A former executive at MoviePass was charged with wire fraud and money laundering for allegedly taking money to pay for a party at Coachella.
Khalid Itum was arrested by the Federal Bureau of Investigation (FBI) on Tuesday (Feb. 21) on a federal grand jury indictment alleging he embezzled $260,000 from the movie subscription service’s parent company, Helios & Matheson Analytics (HMNY), the Justice Department said Wednesday (Feb. 22) in a press release.
The indictment alleged that before joining MoviePass in 2017, Itum registered a company that provided production and marketing services and organized a party at the Coachella music and arts festival, according to the release.
To repay the money he had borrowed for the event, Itum allegedly submitted sham invoices to HMNY for his company’s services, caused its employees to wire money to his company’s bank account, and later allegedly lied to an HMNY auditor that the payment was for legitimate expenses from the 2018 Coachella festival — the one held a year after his company’s party, the indictment alleges, per the release.
Itum pleaded not guilty to the charges, was released on bond and is scheduled to go to trial on April 18, according to the press release.
In a statement emailed to PYMNTS, Itum’s attorney, Adam Fee, said the prosecutors “have got it wrong.”
“Khalid Itum worked earnestly and honestly for MoviePass,” Fee said in the reports. “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.”
Fee continued: “The indictment unsealed yesterday is both wrong on the facts and inconsistent with other government claims about the very same conduct. Bizarrely, the indictment fails to mention that the government has previously claimed that HMNY and MoviePass’s leadership approved the very same payments now described as ’embezzled.’ ”
MoviePass — a subscription service that had offered customers various plans to see up to a movie a day in theaters for less than $10 a month, a business that proved to be unsustainable — shut down in 2019.
The service was launched in 2011 but was largely unknown until 2017 when it was purchased by HMNY, which dropped the fee to $10 a month. After losing as much as $256 million in a year, it shut down.
In November 2022, the Justice Department charged a pair of former MoviePass executives with fraud, saying they misled investors about the health of the movie subscription service.