Farnsworth pleaded guilty to defrauding investors in MoviePass and Vinco Ventures, inflating stock prices while falsely claiming the viability of an AI-based business model.
The DOJ alleged that Farnsworth misrepresented MoviePass' subscription model as sustainable, despite knowing it would incur significant losses, misleading investors for personal gain.
Brent S. Wible stated that Farnsworth's actions involved 'AI washing,' where he exaggerated AI capabilities to mislead investors about the company's potential for profit.
Farnsworth faces severe penalties, with a maximum of 25 years in prison for his roles in securities fraud and conspiracy to defraud investors.
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