option to choose the location-based services that are right
forthem today and in the future.
On or about M arch 12, 2018, Low e issued an em ail apology to M oviepass's
subscribers,partners,and em ployees.Low e adm itted thatM oviepassçldoesnottrack and hasnever
tracked orcollected data on the location ofourm em bers atany pointw hen the app is notactive,''
andtKdoesnotuseandhasneverused (backgrotmdtrackingcapabilitiesl.''Loweclaimedthathe
was(jokingaround''whenhestatedotherwise.
46. On or aboutM arch 13,2018,FA R N SW O RTH privately texted Low e,adm itting:
Ir ur stock istanking on thatletterthat w ent out.They're saying the exactthing 1w as afraid of
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 19 of 31
J
that!
Iwe are notabig data company and wejustadmitted itin theletter W e gotto getyou on
.
l
CNb'C stal'tchanging thenarrative.''
47. Throughouttherem ainderof2018,through atleastM arch 2019,FARNSW ORTH
andLowecontinuedtopromotethemateriallyfalsenarrativethatHM NY possesseddataanalytics
technology and capabilities thatit w as using to m onetize M oviepass's subscriber data w hen,in
truth and in fact, and as FA RN SW O RTH and Low e knew ,H M N Y did not possess any such
technology and capabilities.
TheDefendantandLoweM adeM ateriallyFalseandM isleadingRepresentationsAboutNon-
Subscr+tion Revenue
48. ln addition to m aterially rnisrepresenting thatdata analytics w as a revenue strenm
forM oviepass,FAR N SW O RTH and Low e prom oted a m aterially false and m isleading narrative
about the existence of m ultiple other non-subscription stream s of revenue to help persuade
investors thatM oviepass could build a sustainable and profitable business. For exam ple,w hen
aSkCd during the September22, 2017, interview with Pipeline Data how M ov'iepassw ould be
Profitablewiththe$9.95CGunlipited''plan,FARXSW ORTH responded:
W e'1lgenerate revenue from m any sources.Tickets,èoncessions,advertisem ents...W e
already have dealsin place.W e can also sellsoundtracks,posters,and otherm ovie-related
products,right from their phones.A s soon as they're w alking out of the theater, we'll
contactthem .W etested itand 5-8% ofpeople buy productfrom us.
49. FA RN SW O RTH 'S representations in this interview w ere m aterially false and
misleading. In truth and in fact,and asFARNSW ORTH and Lowe both knew,atthispointin
!
timt! FARNSWORTH andLowestilldidnothaveaplanforhow tobridgethegapbetweenthe
'
cost'ofgoodsassociated with the$9.95 Gtunlimited''plan and achievingprofitability. On orabout
October 8,2017,Low e w rote FAR N SW O RTH and a team ofM oviepass executivesto ask them
to brainstorm itideas''abouthow to gençrate revenue:ççso now thatw ehave gotten into m onth 2
19
'
)
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 20 of 31
f
1 .
I w pricingm odelw ew illneedtocreateaplan onhow w egetfrom theusagelevelnow
ofourne
i
t l
o the desired profitable m odelin the ftzttlre.This w illbe critical to have wellg'
rounded
assum ptionsin orderto raise g'
row th capitalearly in 2018.''
50. During the January 9,2018,YahoolFinancejointinterview,FARNSW ORTH
falsely statedthat,ltwithinthenextsixtydays,gM oviepassjshouldbeself-sufficientonits0w11.5'
W hen asked whatrevenue strenm sw ould make thatpossible,Lowe misleadingly claim ed that
therewereûûM ultiplerevenuestreams.W e'resigning dealswith studios.W e're getting discounts
from exhibitors.''
51. FAR N SW O RTH and Low e knew thatthe claim thatM oviepass should be self-
sufficientwithin 60dayswasm aterially falseand misleadingbecause,in truth and in fact,around
the same time thatFARNSW ORTH and Lowe were publicly claim ing thatM oviepasswas60
daysfrom being self-sufficient,they w ereprivately discussing in textm essagesthefactthat,every
w eek,M oviepass required m illionsofdollars from HM N Y to survive. A sFAR N SW O RTH and
Low e also knew,the few deals thatM oviepasshad signed could notclose the com pany's m ulti-
m illion-dollarweekly cash shortfall.And,asdiscussedin thetextm essagedescribedin paragraph
26 above,FAR N SW O RTH privately acknow ledged to Low e thatH NIN Y w as notprepared to
;
covdr the grow th in costs resulting from the millions of subscribers a'
ttracted by the $9.95
I
I
Ghlnlim ited''plan. .
I
r 52. OnoraboutM arch 23,2018,HMNY and M oviepassissued ajointpressrelease
1
thatw asdissem inated to investorsthrough Business I'
K rc and the South Florida BusinessJournal
!
w ebsite,am ong other m eans. The press release alm ounced that,for a lim ited tim e,M oviepass '
was öffering itsnnnualsubscription to new subscribersfor$6.95 permonth. The pressrelease
stated:ççM bviepass has gained m om ent'um in diversifying its revenue stream s due to a series of
20
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 21 of 31
)
i
1
m arketing agreem entswith studios and distributors,as wellas partnershipswith a ntzm ber of
l
theater exhibitors. This recent success in forming relationships with studios,exhibitors,and
m arketing partners has encouraged M oviepass to offer an even m ore attractive deal to
consum ers.'' Also in the pressrelease,Low e w as quoted assaying:çtW ith the currentgrow th and
supportthatwe've seen within the lastseveralm onths,our studio and exhibitorrevenues and
othermarketing partnerships have motivated us to lowerthe price once again,offering movie
loversgreater accessto M oviepass.''
These representations w ere m aterially false and nzisleading because,in truth and
in fact,and as FA RN SW OR TH and Low e both knew,FA RN SW O RTH 'S and Lowe's reason
forlowering the price was notM oviepass's ability to generate non-subscription revenue but,
rather,its need to receive the fu11year's subscription paym ents up front in order to try to ease
HM N Y 'S and M oviepass's cash sho/falls. Indeed,as early as Janua!y 2018,FA RN SW O RT H
and Low e w ere texting abouttheirdesperate need to accessGlm assive calh''and how an EcAnnual
P1m1can provide cash flow .''
TheDefendantandLoweM adeM ateriallyFalseandM isleadingRepresentationsAboutthe
NatureandCauseofM oviepassSubscribers'LowerUsageRatesandAssociatedDrop in Cost
of Goods
54. FA R N SW O R TH atld Lowe repeatedly publicly assured investors that,based on
histtricaldata,lubscriberusage ofthe $9.95 çtunlimited''plan would nattlrally decline overtim e
i
l
.
assubscriberssettled into a predictable,low rate ofusage.Theirtalkingpointswereintended to
reco1
ncile forinvestorshow M oviepass's subscriber grow th rate could increase atbrenkneck speed
w itho
:utthe com pany rllnning outofm oney. A s FA RN SW O RTH and Low e knew,how ever,this
explànation lacked any basis in fact, and subscriber usage did not naturally decline as
i
:
FA R N SW O R TH and Low e had falsely claim ed itw ould.
l
21
'
Case 1:22-cr-20521-DSL
! Document 161 Entered on FLSD Docket 12/23/2024 Page 22 of 31
l
55. Begimiing in or arotmd January 2018, FARNSW ORTH and Lowe agreed to
artificially reduce subscriber usage through behind-the-scenes tactics aimed at reducing the
am ountofmoney thatM oviepassspentbuyingm oviçtickets.Forexnmple,on January 24,2018,
Loletexted FARNSW ORTH to discusswhich tacticsthey should useagainstsubscribers:
:
1
.
' Lowe:Ineed yourdirection in orderto givem etimeto im pactcash flow needs.Ifw ecant
'
! gsicj getsuo cient ftmding ican slow.down new sub acquisition by reducing card
: shipm ents.
1
k FA RN SW O R TH :Ok
*++
Low e:Ok so w e w ill reduce new card m ailings w eekly by 60k which w ill reduce btu.
n
starting in 2 weeksby $600k weeldy and in 5weeksexceed $2m lowerweekly burn
FAR N SW O RTH :W ow
Lowe:Second weareremoving15Amegsicj,RegalandCinemarksthatwillreduce$50011
weeklyl.)3rdwewillcondtrain (sicjusageof 10plusysersgsic)probably saving $500k
w eekly in nextw eek
56. In or around April 2018, as M oviepass's cash-flow situation worsened,
FARNSW ORTH andLowe directed M oviepassemployeesto resetthepasswordsofthehighest
volume usersto disruptorslow theitusage ofthe M oviepass application to buy movie tickets.
' One M oviepass executive w arned Low e in bolded textthatGtthere is high risk thisw ould catch
theFTC'Sattention(andtheStateAG'sattentionl''becauseM oviepasswouldbeCGtargetinga11
;
ofoùrheavyusers.''Loweresponded,ûtok Igetit''and selectedthetop 2% ofthehighestvolume
l
usersforthe password reset. Lowe then reconsidered and selected the 75,000 highestvolllme
i
userj,increasing thepercentageoftop userswho were targeted fw m 2% to approxim ately 3.4% .
In addition,Low e also added arequirem entthatthetop 7% ofthellighestvolum eusersberequired
l
to vçrify theirptlrchasesby requiring them to take apicture ofthe movieticketthey purchased.
l
I.
.
û
i 22
'
Case 1:22-cr-20521-DSL
; Document 161 Entered on FLSD Docket 12/23/2024 Page 23 of 31
;
Lowe
I'sdecisiontodramaticallyexpandthenumberofuserswhoweresubjecttoservicedisnzption
i ''l
promptedoneM oviepassexecutivetowrite: ol,project2% -7% -11% 101.',
57. o n or aboutA pril14,2018,the day af.terthepassw ord resetand ticketveriucation
measures were implemented,Lowe texted FARNSMI R'I-I-
I to intbrm him that they had
successftllly prevented paying subscribersfrom buyinghlmdredsofthousandsofdollars'wol'th of
tickets.FARNSW ORTH respondedwith approvalandthen sentLoweaphotooftheprivatejet
thathe rentedusing investorm oney to fly him selfand som eM oviepassexecutivesto theC oachella
M usic Festival:
Lowe:W ethink thetacticswelatmchedyesterday saved $400k
FAR N SW O RTH :O h w ow
Low e:Iw ashoping form ore.Today w illhave lessim pactbecause w ithin m inutesReddit
posted solution to resetting passwordl.) We did though greatly expand the ticket
verification which reduces alm ost by 1 m ovie w eekly forthose in the program
***
FARNSW ORTH:Youwouldhavehadablastonthejet
***
Low e:Lookslike fun.
***
Lowe:1hopeyou know how much iadmire you.Every day iam moreproud tobeyolzr
pm neron thism ission.
T
58. FA R N SW O RTH and Low e subsequently m ade m aterially false and m isleading
E
:
representations reporting thatthe first quarter reduction in subscriberusage w as the result of a
m attzration of the subscriber base and natural decline over tim e as subscribers settled into a
predictable,1ow rate ofusage. For exnm ple,on or aboutM ay 16,2018,H M N Y and M oviepass
issuedajointpressreleasetitled (GLHM NYqand M oviepassReportFirstQuarterEarnings''that
23
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 24 of 31
wasjdisseminated to investors through Business Wire,the 50uth Florida Business Jèz/rnlf
l
webkite,andan 8-K filedwiththeSEC,among othermeans.Thepressreleaseannouncedthat
H M N Y and M oviepasshad their (Ebiggestquarter''in theircom bined llistory and stated:
0 1.
11.core strategy hasalw aysbeen to provide a com pelling valueproposition to consum ers
thatvastly improvestheirm ovie-going experience.As oursubscriberbaserapidly grows
and m atures,ourfinancialgoalisto breakeven on subscribers and generate alternative
revenue stream s...Recenttrendsrelated to averageticketpurchases,churning netgro< h
and reducing abuse has bolstered olzr confidence in oureconom ic m odelbeing viable and
showssigrlificantimprovementin achieving ourobjectives.M oviepassisreleasing key
m etricsthatdem onstrate significantim provem entsto itseconom icm odeland strong appeal
to custom ers.The trendline based on our data suggests this figure w illbe reduced f'urther
in the com ing m onths.A s olzr subscriber base m atures, w e are also natlzrally seeing
significantly reduced usage overtim e.
Theserepresentationswerem aterially falseandrnisleading because,in truth and in
fact,andasFARNSW ORTH andLowebothinew,thereductioninsubscribers'usageandm ovie
consum ption w as a'
ttributable to a forced reduction in subscriber usage,not a m aturation of the
subscriber base or naturalcycle of use. These representations were also m aterially false and
misleading because they om ited mention of the factthat,as FARNSW ORTH and Lowe also
knew,M oviepasshadselectedpaying subscribersforinvollmtary inclusion inprogrnmstoprevent
orslow useofthe servicetobuy m ovieticketsbased exclusively on thefactthat,in thepast,these
subscribershad used the service them ost.
A11in violation ofTitle 15,United StatesCode,Sections78j(b)and 78f1)Title 17,
'and
Code ofFederalRegulations,Section 240.10b-5.
24
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 25 of 31
CO UN T 2
C onspiracy to C om m itSecurities Fraud
(18U.S.C.j371)
1. The GeneralA llegations section of this Superseding lnform ation is hereby re-
alleged and fully incorporated herein by reference.
From atleastin oraround November2020,and continuing through atleastin or
around September2024,within theSouthem DistrictofFloridaand elsewhere,the defendr t,
TH E O D O R E FA RN SW O RTH ,
didwillftzlly,thatis,withtheintenttoful4hertheobjectoftheconspiracy,andlcnowinglycombine,
1
conspire,confederateand agreewith otherslcnown and unknowntotheUnited StatesAttol-ney,to
lcnowingly and willftzlly,in cozm ection with thepurchase and saleofa security,thatis,com mon
stock issued by Vinco V entures,by use ofthe m eans and instrum entalitiesofinterstate com m erce,
and by use of the m ails,directly and indirectly,use and em ploy, and cause others to use and
employ,m anipulative and deceptive devicesand contrivances,in violation ofTitle 17,Code of
FederalRegulations,Section240.1017-5,by:(a)employing,andcausingotherstoemploy,devices,
schemes,and al-tificesto defraud;(b)making,and causing othersto make,untruestatementsof
m aterialfactand om itting to state,and causing othersto om itto state,m aterialfactsnecessary in
orderto m ake the statem entsm ade,in the lightofthe circum stancestm derwhich they w ere m ade,
notmisleading;and(c)engaging,andcausing otherstoengage,in acts,practices,andcoursesof
businessw llich operated and w ould operate asafraud and deceitupon persons,in violation ofTitle
15,UnitedStatesCode,Sections78jand78ff,andTitle17,CodeofFederalRegulations,Section
240.10b-5.
25
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 26 of 31
PUR PO SE OF TH E C O N SPIR ACY
3. Itwas the puzpose of the conspiracy for the defendant,FA R N SW O RTH ,and his
coconspirators to tmjustly enrich themselves by:(i) making materially false and misleading
representationsto investorsrelatingtothebusinessesand operationsofVinco Venturesin orderto
adificially increasetheprice ofVincoVenturescom m on stock and increase the volum e ofVinco
Venturessharestraded;(ii)concealingfrom investorsthetnzefactsrelatingtothebusinessesand
operationsofVincoVentures'
,(iii)divertingtheproceedsoftheconspiracyfortheirpersonaluse
and1
benefit;and (iv)concealingtheconspiracy from regulators,1aw enforcement,investors,and
them edia.
M ANNER AND M EANS OF THE CONSPIM CY
The m almer and m eans by which FARNSW ORTH and his coconspirators soughtto
accomplishthepurpose oftheconspiracy included,butwerenotlim itedto,thefollowing:
To concealthe truenature ofFARNSW ORTH 'Srole in,and actualcontrolover,
Vinco Venttlres,FAR N SW O RTH selected individuals to serve as Vinco Ventures'officers and
directors w ith the understanding thatthose individuals w ould actatFA RN SW O R TH 'Sdirection.
To artificially inflate the price ofVinco Ventures com m on stock and increase the
volti
m eofVincoVenturessharestraded,FARNSW ORTH andhiscoconspiratorsm adem aterially
l
i 'b i
falseandm isleading representationsaboutVinco Venttlres usnessstrategy,businessoperations,
and FAlkN sw o R-l-l'
l's role in transactions.
In furtherance of the conspiracy,FA R N SW O RTH and his coconspirators m ade
these m atedally false and m isleading representationsin pressreleasesand SEC filings,a11ofw hich
wereintended to reach,and attim esdid in factreach,investorsandthegeneralpublicthroughout
the United States, including within the Southern District of Florida, and elsewhere.
26
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 27 of 31
FARNSW ORTH andhiscoconspiratorsdrafted,reviewed and/orapprovedthepressreleasesand
f
l
SEC filings.
O V ERT A C T
lnfurtheranceoftheconspiracyandtoachievetheobjectsandpurposethereof,atleastone
conspirator com mitled and caused to be com mitted,in the Southern District of Florida and
elsew here,atleastthe following overtact,am ong others:
On oraboutApril7,2023,VincoVenturesfiled aForm 10-Q,which wasreviewed and
appfoved by FARNSW ORTH and signed by one of FARNSW O RTH 'S coconspirators. This
form wasdisseminatedthroughouttheUaitedStates,includingtoinvestorsin theSouthel.
n District
ofFlorida.
A llin violation ofTitle 18,U nited States Code,Section 371.
FO RFEIT UR E A LLEG ATIO N S
(18U.S.C.j981(a)(1)(C))
The allegationsofthis Superseding Inform ation arehereby re-alleged and by this
reference fully incorporated herein for the pup ose of alleging forfeitlzre to the U rlited States of
America of certain propeo in which the defendant,THEODORE FARNSW ORTH ,has all
interest.
Upon conviction of a violation of Title 18,United States Code,Section 371,as
alleged in this Superseding lnform ation,the defendant shall forfeit to the United States mly
property,realorpersonal,w hich constitm es orisderived from proceedstraceable to such offense,
ptlrsuanttoTitle18,UnitedStatesCode,Section981(a)(1)(C).
Ifanyofthepropertysubjecttoforfeiture,asaresultofany actoromissionofthe
defendant:
a. cnnnotbe located upon the exercise ofdue diligence;
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 28 of 31
b. hasbeen transferred orsoldto,ordçposited with,athird party;
hasbeenplacedbeyondthejlzrisdiction ofthecourt;
d. hasbeen substantiallydimtnishedinvalue;or
hasbeen comm ingledwith otherpropeo which carmotbedivided without
difficulty.
the U nited States shallbe entitled to forfeiture ofsubstitm e property tm derthe provisions ofTitle
21,UnitedStatesCode,Section 8531).
A11pursuanttoTitle18,UnitedStatesCode,Section981(a)(1)(C),Title21,United States
Code,Section 853,andTitle28,UnitedStatesCode,Section2461(c).
ç' l
M AR KEN ZY LA P IN TE
UN ITED STATES ATTO RN EY
SOU THE RN D ISTRICT OF FLORIDA
(
G LE S.L
CH IEF
FR AUD SECTIONg CR IM IN A L D IV ISION
UNITEP STATESDEPARTM ENT OF JUSTICE
By:
CH OPH ER EN TON
L & ARCHER
K ATE T.M CCA RTH Y
M ATTHEW REILLY
TRIM ATTORN EY S
FR AU D SECTIONJ CR IM IN A L D IV ISION
UN ITED STATES D EPA RTA N T OF JU STICE
28
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 29 of 31
U NITED STA TES DISTR ICT CO URT
SOU TH ERN D ISTRICT OF FL ORIDA
UNITED STATES OF AMERICA cAsE NO.:22-20521-CR-Leibowitz(s)
CER TIFICATE O F TR IAL ATTO R NE Y
TheodoreFarnsworth
Superseding Case Inform ation:
New Defendantts)(YesorNo) NO
CourtDivision (selectone) Num berofN ew D efendants
M M iami L'.Key W est IQ FTP Totalnum berofnew counts 1
L FTL I.
ZIW PB
1do hereby certify that:
1. Iia
!
vecarefully consideredtheallegationsoftheindictment,thenumberofdefendants,thengmberofprobable
witnessesandthelejalcomplexitiesofthelndictment/lnfonnationattachedhereto.
1ainawarethatthelnformationsupyliedorfthisstatementwillberelieduponbytheJudgesofthisCourtinsetting
thlircalendarsandschedulingcrimmaltrialsunderthemandateoftheSpeedyTrialAct,28U.S.C.j3161.
Interpreter:(YesorNo) No
Listlanguageand/ordialect:
Thiscasewilltake 0 daysforthepartiesto try.
Plèasecheck appropriatecategory andtypeofoffenselisted below:
(Cleckonlyone) (checkonlyone)
1 , EI 0to 5 days E1Petty
11l L 6to 10 days E':IM inor
111 EI11to20 days CQ M isdem eanor
IV EI21to 60 days E'xZIFelony
V t lZl61daysandover
HasthiscasebeenpreviouslyfiledinthisDistrictCourt?(YesorNo) Yes
Ifyes,JudgeD avid S.Leibowitz Case N o.22-20521-CR-Leibow itz
Hasacomplaintbeenfiledinthismatter?(YesorNo) No
Ifyes, M agistrate CaseN o.
8. DqesthiscaserelatetoapreviouslyfiledmatterinthisDistrictCourt?(YesorNo) Yes
Ifyes,JudgeDavid S.Leibowitz CaseN o.22-20521-CR-Leibowitz(s)
9. Dpfendantts)in federalcustody asof08/09/2023
l0. Drfendantts)instatecustodyasofN/A
11. Ru'le 20 f'
rom the Districtof
12. Isihisapotentialdeathpenaltycase?(YesorNo) No
13. Dàesthiscaseoriginatefrom amatterpending intheNorthernRegion oftheU.S.Attorney'sOffice
PriortoAugust8,2014(Mag.JudgeShaniekMillsMaynard)?(YesorNo) NO
D oesthiscase originate from am atterpending in the CentralRegion ofthe U.S.Attom ey's Office
priortoOctober3,2019(Mag.JudgeJaredM .Strauss)?(YesorNo) No
D id this m atter involve the participation of or consultation with M agistrate Judge Eduardo 1.Sanchez
dttringhistenureattheU.S.Attorney'sOftke,whichconcludedonJanuary22,2023? No
16. Did this m atter involve the padicipation of or consultation w ith M agistrate Judge M arty Fulgueira
Elfenbein during hertenure atthe U .S.Attorney's Office,which concluded on M arch 5,2024? N o
B y: -
K ate .M ccarthy
D OJTrialAttorney
SDFL CourtID N o. A 5502801
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 30 of 31
U NITED STA TES DISTRICT C O UR T
SO U TH ER N DISTR ICT O F FLO R IDA
PENALTY SHEE:
D efendant'sN am e: THEORD ORE FA RN SW ORTH
CaseNo: 22-20521-CR-Leibowitz(s)
Count#:1
Tîlle15UnitedStatesCodeoSections78i(b)and78f1)17C.F.11.5240.10b-5
SectuitiesFraud
*Mlax.Term oflmprisonment:20Years
*MlandatoryM in.Term ofImprisonment(ifapplicable):N/A
*M ax.Supervised Release:Tllree(3)Years
* M ax.Fine:$5M illion ortwicetheGrossGain orGrossLoss .
Count#:2
Title 18aU nited States CodesSection 371 .-
Conspiracy to Com m itSecuritiesFraud --
* M ax.T erm ofIm prisonm ent:5 Y eazs
*M andatoryM in.Term ofImprisonm ent(ifapplicable):N/A
*M ax.SupervisedRelease:Tllree(3)Years
* M ax.Fine:$250,000 ortwicethe GrossLossorGrossGain
frRefersonly to possibleterm ofincarceration,supervised releaseand fines. Itdoesnotinclude
restitution,specialassessm ents,paroleterm s,orforfeituresthatm ay beapplicable.
Case 1:22-cr-20521-DSL Document 161 Entered on FLSD Docket 12/23/2024 Page 31 of 31
AO 455(Rev.01/09)WaiverofanIndictmcnt
U NITED STATES D ISTRICT C OURT
forthe
Southern DistrictofFlorida
United StatesofAm erica )
V ) CaseNo. 22-20251-CR-Leibowitz(s)
)
Theodore Farnsw orth, )
Defendant )
W AW ER OF AN INDICTM ENT
lunderstand thatlhavebeen accused ofone orm oreoffensespunishableby imprisonmentformorethan one
year. 1wasadvised in open courtofmy rightsandthenature ofthe proposed chargesagainstme.
Afterreceiving thisadvice,lwaivemy rightto prosecution by indictm entand consentto prosecution by
information.
D ate: '
De#ndant'ssignature
Signatureofdefendant'
sattorney
Printedname(Ttfc-
/èntïlnf'
sattorney
Judge'
ssignature
Judge'
sprintednameand title
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