Alleged Aussie text scammers extradited to US
Two Australian men have been extradited to the United States and formally arraigned on charges they led a scam of sending unwanted SMS texts to hundreds of thousands of phone users to net more than $60 million.
Michael John Pearse, a 52-year-old from Sydney, and Yongchao "Kevin' Liu, a 33-year-old Chinese national and Sydney resident, were first accused of conspiracy to commit wire fraud six years ago when the US FBI announced they were on their wanted list.
They were identified and arrested with the help of the Australian Federal Police and NSW Police for what US authorities claimed was one of the biggest telecommunication scams in US history.
The pair as well as at least four others were accused of placing unauthorised charges for premium text messaging services on consumers' mobile phone bills, through a practice known as auto-subscribing.
The unsolicited mail included horoscopes, trivia, "love tips", jokes and celebrity gossip with phone receivers automatically charged US$9.99 (AUD$12.88) a month unless the customer spotted the fee and actively sought to stop it.
The charges on a bill however were not declared, instead listed with a random series of numbers and letters which may bill payers assumed was a genuine cost. The scam ran from 2011 to 2013.
The FBI said charges that typically appeared on the consumers' bills in an abbreviated and confusing form with billing descriptors such as "96633IQ16CALL8668611606" and "25184USBFIQMIG."
Even when consumers complained, refund attempts were unsuccessful.
The men had been fighting extradition but appeared in Manhattan federal court overnight.
They were formally charged with wire fraud, conspiracy to commit wire fraud and aggravated identity theft and Pearse was also charged with conspiracy to commit money laundering.
They could face more than 20 years jail.
Pearse's lawyer Daniel Lynch said his client pleaded not guilty and would seek a bail package at a hearing next month.
Prosecutors said Pearse, who had been living in Surry Hills, was the chief executive and Liu, from Ryde, a Java development engineer for a company called Bullroarer, affiliated with Tatto Inc, a company that purchased large numbers of mobile phone numbers to target with messages.
Manhattan US Attorney Audrey Strauss said: "As alleged, Michael Pearse and Yongchao Liu played key roles in an international consumer fraud conspiracy that victimised hundreds of thousands of mobile phone customers."
In a lengthy statement from the US Attorney's Office (New York district), the Internal Revenue Service and the FBI said there were hundreds of thousands of victims from the scheme.
"Yesterday's extraditions continue the pathway to justice for the staggering number of victims and financial losses accumulated as a result of this alleged scheme. I applaud the collective efforts of the law enforcement agencies whose collaboration and co-ordination made the extraditions possible," IRS Acting Special Agent in Charge Ramsey E. Covington said.
It was alleged after obtaining proceeds of the fraud scheme, Pearse worked with other co-conspirators to launder the proceeds for themselves and lavish through the bank accounts of a series of shell companies and companies held in the names of third parties. Some of the money went to a Hong Kong bank and how much has been retrieved by authorities remains unknown. Much was spent on gambling, sports cars and expensive holidays.
A third suspect, Russian-born millionaire tech guru Zhenya Tsvetnenko was also sought by the FBI on extradition and has been in jail in Perth since 2018. His extradition hearing is expected in March and he has strongly denied the accusations. At least 10 men have been arrested so far, including two in WA.
Originally published as Alleged Aussie text scammers extradited to US