Former MoviePass executive arrested for allegedly embezzling $260,000 for Coachella party

Brian Contreras
·3 min read
FILE - In this Jan. 30, 2018 file photo, Cassie Langdon holds her MoviePass card outside AMC Indianapolis 17 theatre in Indianapolis. The startup that lets customers watch a movie a day at theaters for just $10 a month, is limiting new customers to just four movies a month. The move comes as customers and industry experts question the sustainability of MoviePass' business model. Because MoviePass is paying most theaters the full price of the ticket, the service is in the red with just one or two movies in a month. (AP Photo/Darron Cummings, File)
A former MoviePass executive is facing charges of money laundering and wire fraud. (Darron Cummings / Associated Press)

A former executive at the controversial movie ticket subscription service MoviePass has been arrested over allegations that he embezzled hundreds of thousands of dollars to pay off debts incurred from throwing a party at the Coachella music festival, the U.S. attorney's office for the Central District of California announced Wednesday.

Khalid Itum, 42 and a resident of Hollywood, faces two counts each of money laundering and wire fraud for his alleged embezzlement of about $260,000 from MoviePass' parent company Helios & Matheson Analytics (or HMNY), the government agency said in a press release.

"In the spring of 2017, Itum registered Kaleidoscope Productions LLC, a Los Angeles-based company that provided production and marketing services," the statement reads. "That year, Itum, through Kaleidoscope, organized a party at the annual Coachella Valley Music and Arts Festival in Indio."

Itum's title at MoviePass was executive vice president.

Neither MoviePass nor HMNY participated in the Coachella event, according to the statement. Nevertheless, the office alleged, Itum paid off money he'd borrowed to fund the event by filing "sham invoices" with HMNY.

Itum was arrested Tuesday and subsequently pleaded not guilty, according to the U.S. attorney's office. His trial is set for April 18.

Ciaran McEvoy, a spokesperson for the U.S attorneys' offices, said that Itum is free on bond.

Adam Fee, the attorney representing Itum, said the prosecutors "have got it wrong."

"Itum worked earnestly and honestly for MoviePass," Fee said. "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."

It's an ignominious return to the headlines for MoviePass, a much-mocked subscription service founded in 2011 that offered participants virtually unlimited access to movie-theater screenings for less than $10 a month. In 2019, the platform closed its doors. HMNY filed for bankruptcy in 2020.

Itum isn't the only affiliate of the company facing charges. Theodore Farnsworth and Mitchell Lowe — the former chief executives of HMNY and MoviePass, respectively — were sued last fall by the U.S Securities and Exchange Commission over allegations that they misled the public about MoviePass' performance and fraudulently kept subscribers from actually using the service.

Lowe’s attorney has said that they disagree with the SEC's claims, while a spokesperson for Farnsworth said his lawyers would be challenging the claims.

Itum was also named as a defendant in the SEC suit, which claimed that Farnsworth and Lowe approved invoices giving the former executive vice president $310,000, including for fraudulent Kaleidoscope expenses at Coachella.

Despite the brand's struggles, MoviePass is trying to mount yet another comeback. MoviePass was acquired out of bankruptcy by its original founder, Stacy Spikes, who has been rolling out a new version of the service with what he argues is a more sustainable pricing plan.

This story originally appeared in Los Angeles Times.