“A Florida man pleaded guilty today,” began a Department of Justice press release PUBLISHED on Tuesday. In this case, the ever famous Florida Man is none other than Ted Farnsworth, the former CEO of MoviePass’ parent company. His request comes less than four months after another MoviePass leader, former CEO Mitch Lowe, entered a guilty plea of ​​his own.

Farnsworth pleaded guilty to one count of securities fraud and one count of conspiracy to commit securities fraud. He faces a maximum of 20 years in prison for the first charge and up to five for the latter. A sentencing hearing will be scheduled at a later date.

the The DOJ charged Farnsworth62, with a scheme to defraud investors in MoviePass’ former parent company, Helios & Matheson Analytics (HMNY). The agency accused him of making false and misleading business representations of HMNY and MoviePass to artificially inflate the stock and lure investors.

If that sounds familiar, it’s because former MoviePass CEO Mitch Lowe pleaded guilty to similar charges in September. Lowe reportedly agreed to cooperate with prosecutors and regulators as part of his plea, a detail one can imagine tightening the vise on Farnsworth leading up to his plea.

MoviePass subscribers pays the company $9.95 per month for unlimited movie tickets without blackout dates. Farnsworth and Lowe told investors that the business plan was tested and sustainable and would at least break even — if not make a profit — from subscription fees alone. On top of that, they use buzzwords like “big data” and “artificial intelligence” to claim that they can alchemize subscriber data, turning it into revenue.

But according to the DOJ (and… logic), that’s not exactly what happened. Instead, it was a marketing gimmick to attract new subscribers and pump up HMNY’s stock price.

Farnsworth falsely claimed that MoviePass’ cost of goods (the number of tickets purchased by each subscriber with their subscription) has naturally decreased over time, which is in line with his publicly stated expectations. But the DOJ said that because the company directed MoviePass employees to throttle subscribers who used the service to buy most movies, preventing them from getting what was promised from their “unlimited” memberships. Which is consistent with reports from 2019 employees are instructed to change the passwords of frequent moviegoers.

Not surprisingly, the company lost money from the plan. A The downward spiral beginsMoviePass and its parent company declared bankruptcy in 2020 and the pair of Florida men who masterminded the too-good-to-be-true scheme pleaded guilty in a federal court.

The company since then resurrected with a new business model after co-founder Stacy Spikes bought its scraps in 2021.