On Tuesday, Khalid Itum, a former prime government at MoviePass, was arrested by particular brokers with the FBI on an indictment alleging he embezzled $260,000 from the service’s mother or father firm to repay cash he borrowed to throw a celebration at Coachella Music Pageant.
The indictment alleges that Itum submitted sham invoices to MoviePass’s mother or father firm, Helios & Matheson Analytics, to pay for the occasion at Coachella, which he produced by way of a separate firm, Kaleidoscope, that he began. Itum was charged with two counts of wire fraud and two counts of cash laundering. He pleaded not responsible to the costs in Los Angeles federal court docket and was launched on a $75,000 bond.
MoviePass—the corporate that allowed subscribers to see as many films in theaters as they desired for a flat month-to-month charge—folded in 2019. Itum was an government at MoviePass from 2017 till 2019.
In August of 2017, MoviePass was acquired by Helios & Matheson Analytics, a New York–primarily based knowledge analytics firm. Prosecutors say that neither HMNY nor MoviePass participated within the social gathering Itum threw at Coachella. Per the indictment, Itum allegedly submitted sham invoices to HMNY for providers rendered by Kaleidoscope in addition to a separate firm owned by an Itum affiliate. The indictment estimates that Itum precipitated HMNY a complete lack of $260,000.
This isn’t Itum’s first run-in with the regulation. In February 2019, Selection reported that Itum had been {accused} of stealing 1000’s from his earlier employer, a furniture-sales firm. He pleaded responsible to misdemeanor theft in 2010 and was given probation.
And Itum will not be the one former MoviePass government going through authorized troubles. In November 2022, former HMNY CEO Theodore Farnsworth and former MoviePass CEO Mitchell Lowe have been indicted on securities fraud and wire fraud costs for allegedly deceiving traders concerning the sustainability of HMNY and MoviePass. In September, Farnsworth and Lowe have been named in a civil criticism from the Securities and Change Fee, which leveled the allegation concerning Itum and the Coachella social gathering. A spokesman for Farnsworth stated he acted in good religion and would struggle the costs.
Itum’s attorneys have argued that the Coachella occasion was meant to boost MoviePass’s profile, and that MoviePass executives paid Itum’s firm, Kaleidoscope, to throw the occasion as a result of it was “outdoors his unusual duties.” On Wednesday, Itum’s attorneys launched the next assertion:
“The prosecutors have gotten it flawed. Khalid Itum labored earnestly and truthfully for MoviePass. The solely cash paid to him or his consulting firm was for real providers offered to MoviePass and its company mother or father, and the cash was spent in fully reliable methods.
“The indictment unsealed yesterday is each flawed on the info and inconsistent with different authorities claims about the exact same conduct. Bizarrely, the indictment fails to say that the federal government has beforehand claimed that HMNY and MoviePass’s management authorised the exact same funds now described as ‘embezzled.’
“Mr. Itum seems to be ahead to refuting the federal government’s inconsistent and misguided allegations in court docket,” ends the assertion.
In January of 2023, Selection reported that MoviePass introduced it had accomplished its seed financing spherical and was seeking to speed up the “beta” relaunch of its service, which is reside in 9 cities.
If convicted of all costs, Itum faces as much as 20 years in federal jail for every wire fraud rely and as much as 10 years for every cash laundering rely. Itum’s trial is scheduled for April 18.
