Two men extradited from Australia face U.S. charges for $50 million text messaging fraud

(Reuters) – Two men have been extradited to the United States from Australia to face charges over their alleged roles in a scheme to bilk hundreds of thousands of mobile phone users out of more than $50 million for unwanted text messaging services.

Michael Pearse, a 52-year-old Australian national, and Yongchao Liu, a 33-year-old Chinese national, are being detained after making initial appearances on Tuesday in Manhattan federal court.

U.S. Attorney Audrey Strauss in Manhattan accused the defendants and their co-conspirators of using a practice they called “auto-subscribing” to charge monthly fees for unsolicited messages about celebrity gossip, horoscopes, jokes, love tips and trivia, without customers’ knowledge or permission.

Pearse and Liu were charged with wire fraud, conspiracy to commit wire fraud and aggravated identity theft, and Pearse was also charged with conspiracy to commit money laundering. Both defendants arrived in the United States on Monday.

Daniel Lynch, a lawyer for Pearse, said his client has pleaded not guilty, and will propose a bail package at a Feb. 9 hearing. Liu’s lawyer did not respond to a request for comment.

Prosecutors said Pearse was the chief executive and Liu was a Java development engineer for a company called Bullroarer.

According to court papers, Bullroarer was affiliated with Tatto Inc, a company that purchased large numbers of mobile phone numbers to target with messages.

Victims were charged $9.99 a month even if they ignored or deleted the messages, and were often unaware anything was amiss until unintelligible items such as “96633IQ16CALL8668611606” began appearing on their phone bills, prosecutors said.

The scheme allegedly ran from 2011 to 2013. Several other alleged co-conspirators have also been charged.

Lin Miao, who prosecutors said ran Tatto, pleaded guilty in a related case in 2015. A year earlier, Miao and several corporate entities settled related U.S. Federal Trade Commission civil charges by surrendering more than $10 million of assets.