Defendant and Co-Conspirators Earned Over $20 Million From Fraudulently Charging Hundreds of Thousands of Mobile Phone Customers for Text-Messaging Services Without Their Knowledge or Consent
Damian Williams, the United States Attorney for the Southern District of New York, announced today that EUGENI TSVETNENKO, a/k/a “Zhenya,” a dual citizen of Australia and Russia, was sentenced to 98 months in prison by U.S. District Judge Analisa Torres. TSVETNENKO pled guilty on February 18, 2022, for his role in a consumer fraud scheme to charge mobile phone customers millions of dollars in monthly fees for unsolicited, recurring text messages about topics such as horoscopes, celebrity gossip, and trivia facts, without the customers’ knowledge or consent—a practice referred to as “auto-subscribing.” The portion of the fraudulent scheme that TSVETNENKO and his co-conspirators orchestrated defrauded mobile phone users of approximately $41.3 million and netted TSVETNENKO and his co-conspirators more than $20 million in proceeds. TSVETNENKO personally earned approximately $15.4 million in connection with the scheme, which he repaid prior to sentencing.
U.S. Attorney Damian Williams said: “Eugeni Tsvetnenko and his co-defendants made a fortune by fraudulently charging their customers for text messages they didn’t need or approve, in a practice called ‘auto-subscribing,’ then laundering the proceeds through shell companies. Tsvetnenko is paying a steep price for his mobile scam, as he has already paid back over $15 million in forfeiture, and will now spend 98 months in federal prison.”
According to allegations in the Superseding Indictment against TSVETNENKO, evidence presented at the trial of co-conspirators Darcy Wedd (Wedd) and Fraser Thompson (Thompson), and other public filings:
From at least in or about 2012 through in or about 2013, TSVETNENKO, Wedd, Thompson, and others engaged in a multimillion-dollar scheme to defraud consumers by placing unauthorized charges for premium text messaging services on consumers’ cellular phone bills through a practice known as auto-subscribing. TSVETNENKO owned and operated several content provider companies and mobile industry companies in Australia that, among other things, created and sold premium text messaging content to consumers. Wedd operated Mobile Messenger, a U.S. aggregation company in the mobile phone industry that served as a middleman between content providers (such as some of TSVETNENKO’s companies) and mobile phone carriers. Mobile Messenger was responsible for assembling monthly charges incurred by a particular mobile phone customer for premium text-messaging services and placing those charges on that customer’s cellular phone bill.
Beginning in or about early 2012, Wedd, Thompson, who was the Senior Vice President of Strategic Operations for Mobile Messenger, and two other senior executives of Mobile Messenger (CC-3 and CC-4) recruited TSVETNENKO to their auto-subscribing scheme to increase revenues at Mobile Messenger. TSVETNENKO agreed and established two new content providers based in Australia, CF Enterprises and DigiMobi, to auto-subscribe on Mobile Messenger’s aggregation platform. CC-3 furnished lists of phone numbers to TSVETNENKO, along with an auto-subscribing “playbook,” which provided TSVETNENKO with guidance on how to auto-subscribe without being caught. The “playbook” described how to conceal the fraud scheme by making it appear as if the customers had, in fact, elected to purchase the text-messaging services, when in truth they had not.
The consumers who received the unsolicited text messages typically ignored or deleted the messages, often believing them to be spam. Regardless, the consumers were billed for the receipt of the messages, at a rate of $9.99 per month, through charges that typically appeared on the consumers’ cellular telephone bills in an abbreviated and confusing form, such as with nonsensical billing descriptors that often consisted of random letter and numbers. The $9.99 charges recurred each month unless and until consumers noticed the charges and took action to unsubscribe. Even then, consumers’ attempts to dispute the charges and obtain refunds from CF Enterprises or DigiMobi were often unsuccessful. Wedd, to whom CC-3, CC-4, and Thompson all reported, oversaw the scheme at Mobile Messenger.
TSVETNENKO, with the assistance of Wedd, Thompson, CC-3, and CC-4, started auto-subscribing consumers in approximately April of 2012. TSVETNENKO’s auto-subscribing activities, which continued into 2013, victimized hundreds of thousands of mobile phone customers, who were auto-subscribed through Mobile Messenger and charged a total of approximately $41,389,725 for unwanted text messaging services. Wedd, Thompson, CC-3, and CC-4 agreed that TSVETNENKO would keep approximately 70% of the auto-subscribing proceeds generated by CF Enterprises and DigiMobi, and that the remaining 30% of the auto-subscribing proceeds would be divided evenly among Wedd, Thompson, CC-3, and CC-4.
After obtaining proceeds of the fraud scheme, TSVETNENKO worked with other co-conspirators to launder the proceeds. TSVETNENKO and his co-conspirators distributed the proceeds of the fraud scheme among themselves and others involved in the scheme by, among other things, causing funds to be transferred through the bank accounts of a series of shell companies and companies held in the names of third parties. This was done to conceal the nature and source of the payments and TSVETNENKO and his co-conspirators’ participation in the fraud.
In addition to his prison sentence, TSVETNENKO, 41, of Australia, was ordered to pay forfeiture in the amount of approximately $15.4 million dollars, which he has repaid.
Mr. Williams praised the outstanding investigative work of the Internal Revenue Service – Criminal Investigation and the Federal Bureau of Investigation. In addition, Mr. Williams thanked law enforcement partners in Australia, especially the Australian Attorney-General Department’s International Crime Cooperation Central Authority and the Australian Federal Police, as well as the U.S. Department of Justice’s Office of International Affairs, for their significant support and assistance with the defendant’s extradition from Australia.
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