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Date: 01-13-2018

Case Style:

United States of America v. Fraser Thompson

Southern District of New York - New York, New York

Case Number: 1:15-cr-00616-KBF

Judge: Katherine B. Forrest

Court: United States District Court for the Southern District of New York (New York County)

Plaintiff's Attorney: Jennifer L. Beidel, Richard Alan Cooper, Jilan Janet Kamal, Sarah Elizabeth Paul

Defendant's Attorney: K.C. Maxwell, Marc Nurik, Jon Savella

Description: New York, NY - Mobile Phone Industry Executive Sentenced In Manhattan Federal Court To 5 Years In Prison For Role In Multimillion-Dollar Consumer Fraud Scheme

FRASER THOMPSON was sentenced today to five years in prison for his participation in a fraudulent scheme to charge mobile phone customers millions of dollars in monthly fees for unsolicited, recurring text messages without the customers’ knowledge or consent – a practice known as “auto-subscribing.” The fraud committed by THOMPSON and his co-conspirators resulted in the theft of over $100 million from consumers throughout the United States. THOMPSON was convicted by a jury on September 5, 2017, following a three-week trial, and was sentenced today in Manhattan federal court by the Honorable Katherine B. Forrest.

Manhattan U.S. Attorney Geoffrey S. Berman said: “This was a gross ‘main street’ fraud. Fraser Thompson and his co-defendants engaged in ‘auto-subscribing,’ forcing mobile phone users to pay for unsolicited and unwanted text messaging services. They ripped off everyday cellphone users, $10 a month, netting over $100 million in illegal profits, of which Thompson personally received over $1.5 million. Thanks to the diligence of the IRS and FBI, consumers are being safeguarded and perpetrators of large-scale criminal frauds are being arrested, prosecuted, and convicted.”

According to the Superseding Indictment filed in Manhattan federal court, the evidence presented at trial, and statements made in connection with THOMPSON’s sentencing:



THOMPSON was the Senior Vice President of Strategic Operations at Mobile Messenger, a mobile aggregation company. In the relevant time period, mobile aggregators like Mobile Messenger compiled, or “aggregated,” charges for premium text messaging services – such as monthly horoscopes, celebrity gossip, and trivia facts – on consumers’ mobile phone bills. Between 2011 and 2013, THOMPSON and others engaged in a massive scheme to defraud ordinary consumers by placing unauthorized charges for premium text messaging services on their cell phone bills, through a practice known as auto-subscribing.

The auto-subscribing scheme essentially involved two main players in the cell phone industry: mobile aggregators, such as Mobile Messenger, and content providers, which sent consumers the unwanted text messages that ultimately resulted in them being billed for services they had not authorized. Mobile Messenger worked with four different content providers in the scheme, each of which were essential to the scheme’s success. THOMPSON participated in auto-subscribing through two of those content providers, CF Enterprises and DigiMobi, which were operated by one of THOMPSON’s co-conspirators, Eugeni Tsvetnenko, a/k/a “Zhenya.”

The plan to auto-subscribe with Tsvetnenko came about in early 2012, in connection with discussions between THOMPSON and three other Mobile Messenger executives, co-conspirators Darcy Wedd, Erdolo Eromo, and Michael Pajaczkowki, a/k/a “Paj,” about how to increase revenue at Mobile Messenger in the wake of the decreasing profitability of premium text messaging services. Tsvetnenko had been kicked off Mobile Messenger’s aggregation platform in the past due to suspicious subscribing practices, including past incidents of auto-subscribing. Nevertheless, in early 2012, THOMPSON, Wedd, Eromo, and Pajaczkowski agreed to allow Tsvetnenko to establish two new content providers, CF Enterprises and DigiMobi, to conduct a scheme to auto-subscribe on Mobile Messenger’s aggregation platform.

THOMPSON, Wedd, Eromo, and Pajaczkowski agreed to a revenue split with Tsvetnenko, pursuant to which Tsvetnenko would keep approximately 70% of the auto-subscribing proceeds generated by CF Enterprises and DigiMobi, and the remaining 30% of the auto-subscribing proceeds would be divided evenly among THOMPSON, Wedd, Eromo, and Pajaczkowski. THOMPSON, Wedd, Eromo, and Pajaczkowski also devised a method of receiving and distributing the auto-subscribing money through multiple layers of shell companies, in an effort to conceal the nature and purpose of the money. These auto-subscribing activities with Tsvetnenko, which began in approximately April of 2012, and continued into 2013, resulted in hundreds of thousands of mobile phone users being auto-subscribed through Mobile Messenger. THOMPSON, moreover, personally received over $1.5 million in fraud proceeds as a result of his participation in the illegal scheme.

The auto-subscription scheme, through all of the content providers that it involved, affected millions of consumers and generated over $100 million in criminal proceeds.

* * *

To date, seven defendants, Andrew Bachman, Lin Miao, Pajackowski, Eromo, Jonathan Murad, Francis Assifuah, and Jason Lee have pled guilty in connection with their participation in the fraud. One additional defendant, Wedd, was convicted by a jury on December 15, 2017, following a two-week trial.

In addition to the prison term, THOMPSON was sentenced to three years of supervised release, and ordered to forfeit $1,552,114.56.

Mr. Berman praised the investigative work of the Internal Revenue Service - Criminal Investigations and the Federal Bureau of Investigation, and expressed his sincere gratitude to the Federal Trade Commission for their support and assistance with the investigation.



If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact the Victim/Witness Unit at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900. For additional information, go to:

http://www.usdoj.gov/usao/nys/victimwitness.html.

Outcome:

Plaintiff's Experts:

Defendant's Experts:

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