MOD Systems Co-Founder Charged with Wire Fraud31 Mar, 2010 By: Chris Tribbey
Mark Phillips, co-founder and former CEO of MOD Systems, was arrested March 30 and charged with two counts of wire fraud, according to court documents filed in U.S. District Court in Seattle.
Phillips, who hasn’t worked with MOD Systems for a year, is accused of incurring “as much as $524,000 in personal or non-business related expenses that have been paid by MOD” from January of 2008 until March of 2009. Among the alleged expenses are $8,000 for Salvador Dalí lithographs, more than $13,000 in purchases at Hermes and Louis Vuitton stores, more than $13,000 in personal airfare, nearly $10,000 in purchases at a Tokyo department store, and “$6,150 in dental and DNA testing.”
MOD Systems specializes in retail kiosks that can download movies and music to Flash memory and SD cards. Company CEO and chairman Anthony Bay responded to the charges, saying in a statement, “MOD Systems is fully cooperating with the U.S. Attorney’s office. Mr. Phillips has had no involvement in the company’s business or operations for nearly a year.”
“Records indicate that Phillips caused company money to be transferred to a bank account controlled by his then-girlfriend,” a statement from the U.S. Attorney’s office read. “The money was supposed to be used to pay for services provided by the woman’s company, but she never invoiced the company for any services or kept any of the money transferred into her account.
“Instead, the money was controlled by Phillips, and he directed her to pay for luxuries for himself including an expensive watch and a personal investment in another start-up company.”
The FBI is investigating the allegations. If convicted, Phillips faces up to 20 years in prison and a $250,000 fine for each count.