SEC v. Theodore J. Farnsworth; J. Mitchell Lowe; and Khalid Itum, No. LR-26207, Southern District of New York (Jan. 2, 2025) — Press Release
raw: Theodore J. Farnsworth, J. Mitchell Lowe, and Khalid Itum
Theodore J. Farnsworth, J. Mitchell Lowe, and Khalid Itum, No. LR-26207 (S.D.N.Y. Jan. 2, 2025)
summary
Theodore J. Farnsworth, former CEO of HMNY, obtained a consent judgment for misrepresenting MoviePass's business model and approving fraudulent invoices, resulting in a permanent officer and director bar.
paragraph
Theodore J. Farnsworth, former CEO of Helios & Matheson Analytics Inc. (HMNY), faced charges for making materially false statements regarding MoviePass's profitability and data capabilities. He also approved false invoices to disguise executive bonus payments and orchestrated tactics to disrupt subscriber usage. The judgment includes permanent injunctive relief and an officer and director bar, with specific disgorgement and penalty amounts to be determined later.
narrative
The SEC obtained a consent judgment against Theodore J. Farnsworth, the former CEO of Helios & Matheson Analytics Inc. (HMNY), for misrepresenting the business model of its subsidiary, MoviePass. Between 2017 and 2019, Farnsworth made false claims regarding MoviePass's profitability at a $9.95 monthly price, its data analytics capabilities, and its funding capacity. Additionally, he devised fraudulent tactics to hinder subscriber usage and approved false invoices to disguise executive bonuses as service fees. Farnsworth consented to permanent injunctive relief under the Securities Act of 1933 and the Securities Exchange Act of 1934. The judgment also imposes a permanent officer and director bar. While the SEC is seeking disgorgement and civil penalties, the final amounts will be determined at a later date. Litigation against co-defendants J. Mitchell Lowe and Khalid Itum remains ongoing.
Classified accounting-fraud(confidence 95%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 80% / precision 48%. detection rule →
Parties
Securities and Exchange CommissionTheodore J. FarnsworthJ. Mitchell LoweKhalid Itum
Keywords
farnsworththeodore farnsworthmoviepassfarnsworth mitchellmitchell lowelowe khalidkhalid itumsecurities exchangeexchangehmnytheodoresecuritiessecexchange commissionfarnsworth consented
Exhibits & Attached Documents (1)
Extracted insights
Entities 9
- person elizabeth butler
- company Helios & Matheson Analytics Inc.
- organization Helios & Matheson Analytics Inc.
- company MoviePass, Inc.
- organization MoviePass, Inc.
- agency sec's litigation
- agency Securities and Exchange Commission
- organization Securities and Exchange Commission
- person theodore j. farnsworth
Triples 10
- Theodore J. Farnsworth made false statements concerning MoviePass, Inc.
- Theodore J. Farnsworth devised fraudulent tactics to prevent MoviePass's subscribers from using the service
- Theodore J. Farnsworth approved false invoices submitted to Hmny and MoviePass
- Securities And Exchange Commission obtained judgment against Theodore J. Farnsworth
- Theodore J. Farnsworth consented to permanent injunctive relief under Section 17(a) of the Securities Act of 1933
- Theodore J. Farnsworth consented to officer and director bar
- Securities And Exchange Commission seeks disgorgement, prejudgment interest, and civil penalties
- Elizabeth Butler handles SEC's litigation
- Theodore J. Farnsworth was CEO of Helios & Matheson Analytics Inc.
- Helios & Matheson Analytics Inc. had subsidiary MoviePass, Inc.
PDF (from attached: complaint)
Text layers
Extracted body text (2,537c)
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26207 / January 2, 2025 Securities and Exchange Commission v. Theodore J. Farnsworth, J. Mitchell Lowe, and Khalid Itum, No. 22-civ-08226 (S.D.N.Y. filed Sept. 26, 2022) SEC Obtains Judgment Against Former Executive at MoviePass’s Parent Company On December 23, 2024, the U.S. District Court for the Southern District of New York entered a consent judgment against Theodore J. Farnsworth, former CEO of Helios & Matheson Analytics Inc. (HMNY), for making materially false and misleading statements concerning HMNY’s subsidiary, MoviePass, Inc., a movie subscription service. According to the SEC’s complaint, between August 2017 and at least March 2019, Farnsworth and another defendant intentionally and repeatedly made misstatements in HMNY Commission filings, press releases, and in the press concerning key aspects of MoviePass’s business model. The misstatements concerned HMNY’s claim that MoviePass could be profitable at its new, $9.95-per-month subscription price; HMNY's purported data analytics capabilities; and HMNY's ability to fund MoviePass's operations. As further alleged in the complaint, Farnsworth 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 knowingly approved false invoices that a third defendant, a former MoviePass executive, submitted to HMNY and MoviePass, disguising bonus payments as services purportedly provided by an entity that the third defendant controlled. The litigation against the other defendants continues. Farnsworth consented to the entry of a judgment (i) providing permanent injunctive relief under Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and (ii) permanently enjoining him from violations of Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder and from aiding and abetting violations of Section 13(b)(2)(A) of the Exchange Act. In the judgment, Farnsworth also consented to the entry of a conduct-based injunction and an officer and director bar. The SEC’s complaint also seeks disgorgement, prejudgment interest, and civil penalties, which will be determined by the court at a later date, upon motion of the SEC. The SEC's litigation is being handled by Elizabeth Butler and Tian Wen, under the supervision of Jack Kaufman and Thomas P. Smith, Jr., all of the New York Regional Office.
OCR text (2,537c · html-text · 99% conf)
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 26207 / January 2, 2025 Securities and Exchange Commission v. Theodore J. Farnsworth, J. Mitchell Lowe, and Khalid Itum, No. 22-civ-08226 (S.D.N.Y. filed Sept. 26, 2022) SEC Obtains Judgment Against Former Executive at MoviePass’s Parent Company On December 23, 2024, the U.S. District Court for the Southern District of New York entered a consent judgment against Theodore J. Farnsworth, former CEO of Helios & Matheson Analytics Inc. (HMNY), for making materially false and misleading statements concerning HMNY’s subsidiary, MoviePass, Inc., a movie subscription service. According to the SEC’s complaint, between August 2017 and at least March 2019, Farnsworth and another defendant intentionally and repeatedly made misstatements in HMNY Commission filings, press releases, and in the press concerning key aspects of MoviePass’s business model. The misstatements concerned HMNY’s claim that MoviePass could be profitable at its new, $9.95-per-month subscription price; HMNY's purported data analytics capabilities; and HMNY's ability to fund MoviePass's operations. As further alleged in the complaint, Farnsworth 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 knowingly approved false invoices that a third defendant, a former MoviePass executive, submitted to HMNY and MoviePass, disguising bonus payments as services purportedly provided by an entity that the third defendant controlled. The litigation against the other defendants continues. Farnsworth consented to the entry of a judgment (i) providing permanent injunctive relief under Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and (ii) permanently enjoining him from violations of Section 13(b)(5) of the Exchange Act and Rules 13b2-1 and 13b2-2 thereunder and from aiding and abetting violations of Section 13(b)(2)(A) of the Exchange Act. In the judgment, Farnsworth also consented to the entry of a conduct-based injunction and an officer and director bar. The SEC’s complaint also seeks disgorgement, prejudgment interest, and civil penalties, which will be determined by the court at a later date, upon motion of the SEC. The SEC's litigation is being handled by Elizabeth Butler and Tian Wen, under the supervision of Jack Kaufman and Thomas P. Smith, Jr., all of the New York Regional Office.