The former CEO of an Australian wireless software company has been sentenced to more than nine years in prison for his role in a massive horoscope SMS scam that grossed hundreds of thousands of US cell phone users $ 50 million.
Michael Pearse, 52, has been accused of helping develop software that would automatically subscribe ignorant cell phone customers to premium SMS services that they hadn't actually signed up for, prosecutors said.
Investigators say Pearse's company Bullroarer developed the software for a premium SMS company called Tatto Inc. that fraudulently added subscribers to a list of Mobile Messenger, a US company that added charges to a person's cell phone bill , registered.
According to prosecutors, between 2011 and 2013, Tatto billed hundreds of thousands of phone subscribers $ 9.99 a month for unsolicited SMS horoscopes and jokes. Most customers would delete the messages because they thought they were spam.
However, the charges would continue to run until the subscriber notices them on their bill and signs off from the service. Efforts to challenge the previous charges have often proved difficult, prosecutors said. A total of $ 50 million in fraudulent charges were filed, of which $ 10 million went to Pearse, prosecutors said.
"Michael Pearse was instrumental in an international consumer fraud conspiracy that defrauded hundreds of thousands of cell phone customers out of millions," said Damian Williams, the US attorney for the southern borough of New York.
Pearse was arrested in Australia in 2018 and extradited to the United States. In June he pleaded guilty to conspiracy to commit bank transfer fraud. As part of his informed consent, Pearse was asked to repay $ 10.2 million and to forfeit three properties he owned in Australia. On Wednesday he was sentenced to 109 months in federal prison.
In court records, Pearse – who served as a volunteer firefighter in Australia – argued that he played a minor role in the plan and did not use the money he received to fund a lavish lifestyle. A message left with his lawyer was not returned immediately.
Prosecutors said nine others pleaded guilty to the case. The two alleged ringleaders, Darcy Wedd and Fraser Thompson, who ran the mobile messenger, were convicted in court in 2017. Wedd is serving 10 years in prison and Thompson is serving five years.