Two individuals have been charged by the authorities with running a so-called “cramming” scheme, which helped them earn tens of millions of dollars at the expense of unsuspecting mobile phone users.
The two men will appear in federal courts in New York and Los Angeles to respond to the charges brought by the office of US Attorney in New York. The latter has already charged 6 other men this past spring in connection with the same SMS stealing scheme. Four people, including Lin Miao, were all arrested four months ago, while two other defendants reside in Australia and are not in US custody.
Two years ago, the US Federal Trade Commission settled related civil charges with one of the defendants, Lin Miao, and a number of corporate entities. The FTC seized over $10m in such assets as a Beverly Hills home and luxury cars.
A lawyer for the most recent defendant claimed his client was disappointed in this decision by the US Attorney’s office and expresses an intention to oppose charges. For two years, from 2011 to 2013, the men ran a phone scam by arranging for thousands of mobile numbers to be “auto-subscribed” to text messages providing horoscopes, celebrity gossip or trivia, charging innocent mobile subscribers $9.99 a month. Those usually just ignored or deleted the text messages considering it a free spam and failed to notice the monthly charge on their bills.
The two recently arrested men were executives at a mobile aggregator, which served as a middleman between text message companies and mobile carriers. Four years ago, one of them acted as a CEO of a mobile aggregator and noticed the unauthorized charges. When he raised the issue with the above mentioned Lin Miao, the latter offered him to help perpetuate the scheme in exchange for $100,000 and a percentage of the proceeds. The second executive agreed to a similar deal in exchange for regular payments.
Both men now face charges of wire fraud and conspiracy to commit fraud and money laundering. The US Attorney in New York claimed that despite the fact that the text messages were often trivial, the actions of the defendants were far from a joking matter. In the end, their criminal scheme allegedly resulted in pumping millions of dollars out of hundreds of thousands of mobile subscribers from all over the United States.