SEC accuses former MoviePass bosses of fraud

When MoviePass first launched, offering people a chance to pay a flat monthly fee for infinite movie tickets, it seemed too good to be true. It ultimately was, of course, with “infinite movies” eventually becoming “a couple of predetermined movies and only at certain times” as the company started to bleed money, and then the company died. According to the Securities And Exchange Commission, though, some of the company’s founders made it “too good to be true” on purpose and knew going in that it was just a matter of time before the company imploded, all while they continued to make money from it. The SEC calls that “fraud.”

This comes from Variety, which says that former MoviePass executives Theodore Farnsworth and Mitch Lowe knew MoviePass couldn’t survive with its $10 plan, and as things started to go bad, they instituted “fraudulent methods” to avoid losing more money. Those methods allegedly included blocking access to “six Bollywood films” that Lowe reportedly said were “killing us financially” and the introduction of “Project 2%”—where the biggest MoviePass users were specifically targeted by the company to have their accounts sandbagged with “password disruption” and “ticket verification.”

And if that sounds familiar, it’s because we heard a while ago that the FTC was mad about MoviePass using secret little tricks to stop people from using the service. The SEC complaint also accuses a MoviePass executive of tapping into MoviePass money for his own personal use, which is bad in a different way.

This all comes as original MoviePass creator Stacy Spikes is relaunching MoviePass with a new business model that involves new—and pricier—tiered plans as well as “credits” that are used to buy tickets. Spikes also mentioned integration with an extremely bleak advertising system that would track your eyes to make sure you’re actually looking at ads, but… the world doesn’t need that to become a popular thing.