DOJ: Former MoviePass Executive Arrested for Allegedly Embezzling $260,000

A former executive at subscription movie theater ticket service MoviePass has been arrested on a federal grand jury indictment alleging he embezzled $260,000 from MoviePass’ parent company, New York-based data analytics firm Helios & Matheson Analytics (HMNY), to repay money he borrowed to produce an event at the Coachella music festival in Indio, Calif.

The Department of Justice reported that Khalid Itum, 42, of Los Angeles, was arrested by the FBI on Feb. 21, charged with two counts of wire fraud and two counts of money laundering.

Khalid Itum

At his arraignment in U.S. District Court in Los Angeles, Itum pleaded not guilty to the charges, and an April 18 trial date has been scheduled. He was released on $75,000 bond.

MoviePass was a New York-based company that charged subscribers a flat monthly fee in exchange for credits they could spend on movie tickets from any theater in MoviePass’s network of participating cinemas. The service and HMNY filed for bankruptcy in 2020 after blowing through hundreds of millions of investor dollars.

If convicted, Itum could face a statutory maximum sentence of 20 years in federal prison for each wire fraud count and up to 10 years in federal prison for each money laundering count.

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According to the indictment, Itum, who was hired in November 2017 to oversee daily operations at MoviePass before departing the company in March 2019, organized a party at the annual music festival, using MoviePass funds to pay for it. Neither MoviePass nor HMNY officially participated in the Coachella event.

According to the indictment, Itum allegedly submitted sham invoices to HMNY for services purportedly rendered by his production company and a third party. Itum allegedly had HMNY employees wire money from MoviePass and HMNY accounts to his production company’s bank account to pay the sham invoices. Itum allegedly concealed his scheme by lying to HMNY’s auditor that his production company had been used to pay legitimate MoviePass expenses from the 2018 Coachella festival.

Itum’s lawyer, in a statement, denied the charges, contending the executive had received clearances from MoviePass and HMNY regarding the funds.

“The prosecutors have got it wrong,” read the statement. “Khalid Itum worked earnestly and honestly for MoviePass. The only money paid to him or his consulting company was for genuine services provided to MoviePass and its corporate parent, and the money was spent in entirely legitimate ways.”

MoviePass, which has been acquired by its original founder, is attempting to relaunch the service.

Khalid Itum Departs MoviePass; CTO and Human Resources Executives Transition to Consultants

MoviePass March 13 disclosed that Khalid Itum, hired last December to oversee daily operations at the fiscally-challenged movie theater subscription service, is leaving the company.

“Itum will be leaving MoviePass to pursue his entrepreneurial and travel pursuits,” a spokesperson told Business Insider in a statement.

The departure comes as chief technology officer Joey Adarkway and Jake Peterson, head of human resources, transition from fulltime employees to consultants.

The personnel moves come the day after corporate parent Helios and Matheson Analytics disclosed, in a regulatory filing, that MoviePass lost nearly $10 million more ($146.6 million) in the most-recent fiscal filing than was originally disclosed.

Meanwhile, HMNY appears to be successfully churning out content through its MoviePass Films unit headed by co-founders Randall Emmett and George Furla. The company’s content include dramas with Bruce Willis (10 Minutes Gone) — the first of three titles with the actor, and Al Pacino and Meadow Williams in current production, Axis Sally.

In addition, Border, a Cannes-winning film MoviePass Films co-distributed with Neon Rated, was nominated for an Academy Award for Best Makeup and Hairstyling.

“As previously stated, MoviePass has moved in a new strategic direction, and will be refocusing our business model to create a more closely connected relationship between our subscription service and original content production unit, MoviePass Films,” said the spokesperson.

 

 

MoviePass Looking to Market Ticket Subscription Technology to Theaters

MoviePass, the beleaguered subscription theatrical ticket service, is looking to market its technology to exhibitors.

Dubbed a “red label” solution, the strategy is to enable theater owners a means of offering a proprietary subscription ticket service to consumers.

In addition to MoviePass, AMC Theatres and Cinemark currently offer monthly ticket subscription plans.

“Our new business strategy is stabilize, optimize and grow,” Khalid Itum, EVP of MoviePass, told Variety, which first reported the move.

MoviePass in August 2017 turned the exhibition service on its ear offering a $9.95 monthly service that enabled subscribers daily access to a theatrical screening.

While the loss-leader pricing concept resonated with millions of consumers, paying for it proved to be a debacle for MoviePass and its corporate parent Helios and Matheson Analytics (HMNY).

With the service hemorrhaging hundreds of millions of dollars, it has introduced seesaw measures to rein in costs, alienating consumers in the process.

MoviePass now charges from $9.95 to $24.95  monthly for theatrical access depending on market location. A new unlimited plan is also in the works.

HMNY’s stock has taken a beating on Wall Street, with shares in risk of being delisted for failing to meet the $1-per-share minimum. The corporate parent this week filed papers looking to spin off MoviePass to a subsidiary in hopes of resuscitating the penny stock.

HMNY subsidiary MoviePass Films got a boost this week after its film, Border, was nominated for an Academy Award in the “Best Makeup and Hairstyling” category. Announced last September, MoviePass Films partnered with Neon Rated LLC to co-release the Cannes award-winning film from writer and director Ali Abbasi.

The Swedish fantasy film is based on the short story of the same name by Ajvide Lindqvist from his anthology “Let the Old Dreams Die.” It won the Un Certain Regard award at the 2018 Cannes Film Festival and was selected as the Swedish entry for the Best Foreign Language Film at the 91st Academy Awards, though it was not nominated.