A former MoviePass Inc. executive embezzled $260,000 to repay a loan he took out for a party he organized months earlier at the Coachella music festival in California, federal prosecutors allege.
(Bloomberg) — A former MoviePass Inc. executive embezzled $260,000 to repay a loan he took out for a party he organized months earlier at the Coachella music festival in California, federal prosecutors allege.
Khalid Itum, 42, was arrested Tuesday and charged with two counts of wire fraud and two counts of money laundering, the US Department of Justice said in a statement. Itum, a Jordanian citizen who lives in Los Angeles, pleaded not guilty and was released on a $75,000 bond.
In 2017, before joining MoviePass, Itum created Kaleidoscope Productions LLC and borrowed money from two individuals to put on the party during the April music festival in Indio, east of Los Angeles, according to the indictment. In November 2017, he became an executive at MoviePass, which had been acquired by Helios & Matheson Analytics a few months earlier.
To repay the money he owed for the Coachella party, Itum submitted sham invoices to Helios & Matheson for services he claimed were rendered by Kaleidoscope and a different company he owned, prosecutors said. Helios & Matheson paid the invoices, even though neither it nor MoviePass were involved in the Coachella event, prosecutors said. Itum left MoviePass in March 2019.
Itum’s lawyer, Adam Fee, says the prosecutors have it all wrong.
“Khalid Itum worked earnestly and honestly for MoviePass,” Fee said in an emailed statement. “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.”
The allegations in the indictment are inconsistent with other government claims about the same conduct, Fee said.
“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’,” he said.
MoviePass originally gained popularity after launching its subscription plan in August 2017, and within a year it reached its membership peak of 3 million. But operating losses led the company and its parent into bankruptcy by January 2020.
The Itum indictment comes just months after two former MoviePass executives, Theodore Farnsworth, 60, and J. Mitchell Lowe, 70, were charged with securities and wire fraud for allegedly defrauding investors. The two were sued by the US Securities and Exchange Commission over similar allegations.
Itum’s trial date is set for April 18. If convicted of all charges, he could face as long as 20 years in federal prison for each wire fraud count and up to 10 years in for each money-laundering count.
The case is US v. Itum, 2:23-cr-00082, US District Court, Central District of California.
–With assistance from Joyce Cutler.
(Updates with comment from Itum’s lawyer.)
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