The US Securities and Exchange Commission has filed a lawsuit towards two former MoviePass executives. In a federal grievance seen by , the company accused Theodore Farnsworth and Mitch Lowe on Monday of deceptive traders in regards to the viability of the corporate’s $9.95 per thirty days enterprise mannequin.

Farnsworth was the chief government officer of , the father or mother firm of MoviePass between 2017 and 2020. Lowe led MoviePass between 2016 and its . The SEC alleges Farnsworth and Lowe “intentionally” and “repeatedly” shared false info.

“Faced with debilitating negative cash flows – rather than tell the public the truth – Farnsworth and Lowe devised fraudulent tactics to prevent MoviePass’s heavy users from using the service, and falsely and misleadingly informed the public that usage had declined naturally or due to measures the company had employed to combat subscribers’ purported violations of MoviePass’s terms and conditions of service,” the grievance states.

In addition to monetary penalties, the SEC is looking for to forestall each Farnsworth and Lowe from serving in director or officer positions in any firm that’s required to register securities with the company. The SEC’s lawsuit additionally names former MoviePass enterprise improvement government Khalid Itum as a defendant. Itum allegedly pocketed $310,000 by submitting false invoices to the corporate. Last yr, Helios and Matheson, Farnsworth and Lowe settled a lawsuit from the Federal Trade Commission associated to allegations they mislead clients and didn’t .

“The complaint concerns matters subject to an investigation that the company and other news outlets publicly disclosed nearly three years ago, and Mr. Farnsworth’s legal team will maintain the challenge to this complaint,” Chris Bond, a spokesperson for Ted Farnsworth advised Bloomberg. “Mr. Farnsworth continues to maintain that he has always acted in good faith in the best interests of his companies and shareholders.”

The swimsuit comes as a brand new model of MoviePass makes an attempt to reestablish itself beneath the . The firm not too long ago launched a beta service in Chicago, Dallas and Kansas City, providing packages that .