Internet millionaire Zhenya Tsvetnenko faces US court over fraud allegations

Just weeks ago, Zhenya and Lydia Tsvetnenko were the toast of Western Australia.

Young, beautiful and fabulously wealthy, the couple threw lavish parties for each other, ensuring them a permanent presence in Perth's social media pages.

The couple spent $1 million on their 2008 wedding, which saw the bride arrive in a princess-style horse-drawn carriage and the release of hundreds of butterflies after the ceremony.

Mr Tsvetnenko's 30th birthday bash featured ice sculptures of his Lamborghini and Ferrari, and a birthday cake emblazoned with his face on a $US100 bill.

For her 29th, Mr Tsvetnenko flew his wife to Hollywood for an extravaganza attended by celebrities including rapper Snoop Dogg.

Zhenya and Lydia Tsvetnenko posing on a friend's boat. Photo / News Limited
Zhenya and Lydia Tsvetnenko posing on a friend's boat. Photo / News Limited

Despite their propensity for flaunting their wealth, the couple were largely admired thanks to Mr Tsvetnenko's rags to riches story, which is the stuff of legend.

A little under a decade ago, the son of Russian biochemists was a university drop out with just $200 in the bank.

Now at 36, the internet entrepreneur is worth an estimated $100 million, built on the success of his automated SMS services and topped up with the fruits of his Bitcoin business.

No slouch herself, Mrs Tsvetnenko co-runs Perth fashion label Zhivago and has dressed everyone from the Kardashians to The Veronicas.

They splashed their cash on private planes and a fleet of luxury cars which included a Lamborghini, a Ferrari and a Hummer, posting the photographic evidence on social media.

Last Friday, however, Mr Tsvetnenko went from being on top of the world to the top of the US Department of Justice's hit-list after he was indicted over his alleged involvement in a multi-million scheme to defraud mobile phone consumers.

Mr Tsvetnenko has denied the allegations.

The Southern District of New York US Attorney's Office alleges that between 2011 and 2013, Mr Tsvetnenko, and at least seven others, engaged in a process called "auto-subscribing", which defrauded consumers by charging them for premium text messages without their knowledge or consent.

Premium text message services include monthly horoscopes, celebrity gossip and trivia facts.

Prosecutors allege consumers were charged about $13 a month for services, a fee that was automatically embedded into their phone bill.

Zhenya and Lydia Tsvetnenko lived the high life in Perth. Photo / Facebook
Zhenya and Lydia Tsvetnenko lived the high life in Perth. Photo / Facebook

They claim Mr Tsvetnenko auto-subscribed "hundreds of thousands" of phone numbers through the US mobile aggregator and generated "million of dollars of revenue".

Mr Tsvetnenko faces a further charge of conspiracy to commit money laundering, which also carries a maximum 20-year prison sentence.

Some of the defendants, including Australians Michael Pearse and Yongchao (Kevin) Liu, were charged months ago with little fanfare.

The case picked up steam on Friday after US prosecutors revealed they had charged a further three men in relation to the scheme, including Mr Tsvetnenko, Francis Assifuah and Fraser Thompson, a US-based former executive at mobile aggregation company Mobile Messenger.

The Perth rich-lister, who is believed to be holed up in his Mt Pleasant mansion, has not been arrested and plans to fight extradition.

"Mr Tsvetnenko will be defending all the allegations made against him," his spokeswoman Evelyn Duffy said this week.

In 2006, Mr Tsvetnenko was ordered to give undertakings to the Australian Competition and Consumer Commission (ACCC) over the regulator's concerns that his text message SecureDate service was engaging in misleading or deceptive conduct.

He was required to attend a trade practices training session.

The US Department of Justice alleges Mr Tsvetnenko became involved in the text messaging scheme in 2012, after Darcy Wedd and Fraser Thompson held discussions about how to increase revenues for a US mobile aggregator.

​Mobile aggregators compile the charges that appear on consumer bills.

Mr Tsvetnenko, who ran "at least two different Australian digital content providers", was allowed to begin auto-subscribing consumers.

"Over the course of the next several months through mid 2013, Tsvetnenko and the Australian content providers auto-subscribed hundreds of thousands of phone numbers through the US mobile aggregator and generated millions of dollars of revenue, which the defendants apportioned among themselves and were used to fund a lavish lifestyle of expensive vacations and gambling," the US Attorney's Office said in a statement.


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