HELENA, Mont. — A Montana man being sued by the federal government over $70 million in charges to unsuspecting phone customers' bills nationwide is now facing criminal counts of wire fraud, conspiracy and money laundering.
The 35-count indictment against Steve Sann was unsealed Wednesday during a settlement conference in a separate civil lawsuit filed by the Federal Trade Commission over the allegations.
Sann, who lives in the western Montana town of Lolo, ran multiple companies starting in 2006 and running through 2011 that sold a voicemail and fax service called ConnectMe Voice, according to the indictment.
Sann's companies signed up customers online and added the monthly charges that ranged from $9.95 to $24.95 directly to their phone bills using billing aggregators that contract with local phone companies to provide billing services, prosecutors said.
This is how it worked, according to court filings: Sann's companies used Internet marketers including Clash Media and DMI Partners that run websites offering people free products or job search assistance.
Website users must first navigate through a series of marketing offers before arriving at the job listings or prize drawing they were seeking. Clicking on those offers to get to the next page signs the user up for the services being offered, including Sann's voicemail and fax service.
The marketing practices used to sign up customers were "clear and unambiguous," Sann's accountant, Robert Braach, said in a statement to the court.
But hundreds of complaints were filed against the Sanns' businesses with the FTC, the Better Business Bureau and with phone companies after customers noticed the charges on their phone bills. Most said they never signed up for the service and never used it.
When customers complained or phone companies grew suspicious about one of the Sanns' companies charging phone bills, the customers would be switched over to another one of Sann's companies and the charges would continue, the FTC said.
Some were billed for months before they were noticed, and some never noticed the charges at all, according to the FTC lawsuit.
Sann's companies received an average of 450 complaints per month and of the $70 million billed since 2008, they returned more than $40 million after customer challenges, the FTC said.
The criminal indictment says Sann lied and said his companies received no customer complaints from February 2010 through November 2011 in order to continue using the billing aggregators.
He also concealed his ownership of the companies – six named in the criminal charges, nine in the FTC lawsuit – by enlisting friends and relatives to serve as the businesses' leaders, the indictment says.
Sann attorney Michael Sherwood emailed The Associated Press a statement Thursday that said Sann plans to plead not guilty to the charges at his Oct. 8 arraignment, and Sherwood intends to ask a federal judge to dismiss the indictment.
The grand jury that indicted Sann did not hear his side of the story, and if the case goes to trial, "we will do our best to insure the whole truth is presented," Sherwood said.
Sann, his wife, son and Braach – all named as defendants in the FTC lawsuit – have previously said they took steps to prevent false charges from being added to phone bills.
The FTC civil lawsuit is a separate legal matter from the new criminal charge. The indictment was filed Sept. 12 but had been under seal until last week's settlement conference.
Sann is scheduled to make his initial court appearance on Oct. 8.
The companies run by Sann stopped operating in 2012 and most of his assets were frozen earlier this year.