LOS ANGELES
Officials stated Wednesday that a former executive at cinema subscription service MoviePass Inc. has been arrested on a federal grand jury indictment alleging he embezzled approximately $260,000 from MoviePass’ parent company.
Officials allege that he allegedly did this to repay the money he borrowed to produce an event at the Coachella music festival.
Khalid Itum, 42, of Hollywood, was arrested by special agents with the FBI on Tuesday. Itum is charged with two counts of wire fraud and two counts of money laundering.
At Tuesday’s arraignment, Itum pleaded not guilty to the charges, and an April 18 trial date was scheduled. He was ordered released on $75,000 bond.
According to the indictment returned Friday by a federal grand jury, Itum was a MoviePass executive from November 2017 until March 2019.
MoviePass was a New York-based company that charged subscribers a flat monthly fee in exchange for credits they could spend on movie tickets from any theater in MoviePass’s network of participating cinemas.
In August 2017, Helios & Matheson Analytics (HMNY), a New York-based data analytics company, acquired MoviePass.
In the spring of 2017, Itum registered Kaleidoscope Productions LLC, a Los Angeles-based company that provided production and marketing services.
That year, Itum, through Kaleidoscope, organized a party at the annual Coachella Valley Music and Arts Festival in Indio. Neither MoviePass nor HMNY participated in the Coachella event.
Itum borrowed money from two individuals to help fund Kaleidoscope’s costs at Coachella.
To repay the borrowed money, Itum later allegedly submitted sham invoices to HMNY for services purportedly rendered by Kaleidoscope and a different company owned by an Itum associate. Itum allegedly caused HMNY employees to wire money from MoviePass and HMNY accounts to a Kaleidoscope bank account to pay the sham invoices. I
tum allegedly concealed his scheme by lying to HMNY’s auditor that Kaleidoscope had been used to pay legitimate MoviePass expenses from the 2018 Coachella festival.
Itum caused HMNY a total loss of $260,000, according to the indictment.
If convicted of all charges, Itum would face a statutory maximum sentence of 20 years in federal prison for each wire fraud count and up to 10 years in federal prison for each money laundering count.
The FBI’s New York Field Office is investigating this matter. Assistant U.S. Attorney David Y. Pi of the Major Frauds Section is prosecuting this case.