The Farnsworth MoviePass Fraud: Timeline of Deception
The Farnsworth MoviePass fraud case represents one of the most notorious investment scams in recent entertainment industry history, leaving investors with millions in losses.
When examining the Farnsworth MoviePass fraud in detail, several red flags become apparent that could have warned potential investors about the scheme.
Once a scammer always a scammer? While it is possible for humans to change, often times, a little research into a person’s background will uncover a past that comes with a flashing neon warning sign. Such seems to be the case with Theodore J. Farnsworth. But, as with many investment fraud deals, the story weaved for unwary investors was enticing.
The “in thing” is often hard to resist, and the business of entertainment creates its own aura drawing people to it. Farnsworth ran HMNY which was the primary owner of a business called MoviePass. MoviePass was a subscription-based service wherein a subscriber paid $9.95 a month (after HMNY gained control) for the ability to see “any move; any theater; any day.” Prior to HMNY’s acquisition of MoviePass, the monthly subscriber rates varied from $12.95 to $89.95 depending on location. SEC’s MoneyPass Complaint
Given the going rate to view just one film, the new price seemed too good to be true to at least some media sources. How in the world would MoviePass make a profit? In fact, MoviePass was on the brink of failure when HMNY and Farnsworth created a tale to attract financial investors.
- In 2017 Variety.com interviewer asked Farnsworth if MoviePass “would need to raise prices or risk going out of business?” Lowe (another fraudster in the mix) responded in the negative, claiming people didn’t understand their business model.
- In 2017 in an interview with Pipeline Data, Farnsworth said he was “confident MoviePass would break even on subscription[s] alone.”
- When Yahoo Finance interviewer asked Farnsworth and Lowe in 2018 if the price point was too low, Farnsworth and Lowe both said no. Lowe added an apparently made-up statistic that the $9.95/month rate “attracted moviegoers who only attended movies five times a year.”
- Similar lies appeared in Recode Media Podcast, CNBC, Yahoo Finance and Entertainment Finance Forum.
By the time 2018 arrived, Yahoo Finance and Variety.com reported MoviePass lowered its monthly rate to $6.95 for those paying a year’s fee up-front, with Farnsworth and Lowe claiming they could make money immediately with non-subscription revenue. In order to attract more investors, the lies got bigger. Farnsworth and Lowe claimed the data proved subscribers acted much like they would on an all-you-can-eat buffet. At first, subscribers attended several movies, but over time the thrill wore off, resulting in subscribers going to a single movie per month.
As things kept deteriorating, MoviePass started to block Bollywood films as those films were “killing us financially.” Later they also blocked AMC theaters. In one final attempt to con subscribers, Farnsworth and Lowe instructed employees to invalidate heavy users’ passwords, claiming suspicious activity, in order to decrease subscribers’ use of the service.
The good news, in January 2025, SEC obtained a consent judgement against Farnsworth. The case is on-going with other defendants. Also, there’s another consent judgment against Farnsworth in Vinco Ventures. Farnsworth, undeterred by his financial investment fraud in HMNY, became the puppet master in publicly traded, Vinco Ventures from 2021 to 2023. Vinco announced a merger with Farnsworth’s Zash Global Media and Entertainment to “creat[e] exciting acceleration and growth in live-streaming content, video-sharing, distribution and production within [the combined Vinco/Zash] ecosystem.”
Neither Vinco nor Zash had the capabilities touted. But, with the right story and buzz words, Vinco raised over $120 million through securities offerings, while Farnsworth extracted millions of dollars from the company in financial benefits for himself.” SEC’s Vinco Complaint
While Farnsworth’s control wasn’t necessarily evident to financial investors at first, once the merger with his other company Zash was announced, an investor doing a tad bit of research would have easily found the appearance of an investment scam.
Before investing in Vinco Ventures, Farnsworth and friends filed Chapter 7 bankruptcy proceedings in January 2020 for HMNY. Prior to bankruptcy, HMNY was taken off the NASDAQ in January 2019. While neither of these signs are necessarily indicative of fraud, further digging would have uncovered Farnsworth and Lowe’s press interviews with messages sounding too good to be true.
As for HMNY (MoviePass) investors, a hard look at the underlying business model and the press coverage might have saved investors heart ache. The business was failing before HMNY got publicly involved, and subscription prices were substantially lowered. Question the messages communicated, while investigating the business model, the players, and past successes and failures of all the key players.
Warning Signs of the Farnsworth MoviePass Fraud
The SEC’s 2025 judgment against the Farnsworth MoviePass fraud provides some closure for affected investors, though many will never recover their full investments.
HMNY and Vinco investment fraud cases remind us of lessons we know, but sometimes forget to apply.
- If a business model sounds too good to be true, it probably is
- Media coverage does not mean the business is solid
- People lie to get your money
- Do your research. Fraudsters have a record of fraud.
We hope all your real estate, commodities, foreign exchange, and oil and gas investments are safe and profitable. But if you find yourself searching for an experienced investment fraud attorney, oil and gas litigator or a commercial litigation lawyer, Mark Alexander PC is here to help.
