Former Perth rich-lister Zhenya Tsvetnenko to be sentenced in US court after multi-million-dollar text message scam – ABC News

Zhenya Tsvetnenko liked things fast.

There were the fast cars. Lots of them.

He talked fast. So fast it was like his mouth struggled to keep up with the ideas streaming out of his brain.

But, most of all, the Russian-born Perth man liked fast money.

And, inevitably, that was his downfall.

Almost six years after US authorities charged him with fraud and money laundering, this week he will learn his fate.  

He will be sentenced in a New York court after pleading guilty to his part of a $US270 million ($389.6 million) text-messaging scam. 

It was a scam that saw him personally pocket $US15.4 million, a scam that had origins in Perth and travelled across the world, stealing money from hundreds of thousands of people.

Zhenya Tsvetnenko, left, being escorted by federal officers in Perth before his extradition

From Russia with not much

The early years of Zhenya Tsvetnenko’s life were modest — a far cry from the empire he’d go on to build. 

In 1992, when he was 12, his parents emigrated to Perth, with “nothing more than a couple [of] suitcases”.

“We sold our apartment in Russia for $6,000. I remember that,” he told a Perth community television station in 2011.

“My parents moved here. We started from scratch.”

He went to a local high school and on to university to study electrical engineering, but later dropped out to make money — fast money — in something quite foreign for Perth: tech.

Surviving on two-minute noodles, in the early 2000s he whittled his bank account down to $200 as he developed code in his suburban bedroom.

“Don’t give up,” he said in the same 2011 interview. “If you’ve got an idea and it doesn’t work — [even] if you have to throw that idea away and think of something new — do it.”

The “idea” for Tsvetnenko was automated SMS technology.

Launched in the pre-smartphone era of the mid-2000s, his unique computer program delivered bulk text messages to mobile phone users, offering subscriptions services such as horoscopes or weather forecasts.

It grew rapidly, and money started streaming in.

So much so, he told The West Australian in 2009 — whilst posing in front of two Lamborghinis, a Ferrari and a Hummer — that he’d made so much money so quick he “hadn’t had time to count it”.

A man smiling in a car

At the time, the BRW Young Rich List estimated his wealth at about $107 million.  

But, even then, authorities were watching, and rumblings of impropriety were getting louder.   

A corporate adviser who worked with Tsvetnenko at the time told the ABC: “No one had any real idea how he was making his money, but he was splashing it around and investing a lot in Perth tech companies. 

“Most people were like: Who cares?”

Flash with cash 

In Perth at that time everyone knew — or knew of — Zhenya Tsvetnenko.

He was the epitome of excess, a “Perthonality” in every sense. Even in a state emerging out of once-in-a-generation mining boom, the Russian-born tech tycoon stood out above the rest.

Tsvetnenko celebrated his 29th birthday party with US rapper Snoop Dogg in LA, spent $600,000 on his wedding, invested in nightclubs and had almost weekly appearances in Perth’s social pages — and he was very happy to flaunt his cash.

A man smiling at the camera

Western Australia has had its “cashed-up bogans”, but flashiness was the antithesis of Perth’s more-reserved — and older — mining-backed business circles, where it was generally frowned upon. 

However, after becoming a father, Tsvetnenko pulled back on the partying and tried to re-shape his image, leaving behind the SMS technology and launching an ASX-listed company focused on bitcoin. 

Perth-based tech investor Howard Digby worked with Tsvetnenko during the 2010s. 

“I knew his story. [I’d] seen his photos in the paper,” he said. “And my immediate thoughts were, ‘Jeez, I wouldn’t be so flashy, mate’,” Mr Digby said. 

A man and a woman drinking champagne.

“But then I met him and he was humble, very keen on probity — and, perhaps, that was hindsight coming into play.      

“I do remember the day he told me the full story about his previous company [the SMS company]. I just thought to myself, ‘Mate, did you ever ask yourself why you were making so much money so quickly? Why is it going so well?'”   

And, eventually, this past — and the fast money — would catch up with him. 

The scam

As much as the scam itself was complex, at its core it was relatively simple. 

According to US Department of Justice documents seen by the ABC, from 2012 to 2013, Tsvetnenko and his co-conspirators, defrauded hundreds of thousands of mobile phone consumers in the United States by placing unauthorised charges on their mobile phone bills.  

The practice — known as “auto-subscribing” — saw US consumers billed $US9.99 a month for services such as “horoscopes, celebrity gossip or trivia facts” without their knowledge or consent.

Often the bills would recur monthly unless consumers actively told their phone company they wanted out of the service. 

Tsvetnenko was brought into the scam by self-described “entrepreneur and Hollywood producer” Darcy Wedd, also from Perth.

Wedd, who knew Tsvetnenko from his time in Western Australia, oversaw the whole scheme. In 2018, Wedd was sentenced to 10 years’ jail in the US for his role. 

A man with white teeth smiling at the camera.

According to the US Department of Justice, Tsvetnenko played a “direct, active, and indispensable role” using what it described as his “history of engaging in deceptive and suspicious practices, including auto-subscription” to help the conglomerate defraud consumers of $41 million.

All-in-all, seven people have been charged and sentenced for various roles in the scam, resulting in jail terms from six months to 10 years. 

Although Tsvetnenko wasn’t the ringleader, his personal 70 per cent cut of the criminal proceeds — more than $15.4 million — was the largest by far.

Jennifer Beidel worked as a US attorney in the Southern District of New York’s complex fraud and cybercrime unit, the unit that mounted the case. 

Eugeni Tsvetnenko close up

She told the ABC the unit worked with US law enforcement after it spent many years pulling together the complex case against against Tsvetnenko and his co-conspirators.

That included “search warrants, subpoenas and developing cooperating witnesses”, she said. 

It also involved breaking down the various shell companies the scammers had used to try to hide the money from authorities.    

“The issue with this case was individual victims had a low loss amount,” she said. 

“And so, sometimes, criminals can get away with this kind of conduct because each individual victim only lost say $10 or $20. 

“But when you add it up, it was a huge sum of money.” 

Auto-subscribing occurred in Australia, where it is more commonly known as “third-party billing”.

No criminal proceedings against Mr Tsvetnenko have ever taken place in Australia, and he has no criminal record in Australia. 

The ABC contacted the Australian Federal Police for comment. 

Motivated ‘solely by greed’

Tsvetnenko was charged at his luxury riverside home in Perth in 2016, with US authorities at the time declaring their plans to push for extradition of the multi-millionaire from Perth to face court in New York. 

After fighting the charges in a protracted legal battle over two years — in the meantime watching his seven co-conspirators sentenced to jail time —  he was brought into Perth’s Hakea Prison in December 2018.

Swans and a aprtments

Last year, he abandoned the extradition fight, was flown to the US and thrown into custody. In February, he pleaded guilty to conspiracy to commit wire fraud and money laundering.

On Wednesday, he will learn his fate, with authorities recommending a sentence in the range of seven to nine years.  

“Tsvetnenko chose to become rich by defrauding others through a sprawling, large-scale fraud,” US attorney Damian Williams said in his sentencing document. 

“Tsvetnenko’s decision to engage in fraud [wasn’t] a fleeting mistake or a one-time lapse in judgement.

“His crimes were motivated solely by greed.

“Deliberately, and methodically, the defendant continued to auto-subscribe unwitting consumers, day after day, for a substantial period of time, generating tens of millions of dollars in profits to line his pockets and those of his co-conspirators.”

Back in Perth, Tsvetnenko has rallied his family, former business associates, friends, charities and even former inmates at Hakea Prison.

They have sent 48 separate letters to the sentencing judge on his behalf in a bid to receive a lighter sentence.       

A man with a kangaroo

Tsvetnenko — who paid back the $15.4 million he stole — has spent almost four years in custody and is pleading with US authorities to release him under time already served.   

The ABC contacted his US-based lawyer for comment.  

If the bid fails, a spokesperson from the Attorney-General’s Department told the ABC that international prisoner transfers to Australia required the consent of the “prisoner and the foreign country concerned”.

It would also need Australian government and West Australian government approval.

“I justified my actions at the time by thinking it wasn’t a lot money and nobody was being hurt,” Tsvetnenko said in his own letter to the judge. 

“I was fooling myself. I am deeply ashamed of what I did and the harm that my conduct caused. I live with that remorse every day.

“I knew in the back of my mind that it would only be a matter of time before the events of my younger days would catch up with me.”

Fast money has a way of doing that.