A former MoviePass 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 Coachella party, Itum submitted sham invoices to Helios & Matheson for services purportedly rendered by Kaleidoscope and a different company he owned, prosecutors said. The company paid the invoices, even though neither Helios & Matheson nor MoviePass were involved in the Coachella event, prosecutors said. Itum left the company in March 2019.
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 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 up to 20 years in federal prison for each wire fraud count and up to 10 years in federal prison for each money laundering count.
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter examining what leaders need to succeed. Sign up here.
