SEC v. Theodore J. Farnsworth; J. Mitchell Lowe; and Khalid Itum, No. LR-25525, Southern District of New York (Sept. 27, 2022) — Press Release
raw: Theodore J. Farnsworth, J. Mitchell Lowe, and Khalid Itum
Theodore J. Farnsworth, J. Mitchell Lowe, and Khalid Itum, No. LR-25525 (S.D.N.Y. Sept. 27, 2022)
summary
The SEC charged former MoviePass and HMNY executives Farnsworth, Lowe, and Itum for misleading investors and falsifying records to embezzle over $310,000.
paragraph
The SEC filed charges against Theodore J. Farnsworth, J. Mitchell Lowe, and Khalid Itum for making false statements regarding MoviePass's profitability and data analytics capabilities. The defendants also allegedly used false invoices to funnel more than $310,000 to Itum for personal benefit. The charges include violations of the Securities Act of 1933 and the Exchange Act of 1934, with the SEC seeking injunctions, disgorgement, and officer-and-director bars.
narrative
The SEC has filed charges against former HMNY CEO Theodore J. Farnsworth, former MoviePass CEO J. Mitchell Lowe, and executive Khalid Itum for multiple securities violations. Between 2017 and 2019, Farnsworth and Lowe allegedly misled investors regarding MoviePass's profitability at its $9.95 price point, HMNY's data analytics capabilities, and its funding stability. Additionally, the trio is accused of approving fraudulent invoices to disguise over $310,000 in personal payments to Itum. The complaint also highlights fraudulent tactics used to restrict subscriber access to the MoviePass service. The defendants face charges under the Securities Act of 1933 and the Exchange Act of 1934, including books and records manipulation. The SEC is seeking permanent injunctions, civil penalties, disgorgement, and officer-and-director bars for Farnsworth and Lowe.
Classified financial-fraud(confidence 95%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 67% / precision 23%. detection rule →
Parties
Securities and Exchange CommissionTheodore J. FarnsworthJ. Mitchell LoweKhalid Itum
Keywords
farnsworth lowelowefarnsworthitumtheodore farnsworthmitchell lowelowe khalidkhalid itumsecurities exchangemoviepassexchangesecuritiesfarnsworth mitchelltheodoremitchell
Exhibits & Attached Documents (1)
Extracted insights
Dollar amounts 1
- $310K $310,000 $100K–$1M
Entities 1
- agency Securities and Exchange Commission
Triples 11
- Securities And Exchange Commission filed charges against Theodore J. Farnsworth, J. Mitchell Lowe, and Khalid Itum
- Theodore J. Farnsworth and J. Mitchell Lowe made false statements concerning MoviePass's business model, data analytics capabilities, and ability to fund operations
- Theodore J. Farnsworth, J. Mitchell Lowe, and Khalid Itum created or approved false invoices to obtain more than $310,000 for Itum's personal benefit
- Theodore J. Farnsworth and J. Mitchell Lowe devised fraudulent tactics to prevent MoviePass subscribers from using the service
- Theodore J. Farnsworth and J. Mitchell Lowe approved false invoices submitted by Khalid Itum disguising bonus payments as services
- Securities And Exchange Commission charges Farnsworth and Lowe with violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5
- Securities And Exchange Commission charges Lowe with aiding and abetting Farnsworth's and HMNY's violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5
- Securities And Exchange Commission charges Farnsworth, Lowe, and Itum with violating Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2
- Securities And Exchange Commission charges Farnsworth, Lowe, and Itum with aiding and abetting HMNY's violations of Section 13(b)(2)(A) of the Exchange Act
- Securities And Exchange Commission seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against all defendants
- Securities And Exchange Commission seeks conduct-based injunctions and officer-and-director bars against Theodore J. Farnsworth and J. Mitchell Lowe
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Extracted body text (2,925c)
SEC Charges Former Executives At Moviepass and Its Parent Company for Making False Statements to Investors and Falsifying Books and Records Litigation Release No. 25525 / September 27, 2022 Securities and Exchange Commission v. Theodore J. Farnsworth, J. Mitchell Lowe, and Khalid Itum, No. 1:22-civ-08226 (S.D.N.Y. filed Sept. 26, 2022) The Securities and Exchange Commission announced today that it filed charges against Theodore J. Farnsworth, former CEO of Helios & Matheson Analytics Inc. ("HMNY") and J. Mitchell Lowe, former CEO of MoviePass, Inc. ("MoviePass"), for allegedly making materially false or misleading statements concerning key aspects of MoviePass's business model. The complaint also charges Farnsworth, Lowe, and Khalid Itum, a former MoviePass executive, with creating or approving false invoices that allowed Itum to obtain more than $310,000 from MoviePass and HMNY for his personal benefit. According to the complaint, between August 2017 and at least March 2019, Farnsworth and Lowe intentionally and repeatedly made misstatements in HMNY Commission filings, press releases, and in the press that MoviePass could be profitable at its new, $9.95 per month subscription price; about HMNY's purported data analytics capabilities; and concerning HMNY's ability to fund MoviePass's operations. As further alleged in the complaint, Farnsworth and Lowe also devised fraudulent tactics to prevent MoviePass's subscribers from using the service. In addition, the complaint alleges that, between January and April 2018, Farnsworth and Lowe knowingly approved false invoices that Itum submitted to HMNY and MoviePass, disguising bonus payments as services purportedly provided by an entity Itum controlled. The SEC's complaint, filed in the Southern District of New York, charges Farnsworth and Lowe with violating Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and charges Lowe with aiding and abetting Farnsworth's and HMNY's violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The complaint further charges Farnsworth, Lowe, and Itum with violating Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder and aiding and abetting HMNY's violations of Section 13(b)(2)(A) of the Exchange Act. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against all defendants, and also seeks conduct-based injunctions and officer-and-director bars against Farnsworth and Lowe. The SEC's investigation was conducted by Elizabeth Butler, Christopher Mele, and Tian Wen of the New York Regional Office, with assistance from James D'Avino, Alan Maza, and Alistaire Bambach, and was supervised by Thomas P. Smith, Jr. The litigation will be led by Jack Kaufman. SEC ComplaintOCR text (2,925c · html-text · 99% conf)
SEC Charges Former Executives At Moviepass and Its Parent Company for Making False Statements to Investors and Falsifying Books and Records Litigation Release No. 25525 / September 27, 2022 Securities and Exchange Commission v. Theodore J. Farnsworth, J. Mitchell Lowe, and Khalid Itum, No. 1:22-civ-08226 (S.D.N.Y. filed Sept. 26, 2022) The Securities and Exchange Commission announced today that it filed charges against Theodore J. Farnsworth, former CEO of Helios & Matheson Analytics Inc. ("HMNY") and J. Mitchell Lowe, former CEO of MoviePass, Inc. ("MoviePass"), for allegedly making materially false or misleading statements concerning key aspects of MoviePass's business model. The complaint also charges Farnsworth, Lowe, and Khalid Itum, a former MoviePass executive, with creating or approving false invoices that allowed Itum to obtain more than $310,000 from MoviePass and HMNY for his personal benefit. According to the complaint, between August 2017 and at least March 2019, Farnsworth and Lowe intentionally and repeatedly made misstatements in HMNY Commission filings, press releases, and in the press that MoviePass could be profitable at its new, $9.95 per month subscription price; about HMNY's purported data analytics capabilities; and concerning HMNY's ability to fund MoviePass's operations. As further alleged in the complaint, Farnsworth and Lowe also devised fraudulent tactics to prevent MoviePass's subscribers from using the service. In addition, the complaint alleges that, between January and April 2018, Farnsworth and Lowe knowingly approved false invoices that Itum submitted to HMNY and MoviePass, disguising bonus payments as services purportedly provided by an entity Itum controlled. The SEC's complaint, filed in the Southern District of New York, charges Farnsworth and Lowe with violating Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and charges Lowe with aiding and abetting Farnsworth's and HMNY's violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The complaint further charges Farnsworth, Lowe, and Itum with violating Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder and aiding and abetting HMNY's violations of Section 13(b)(2)(A) of the Exchange Act. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against all defendants, and also seeks conduct-based injunctions and officer-and-director bars against Farnsworth and Lowe. The SEC's investigation was conducted by Elizabeth Butler, Christopher Mele, and Tian Wen of the New York Regional Office, with assistance from James D'Avino, Alan Maza, and Alistaire Bambach, and was supervised by Thomas P. Smith, Jr. The litigation will be led by Jack Kaufman. SEC Complaint