MOD Systems Co-founder Convicted of Fraud, Money Laundering3 Mar, 2011 By: Chris Tribbey
Mark Phillips, co-founder and former CEO of MOD Systems, was convicted March 2 of several counts of wire and mail fraud and money laundering, and could face up to 20 years in prison when he’s sentenced May 27.
First arrested and charged in March 2010, Phillips, 36, of Seattle, was convicted following a nine-day jury trial.
Federal prosecutors said in a statement that Phillips had company money transferred to a bank account controlled by his then-girlfriend, which he then used for luxury items, including an expensive watch and investments into another start-up company. Federal prosecutors also said Phillips transferred $1.5 million from MOD to his personal account in April 2008 and used the money as a down payment for a $2.3 million penthouse.
“We are pleased with the results of this investigation, which targeted an individual entrusted with fiduciary responsibilities who instead pilfered funds for his personal benefit,” said FBI special agent-in-charge Laura M. Laughlin. “The results were made possible through an effective partnership between the FBI, IRS, U.S. Postal Inspection Service and the U.S. Attorney’s Office, a collaborative investigative model we have found very effective in addressing complex fraud schemes.”
MOD Systems, which specializes in retail kiosks that can download movies and music to SD cards, said in a statement: "MOD fully cooperated with the U.S. Attorney's office during its investigation and is pleased that this chapter is now behind us. In spite of the distraction, MOD has remained focused on our business, our partners and our customers and has successfully moved forward."
“It is despicable for a CEO to violate his position of trust by looting corporate money for personal gain,” said Marcus Williams, the IRS special agent in charge of the Pacific Northwest. “Federal law enforcement will not sit on its hands and allow that to happen.”