SEC v. Theodore J. Farnsworth — U.S. Securities and Exchange Commission Litigation Release No. 26208, dated January 2, 2025.
The SEC charged Theodore J. Farnsworth for defrauding investors in Vinco Ventures, Inc. by secretly controlling the company and making false statements about its platform and affiliated companies. Farnsworth concealed his role due to ongoing investigations into his past conduct with MoviePass and HMNY.
In Plain English
Imagine someone secretly controlled a company, like a puppet master. They told everyone the company had amazing technology and was going to make tons of money, but it didn't. They even lied about how well two other companies they controlled were doing. This person took millions from the company while investors lost a lot of money.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Secret Control Established Between January 2021 and April 2023, Theodore J. Farnsworth secretly controlled Vinco Ventures, Inc. He achieved this partly by hand-selecting officers and directors who would follow his directives, ensuring his influence remained hidden.
- Merger Announcement with False Premises In January 2021, Farnsworth authorized press releases announcing a merger between Vinco and Zash Global Media and Entertainment Corporation. These releases claimed the merger would combine Vinco's 'proprietary platform' with Zash's 'state-of-the-art analytics and distribution technology'.
- Nonexistent Technology Claimed However, the SEC's complaint alleges that both foundational elements of the promised 'Vinco ecosystem' were false. Farnsworth knew that neither Vinco possessed a proprietary platform nor did Zash have the claimed advanced technology.
- Misleading Statements on Affiliates Farnsworth also drafted, reviewed, or approved false or misleading statements about two affiliated companies, Lomotif Private Limited and AdRizer LLC. These statements exaggerated their capabilities and Vinco's revenue expectations from AdRizer's advertising platform.
- Concealment of Control To further obscure his involvement, Farnsworth deliberately concealed his control over Vinco. He knew that the SEC and Department of Justice were already investigating his past conduct related to MoviePass, Inc. and its parent company, Helios & Matheson Analytics, Inc. (HMNY).
- Extraction of Funds During the period of his secret control, Farnsworth extracted millions of dollars in financial benefits for himself from Vinco, while the company raised over $120 million through securities offerings.
- Investor Losses As a result of these alleged misrepresentations and Farnsworth's actions, Vinco's stock price plummeted. It fell from a high of $12.49 per share in September 2021 to mere fractions of a penny, causing substantial losses for investors.
The Enforcement Action
The SEC charged Theodore J. Farnsworth for defrauding investors in Vinco Ventures, Inc. through false and misleading statements and concealment of his control. On December 30, 2024, the U.S. District Court for the Southern District of New York entered a consent judgment against Farnsworth, providing permanent injunctive relief and imposing an officer and director bar. The SEC's complaint, filed December 23, 2024, sought disgorgement, prejudgment interest, and civil penalties, which will be determined by the court. Farnsworth was previously charged by the SEC in September 2022 for similar conduct related to MoviePass and HMNY.
Named in this action: Theodore J. Farnsworth.