LOS ANGELES (CNS) - A former executive at the cinema subscription service MoviePass Inc. has been arrested on a federal grand jury indictment alleging he embezzled $260,000 from MoviePass' parent company to repay money he borrowed to produce an event at the Coachella music festival, officials announced Wednesday.
Khalid Itum, 42, of Hollywood, was arrested by special agents with the FBI on Tuesday, according to the U.S. Department of Justice.
At his arraignment in Los Angeles federal court, Itum pleaded not guilty to the charges -- two counts each of wire fraud and money laundering -- and an April 18 trial date was scheduled. He was ordered released on $75,000 bond, prosecutors said.
Itum was an executive from November 2017 until March 2019 with MoviePass, a New York-based company that charged subscribers a flat monthly fee in exchange for credits they can spend on movie tickets from any theater in the company's network of participating cinemas, according to the indictment.
In August 2017, Helios & Matheson Analytics, a New York-based data analytics company, acquired MoviePass.
In spring 2017, Itum registered Kaleidoscope Productions LLC, a Los Angeles-based company that provided production and marketing services. The same year, Itum, through Kaleidoscope, organized a party at the annual Coachella Valley Music and Arts Festival in Indio, prosecutors said.
Neither MoviePass nor HMNY participated in the Coachella event. Itum borrowed money from two individuals to help fund Kaleidoscope's costs, but to repay the borrowed money, he submitted sham invoices to HMNY for services purportedly rendered by Kaleidoscope and a different company owned by an Itum associate, the indictment alleges.
Itum allegedly caused HMNY employees to wire money from MoviePass and HMNY accounts to a Kaleidoscope bank account to pay the sham invoices. The defendant concealed his scheme by falsely telling HMNY's auditor that Kaleidoscope had been used to pay legitimate MoviePass expenses from the 2018 Coachella festival, federal prosecutors contend.
The DOJ alleges that Itum caused HMNY a total loss of $260,000.
If convicted of all charges, Itum would face up to 20 years in federal prison for each wire fraud count and up to 10 years for each money laundering count prosecutors noted.