MoviePass created a stir in Hollywood in 2017 by giving customers an irresistible offer where they had to pay $10 to see a movie a day for an entire month. The service grew rapidly to 3 million subscribers in less than a year.
However, MoviePass’ business model can best be described as unsustainable and the company went bust within two years and was shut down. Now, the MoviePass’ former CEO and its former parent company have been charged with deceiving investors on the sustainability and profitability elements, according to a Department of Justice release.
J Mitchell Lowe and Theodore Farnsworth along with former MoviePass exec Khalid Itum who created and approved false invoices and made $310,000 are now being questioned by the US authorities for committing fraud.
Though they knew that their offer was simply not feasible, they used the plan to boost subscriber numbers and inflate HMNY’s stock price while losing money. They also used terms like big data and artificial intelligence to describe the way information was processed and analyzed, when no such technology was involved.