Self-Made Tech Mogul
Many people in the West-Australian city of Perth know Zhenya Tsvetnenko as a colorful entrepreneur. The self-made tech mogul used to be a big name in the tech start-up industry. In 2010 he received Ernst & Young’s Young Entrepreneur of the Year Award, with the jury describing his ability to grow his mobile text alert business as “extraordinary”. Russian-born Zhenya Tsvetnenko was just 12 years old when he moved to Perth with his parents. He went to a highly sought after public school, Rossmoyne Senior High. He continued his studies at the University of West Australia, but dropped out. Zhenya then created pioneering SMS gateway technology from his bedroom and quickly became a Google AdWords and MySpace master. In 2008, he married his girlfriend of 6 years. The couple reportedly spent over $60,000 on flowers alone and over $1 million in total to entertain a small circle of 120 wedding guests. A few years later, they welcomed a daughter and a son, born two years apart in 2013 and 2015. The Tsvetnenkos were very present in Perth’s social scene. They also juggled a number of businesses, including a record label, bar, nightclub and a fashion empire. Zhenya Tsvetnenko was also the co-founder of bitcoin mining company now known as DigitalX.
Surprise Arrests
At some point, however, the Tsvetnenkos’ world came crumbling down. In July 2016, US authorities charged Zhenya with wire fraud, money laundering and identity theft. Acting on an extradition request, Australian police knocked on the couple’s luxurious Applecross home’s door days before Christmas 2018. The then 30-something year old has since been in “custody” in Hakea prison. Meanwhile, two of Zhenya Tsvetnenko’s business partners, Darcy Wedd and Fraser Thompson received a 10 and 5-year prison sentence respectively. The jury who convicted Darcy Wedd was convinced he was “at the epicenter of a massive fraud that stole money from millions of Americans.” A key witness estimated Wedd’s co-fraudster, Zhenya Tsvetnenko, reaped $15 to $20 million from the same scheme in 2012 and 2013 alone. Further, the US froze the assets of another Australian, Michael Pearse. He was extradited to the US in January 2021, together with Yongchao Liu, a 33-year-old Chinese national living in Sydney. Michael Pearse entered a plea agreement and will be sentenced in October. Several other fraudsters have also been charged.
$150 Million Text Scam
According to court documents, the men were all part of a multi-million-dollar phone text scam. The setup was easy. The fraudsters simply purchased large sets of mobile phone numbers. Next, they targeted thousands of victims with auto-subscription text messages. Unaware of what was happening, mobile phone users were charged $9.99 a month for recurring messages about trivia, love tips, celebrity gossip and horoscopes. They never signed up for these texts in the first place. Therefore, victims were often unaware something was amiss. Until they noticed dubious monthly charges appearing on their phone bills. To make things worse, victims often found it difficult to unsubscribe. With the proceeds Zhenya Tsvetnenko and his co-conspirators were able to fund a lavish lifestyle, including expensive vacations, luxury cars and parties with Hollywood celebrities.
Future Uncertain
The United Nations Human Rights Committee has criticized Australia’s practice of refusing bail in extradition cases. However, Zhenya Tsvetnenko’s appeals have been ignored. In the past three years, Zhenya was denied bail three times because the court deems him a flight risk. A Facebook Page called Friends of Zhenya has been sharing regular updates from the beginning. No posts were added after his surrender on Tuesday this week. His wife and parents were not present at the hearing. An extradition date and subsequent court hearings in the US are yet to be set. Zhenya Tsvetnenko is facing an uncertain future. The three charges – wire fraud, money laundering and identity theft – attract up to 60 years imprisonment combined. The former tech mogul has always maintained that he is not guilty.
