You Must First Invent the Universe

Entrepreneurs create things, typically a product or service, right?  Well, sure -- something starts out as an idea, one or more people execute on that idea and essentially give birth to something that didn’t exist before.

Fortunately, though, even entrepreneurs don’t have to build their visions entirely from scratch.  Let’s enlist Carl Sagan to put this into perspective:

“If you wish to make an apple pie from scratch, you must first invent the Universe.”
- Carl Sagan, Cosmos

Construction at the AZ Disruptors headquarters is wrapping up and the building is coming along beautifully.

 

 

 

 

 

  

But, I don't see this as merely the AZ Disruptors headquarters -- it’s an entrepreneurial Universe on the verge of opening with a Big Bang!  And, unlike the actual Universe, which required nearly 14 billion years to produce everything you see around you -- AZ Disruptors will provide space, talent, motivation, equipment, and mentorship on day one.  

No small feat.

"Somewhere, something incredible is waiting to be known."
— Carl Sagan

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This article was written by Angelo Coppola. He is a software industry veteran who currently serves as Vice President of Marketing for Axosoft. Angelo will provide AZ Disruptor classes with mentorship in the areas of marketing, design, and user experience. You can be a mentor, too.

Scratch Audio: GarageBand for the Web!

There were some excellent presentations at the most recent AZ Disruptors meetup at Axosoft headquarters.  I'm someone who attended the first TechCrunch 40 event; I was recently at Jason Calacanis' LAUNCH event -- and I've gotta say, we have some amazing local talent. At the AZ Disruptors lunches, I'm seeing products, presentations, and founders that easily rival the best of what I've seen in the Bay Area.

Scratch Audio is a top-notch example of this, as is Sean Tierney, Scratch Audio's co-founder.

The product is designed to enable collaboration amongst musicians.  Think GarageBand for the web.  Singer in London, guitarist in New York, synth in Chicago, rythm section in L.A.? No problem.  Float the ideas straight from your imagination to the musical zeroes and ones of Scratch Audio.

Pass it around. Collaborate. Add. Subtract. Enhance. All you need is a browser and some basic equipment like a microphone.

This product really piqued my interest because I'm a regular user of GarageBand, even though I'm not a musician.  I use it for recording the spoken word -- for podcasting.  And this actually opens up an entirely interesting set of new paradigms for the podcasting world, too.  

Check out Sean's great presentation:

This article was written by Angelo Coppola. He is a software industry veteran who currently serves as Vice President of Marketing for Axosoft. Angelo will provide AZ Disruptor classes with mentorship in the areas of marketing, design, and user experience. You can be a mentor, too.

My Apology Offer to JAWA & Jason Hope

[For background information about this, start here: Explanation of Text Message Scams]

After John Yantis wrote this great piece in the AZ Republic, I was pretty sure I was done writing about JAWA and Jason Hope. I figured now that the AZ Republic is on it, I can move on. Then towards the end of last week, two amazing and unfathomable events occurred:

First, I received this 7-page cease and desist letter from one of Jason Hope's lawyers. The letter claims the following about my recent blog posts covering the Verizon lawsuit against JAWA and Jason Hope: 

I don't know much about legal terms and I'm not quite sure what all that means, but I'm pretty sure the above accusations are not good. As it turns out, I might be a criminal according to their letter. In fact, Mr. Enrico Schaefer (from TraverseLegal, the Lawyer representing JAWA and Jason) is quite convinced that I am in fact a criminal and that my reason for writing about text messaging scams is just to cover up my own crimes. Check it out:

Let me get this straight...to cover up my own unlawful activities, they are arguing that I am going around and accusing random innocent rich people of scams? Geez. Now, I'm really offended. Not about the accusations of being a criminal, but about the accusation of being the dumbest criminal on the planet. I mean what kind of criminal would go around accusing random innocent rich people of pulling scams?

So what does Mr. Schaefer claim are my unlawful activities? Well, shit! There is a whole laundry list of them. Here is a sampling:

Mr. Schaefer lists 9 such hideous crimes!

[Begin Rant]

Seriously dude? You think I'm writing about JAWA and Jason hope because I want to cover up my crimes for registering domain names? This is the best you could come up with? I mean you went through all the trouble of investigating me and the worst dirt that you could come up with is that I own the domain name PhotoDrop.com? And furthermore, you seriously think that PhotoDrop.com is in trademark violation for Adobe's PhotoShop? I especially love my top crime: registering the domain MacBugTracker.com. All of your research didn't show you that I have a software company, Axosoft, that makes Bug Tracking Software? What are you going to expose next? That I received a parking ticket in 1998? God, I wish I was writing this in text messages, just so I could write "LOL". Oooh, but that LOL might cost me $9.99 per month for the rest of my life if I sent it to one of your client's scam numbers.

[/End Rant]

The second thing that happened is that on Friday of last week, as some of our readers noticed, the AZDisruptors.com site mysteriously went offline. What!?!? How did that happen? It turns out that Mr. Schaefer took it on himself (or maybe he acted at the direction of his clients) to contact the hosting provider of AZ Disruptors, SquareSpace.com, and told them that they need to pull down our web site. Here is the kicker: SquareSpace actually complied with their request!

Now, I'm a HUGE fan of SquareSpace. These guys have done a phenomenal job of creating an easy-to-use blogging engine. It's truly an awesome product. So much so that they successfully raised $38.5 Million recently from Accel and Index Ventures. But here is what really pisses me off about Square Space: with just one random nastygram that they received from a lawyer, they took down my site without even contacting me first. They took it down and emailed me about it. Are you kidding me? That's all it takes to take down a site hosted on Square Space? Send a nastygram and bam! Apparently you can take down any Square Space hosted site with just a letter! No need to do a DoS attack on them. So much for Square Space's incredible infrastructure.

As I write this, the site is still hosted on Square Space because I re-enabled my content and argued back with Square Space's support team. They haven't responded to my numerous emails and my request to get a call back, but if the site mysteriously disappears one day, you'll know why. It might take us a day or two to get it back up and running on a different hosting provider.

(SquareSpace, if you are listening, you should call me - your support team has my number)

JAWA and Jason Hope's Demands

So what does Mr. Schaefer and his clients demand that I do? Here is a list of their demands:

Is that all?

And what do I get in return? Nothing! In fact, they intend to reserve the right to sue me at anytime in the future. These guys are not the best negotiators. I'm a little disappointed:

I'm ashamed to admit it, but I have to be honest here: I had to lookup what "panopoly" meant because I was pretty sure they weren't talking about Tom Cruise's ex-girlfriend. It turns out, there is no such word, but Google recommends panoply, which means what you would expect it to mean in context. It's a frivolous word. Saying "our clients reserve their full rights" would have had the same meaning, but if you're going to throw in a fancy word, at least spell it right.

So, of course, I had to go and find myself a good lawyer. Fortunately for me, on a recent trip to China with the AZ Tech Council, I happened to meet Jonathan Frutkin. Jon is brilliant and he probably even knows what panoply means. I bet he could even spell it! Check out his official response to the 7-page ramblings of JAWA's lawyers. I absolutely love the opening lines.

It's pretty pathetic that a scam artist with money can usually shut up the vast majority of people with such crazy, far-reaching and false accusations. From what I hear, this isn't the first time these people have tried to shut someone up and if I comply with their demands, it most certainly won't be the last. I didn't seek out to write about text message scams. It fell into my lap and I couldn't believe nobody was writing about it. Then I found out I was a victim. You could almost say that this story chose me. The stars were aligned and here I am. I'm not going away and I'm not about to retract my posts and say I was wrong, unless...

My Apology...

It struck me the other day that JAWA and the network of companies listed in the Verizon lawsuit have MILLIONS of customers! If in fact they are not involved in any sort of scam, then the vast majority of those customers must be happy customers who are knowingly and willingly paying $9.99 every single month on their cell phone bills. So I have an offer to make... 

I WILL DO ALL OF MR. SCHAEFER'S ABOVE DEMANDS AND I will record a personal apology video and promote the video on every domain I own (including MacBugTracker.com), under the following conditions:

• JAWA Provide access to only 500 randomly chosen customers from the millions of JAWA customers who have been charged $9.99 per month on their phone bill. Of course, to alleviate concerns of tampering by either side, we would use a 3rd party polling company for the customer sampling. The assumption here is that there are Millions or more JAWA customers based on JAWA's response to the Verizon lawsuit.
• The 3rd Party Polling company will then poll the 500 randomly chosen JAWA Text messaging customers to see if they are happy with the services that JAWA has been providing them through text messaging and the fees they have been charged on their phone bill

If only 25% of the 500 randomly polled JAWA customers acknowledge that they have knowingly been paying for JAWA's services and that they are happy with it, I will apologize profusely. Of course, the BS lawsuit threats would also have to be dropped, but the idea here is that if JAWA is in fact a company with MILLIONS of happy customers, it should be relatively easy to verify. I'm setting the bar unbelievably low too. If just 1 out of 4 customers are knowingly paying for JAWA's services, I will gladly eat my words!

And here is the best part, I'll pay for the whole test!

What do you say?

P.S. Mr. Schaefer, the next time you think you've found a person who is a criminal, as you say I am, instead of trying to bargain with them, try exposing their crimes so they stop doing them.

ASU Computer Programming Competition

This morning, from 9am to 1pm, the Computer Science club at ASU (it's actually the Woman in Computer Science club but they hardly have any woman in their group - sorry Fred, I have to give you a hard time about this) had their annual programming competition.

Yours truly was one of the judges for the competition. There were some seriously tough problems to solve. In total, there were 10 computer science problems. Students were in teams of 1-4 people and they started the clock at 9am. The Team that solved the most problems correctly would win the competition.

Thank goodness there were pre-defined input and output files that the judges used to score each potential solution. Otherwise, my brain would be hurting right now. With more than 60 students and 30 teams and the possibility of 2 submissions per problem and a choice of programming languages that included Python, Java, C, C++ or .NET, judging the competition got to be quite interesting at times. We had to take submissions and compile them to ensure the code was original and compiled correctly, then use the input and output files to ensure the problem was solved appropriately. It was hectic, but it was fun.

So who wakes up super early on a Saturday morning to prepare for a 9am programming contest? Exactly the type of people that create great software companies and precisely the type of people we're looking for at AZ Disruptors and Axosoft! Yeh, we're geeks. So sue us (that's just a figure of speech people).

Congratulations to all the participants. I also wanted to highlight the winners of the competition:

• First Place: JDR - Daniel Olivas, James Cotter, Venkataramanan Kuppuswamy
• Second Place: Blue Bombers Forever - Matthew Brown, Andrew Morgan, Arjun Mukherji
• Third Place: Team Broadmor - Taylor Smith, Chris White, Patrick McInerney

Great job guys!

Awesome 3rd AZ Disruptors Lunch

Despite the recent posts about Text Messaging Scams, AZ Disruptors is actually about startups. Software startups. Today, for our 3rd AZ Disruptors lunch, we had a packed house! In fact, we were overflowing and had to stop RSVPs 2 days ago.

The AZ Disruptors offices are also coming along. Contruction of the other half is nearly complete and we are getting excited to have up to five new startups move into this sweet space.

Additionally, we allowed for 5 product demos today. They were short, 5 minute demos and I had every intention of having them recorded and put up here for people to see. I'm extremely bummed that the quality of the recordings were not good enough to be posted and we had some technical difficulties recording some of the demos.

However, here is a brief mention of each:

Scratch Audio by Sean Tierney - Sean demoed Scratch Audio, a web app for browser-based, collaborative multi-track recording. Think of it like this: it's GarageBand in the cloud with multiple users collaborating from across the world to make music together. Nice work!

RunRate by Sean Coleman - RunRate aims to be QuickBooks for the web. Killer features include transaction creation through OCR from a receipt photo and a brilliantly simple user interface. Great job!  

Workables by Jonathan Hegranes - Jonathan demoed how fast and easy it is to both find work or find workers who will perform a job. Workables, which is already operational, uses a streamlined UI that reminds me of Twitter. Nicely done!

Virtual Goody Bags by Danielle Fazio - You know the goody bags you get at conferences and they end up in the trash? Well, Virtual Goody Bags has put those bags in the cloud. Instead of junk, you get real offers that you can retrieve by logging into your virtual goody bag. Good stuff!

Grip Innovations by David Saar - David demonstrated control software and media node from their networked audio solution. The "Grip" system eliminates audio consoles and 90% of the cablining used with traditional products.

Also, my apologies to Will Chase for not having time to demo WebtacularCMS. They've created a CMS system that allows users to setup full-featured web sites in as little as 3 minutes.

JAWA's Defense, Employees and Intimidation

I'm amazed that to this day, I still haven't seen a single journalist in Arizona write about the JAWA lawsuit and the incredibly lucrative, large text message scams.

AZ Disruptors is a site about software startups in Arizona, not about covering scams, but in the absence of the Arizona Republic and the Phoenix Business Journal actually doing some investigative reporting, I'm picking up their slack. I'm not sure why they're not covering this -- I've been in contact with virtually every local news vendor in the valley.

Anyway, yesterday, JAWA filed their counterclaim to Verizon's suit. It's quite a fun read. Lets break it down, shall we:

This is absolutely awesome and incredible insight. First, JAWA seems to be arguing that because they have 240 employees, somehow, the judge should consider that as part of their argument.

That's like Enron arguing "we have 30,000 employees at Enron..."

Then it gets better. In fact, it gets really good. They assert that they have been doing business with Verizon for 4 years and Verizon's share of the revenues (30% in this case) has been worth $30 Million since 2008. WOW! That means JAWA's share of the revenues JUST FROM VERIZON for the past 2 years has been over $70 Million!

That's worth repeating. $70 Million in revenues just from 1 of the 4 major cell phone carriers.

I know it seems impossible, but it gets even better! In another part of the counterclaim, JAWA claims:

In this part, they claim that the aggregators are withholding approximately $19 Million from JAWA. This is money the cell phone companies have already billed customers, but have not yet paid to JAWA. However, the aggregators apparently don't pay the content providers (Jawa, etc.) for approximately 90 days after the service is provided.

This is probably why AT&T was willing to give me back a 3 month refund -- but not more -- without a bigger fight. If that is in fact the case, the $19 million being withheld from JAWA's represents revenue for the past 90 days. At a $19 Million per 90-day run-rate, that puts JAWA's revenues at approximately $76 Million per year (assuming no growth) from the US alone.

But, that might be a low estimate, because in another part of the JAWA Counterclaim, JAWA indicates that "JAWA's revenues generated by customers of Verizon approximated $75 Million during the past twelve months."

I know what you're thinking. You're thinking it can't get better than that, right? Just wait, there's more! JAWA also claims, "Verizon has willingly accepted and retained the profits over the last four years from what it now describes as a 'criminal enterprise' even though, during this time, it audited these practices."

Wow! That sounds a lot like JAWA is saying Verizon is our partner in crime Premium SMS Services and we don't understand why they've turned against us, all of a sudden. This very well might be true. And, it may be possible that Verizon's change of heart was initiated by Texas Attorney General, Greg Abbott. If that's the case, Kudos to him!

JAWA's defense begs the question: Do the wireless companies knowingly allow these scams to continue?

Where Are JAWA's Employees in All This?

One might think that if JAWA is doing something wrong, with more than 240 employees, there would be at least one whistle blower, right? This is where things get interesting. Remember Enron? They had more than 30,000 employees. Bernie Madoff had a $50 Billion Ponzie scheme with hundreds of employees.

Often times, employees of such companies don't get to see the big picture. They get sucked into it or have personal reasons for staying quiet (think mortgages, children, and other responsibilities). They might also be worried or intimidated by their seemingly powerful employers who are often well-connected with politicians.

In JAWA's case, at least one employee is sticking up for them. Earlier today, I had the following comment posted on my blog by a person identifying themselves as "me":

"me" seems to be a really brave guy and a dedicated employee. He's also got an interesting name. But what I don't understand is this: If JAWA is a legitimate business why is "me" so concerned? His or her comment "...and if the ship goes down I will proudly go down with it" doesn't seem like something one would say about an honest company. Ships don't just go down without a reason.  Maybe the commenter knows that there are good reasons for this ship to go down.

Could Employees be Intimidated?

For the first time ever, my company Axosoft, has become the victim of intimidation techniques. Just this morning, Axosoft's Wikipedia page was vandalized. Take a look:

The link that was added to the Axosoft Wikipedia page goes to a Maricopa Superior Court page listing all the law suits that I've been a party to. I'm not certain who was behind the vandalized site, nor what their purpose was. Perhaps it is to tell me "hey, we're watching you!" Or is it to intimidate me?

Who is it from? It turns out the edits were done from an IP address related to a hosting provider known as http://www.defconservers.com, which itself looks like a shady hosting provider. Try calling their toll-free number: 1-800-998-3108. It could have been any of their customers who made the change. Or some hacker. But the timing is odd, wouldn't you say?

Intimidation doesn't work with me. It only lights the fire in my belly. But it goes to show that if someone is in fact trying to intimidate me -- and I hardly know anything about this case -- I can only imagine what the employees of a company that might be involved with fraud must endure. 

Here's the thing: if you let others intimidate and stop you from doing the right thing, then what does that say about your character? Only YOU get to define who you are.

If you know any information about this, you can email me directly. My email is hamids at axosoft - do it from an anonymous email, if needed. Don't let anyone intimidate you and stop you from doing what you know is right.

Explanation of Text Message Scams & Cramming

Alright, I had to do a video to explain all these text message scams. Check it out:

See the Video on YouTube

This story keeps getting more interesting every day. Before putting up the above video, I contacted Jason Hope and asked him if he could explain the accusations of Jawa and him about text message scams. He told me "You know, I'm not going to comment to you on a recorded call. I've got attorneys and you can be in touch with them and I'd appreciate it if you don't post anymore on the Internet. Thank you! [CLICK!]"

He didn't even provide me with contact information for his attorneys. How rude is that! I think he was very truthful with me though. I think he truly would appreciate it if I were to stop posting about this.

For some background articles on this:

Local Tech Darling, JAWA and Jason Hope a Big Scam?

Have JAWA and Jason Hope Stolen More Than $100 Million?

WOW! I'm Victim of the Text Message Scams

WOW! I'm Victim of the Text Messaging Scams!

After writing two articles on the scumbags who run text message fraud schemes, it occurred to me that I never check my AT&T phone bill - what if I'm one of the people that Jason Hope and his elaborate text messaging scams is affecting?

So I decided to check my online bills. checking my latest bill, sure-enough, I found a subscription charge of $9.99: 

It's worth noting that above information is at the VERY BOTTOM OF MY 38 PAGE BILL! I was blown away. Here I am feeling sorry for the millions of people who are falling for these scams and not noticing the charges on their bill and it turns out, I'm one of the suckers!

How far back did this go? I checked every one of my online bills all the way back to January of 2010. The subscription charge by these scumbags started on my May 2010 billing cycle:

$9.99 each month for May, June, July, August, September, August, November, December, January (2011) and February. A total of $99.90 of charges that had gone unnoticed on MY BILLS! Unbelievable.

I got on the phone with AT&T and as I write this article, I've been on the phone with them for a total of 1 hour and 29 minutes. I'm currently on hold. Here is how my interactions with AT&T went: 

• Michael, the first Customer Service Rep has been a victim of these scams himself. He sounded like a young guy in his 20s. He started explaining that "I agree it's a scam" but then he started to blame himself for when he was scammed saying "I must have signed up for it when I applied for some scholarships and I didn't read the fine print." I was blown away. Michael seemed to blame himself for the scam! I couldn't believe what I was hearing. He went ahead and refunded 2 months of charges for me, but he also said that they couldn't go beyond 3 months. I then asked what we need to do to stop this company from charging anybody else - ever! He said there was nothing they could do. I asked if they have a fraud department and they do. Michael transferred me to the fraud department.
• Cory in the Fraud department, whom I must have just woken up, explained to me that there was nothing he could do about text messaging fraud. His fraud department was to address issues that was about falsely created cell phone accounts, not fraudulent text messages. He then proceeded to transfer me back to customer service because he said "if customer service can't help you, nobody can!"
• This time around, I got a more sympathetic young girl, Angelique, in customer service. She loved the fact that I was trying to stop this scam from affecting all of AT&T's customers. In fact, she proceeded to refund me all 10 months worth of charges. She did inform me that there was not much she could do about stopping the scams, but after some encouragement from me that "if we don't stop it, who will?" she agreed to explain the situation to her boss and see where it would go.
• Rebecca was Anjelique's boss. She was not on board with our plans. She explained to me that they were "already investigating this," which turned out to be a bunch of BS as it was later confirmed by Rebecca's boss. There is no investigation that my complaints (or anybody else's for that matter) has triggered. After several minutes of Rebecca explaining to me that it's out of her hands, she agreed to transfer me to her boss.
• Jennifer was Rebecca's boss. She was determined to be my last stop. She put her foot down that there is nothing AT&T can do about such fraudulent charges, except to credit them back to customers who complain. Really? Really! My conversation with her was very informative and she claimed that AT&T does not make a single cent on any of the text message charges (update: I have confirmed through my own sources that claim is 100% false - the wireless companies can get up to 50% of the fees charged through text messages). That is completely bogus. The conversation is definitely worth listening to (Listen below). She also claims that AT&T has no way to stop text messages coming from known scammers (update: I have confirmed that too is bogus - in fact, the Mobile Messaging Association created just for that purpose).

The reason my call with AT&T took more than 90 minutes is because I was trying to stop "Textea", the "content provider" that had been charging me $9.99 for 10 months, from being able to continue to operate and charge other AT&T customers. That proved to be an insurmountable challenge.

I cut the full recording of my conversations with AT&T to just a few minutes with the last person in line, Jennifer. Remember, this is after they had already credited me for the charges. They no longer wanted to have anything to do with me. My exchange with Jennifer from AT&T will go down as one of the highlights of this investigation:

It's pretty incredible. I'm reminded, despite what Jennifer claims, AT&T makes hundreds of millions of dollars from the pass-through of such scam charges. So what is their incentive to stop the crooks? They have none. Just the opposite, in fact. They have incentive to let the scams continue and turn a blind eye.

I decided to investigate "Textea", the supposed "Content Provider" that has been charging me $9.99 for 10 months. AT&T could not provide me with any contact information for this content provider. Fantastic! Some Google searches revealed the web site http://www.textea.com. The site, which is in Spanish, provides a 1-877-889-1506 phone number to call. The automated system IS IN SPANISH! Are you kidding me? Pressing 2 gets me an English prompt and of course, there is no way to reach a human operator. When you choose the option to stop their subscription, the prompt switches back to Spanish. Nice! Nobody can stop these guys? Seriously? We just have to put up with this crap?

I can't help but wonder if Jason Hope and the network of companies that he has created to scam people are also behind Textea.com and I didn't even get an invite to his $500,000 party that I helped pay for. Unfortunately, there is no easy way to investigate these matters without the cooperation of the wireless phone companies.

Have Jawa and Jason Hope Stolen > $100 Million?

It turns out, Jawa used to be known as "Cylon LLC" and they have been running their text messaging scams for a very long time. In fact, the company has already been exposed and a very good news story covered their entire scam more than a year ago. Watch this:

Cell phone scam called "cramming": kxan.com

So what did Cylon do after they got caught? They changed their name to Jawa and put together a network of other LLCs to continue the same scam. It was simply too profitable to give up.

Jawa's half-a-million dollar holiday party was covered by several web sites, including this article in Gawker media. The comments on this article are very insightful. Several of the commenters, after reviewing Jawa's web site, wondered about how they make money or about its legitimacy. One particular commenter, however, seems extremely insightful:

Whoever this todbodman guy is, he seems to have all the details. One thing in particular about his comment jumps out at me: "...they are billing something crazy like 2 in 10 cell phones in the US..." Wow! There are over 290 Million cell phones in the US. Just AT&T and Verizon alone have over 180 million customers. If todbodman's comment is accurate, and as many as 2 in 10 (20%) cell phones in the US have been scammed by Jawa and their complex network of paid text message fraud, the numbers could be staggering.

Lets calculate what the numbers would be for just 20% of AT&T and Verizon customers at the lower, $3.99 per scam amount:

180 Million x 20% x $3.99 = $143 Million!

Now lets calculate the numbers for the total cell phone population of the US at the higher $9.99 per scam amount:

290 Million x 20% x $9.99 = $579 Million!

That is no chump change. Remember, that a lot of their scams are also on a monthly recurring basis, so the numbers can add up quickly. Rumor has it that they are running this scam WORLD-WIDE!

Here is something crazy to consider: If a person steals a car valued at $1,000, they'll spend years in jail for "Grand Theft Auto." What do you get when you steal hundreds of millions of dollars, $3.99 to $9.99 at a time? So far, you get to build North America's Largest House and throw some lavish parties:

Watch Video of Jason Hope's $500,000 Party

Regarding the Verizon lawsuit, Jawa is going on the offensive. In a recent Press Release, Jawa claims:

"We are outraged by today's District Court action that allows Verizon Wireless to continue to abuse its dominant market position and force out smaller competitors who provide valuable mobile content to customers. It is a blatant attempt to monopolize content. We will continue to aggressively fight for our rights and hope to resolve this matter quickly. JAWA employs more than 240 people, all of whom live in the Scottsdale, Arizona area. We take great pride in our work and want nothing more than to get back to delivering superior service to our customers."

Seriously? 

People can say whatever they want. Laywers and PR agents can make their claims seem legitimate. They very well could get away with this elaborate scam. It's possible they could "settle" the lawsuit with Verizon. After all, Verizon (and other wireless operators) make money from Jawa and Jason Hope's scams (they keep a portion of the proceeds). All they need to do is show that they are taking action to try and prevent such scams from continuing. Verizon's lawsuit has already done that. As far as Verizon is concerned, they might think they are better off to settle for a nice one-time payment, which would allow Jawa and Jason Hope to keep most of their stolen wealth and continue operating in other regions of the world where consumer protection isn't so great.

It's time to do something. This scam could be the biggest ever in the state of Arizona and there isn't a single journalist covering the story yet. It's very unfortunate.

Local Tech Darling Jawa & Jason Hope a Big Scam?

This post is a bit off topic, but I can't sit here watching the media's silence on this potentially incredibly large scam pulled by a local tech company, Jawa.

I first learned about Jawa at the Scottsdale "State of the City" address given by Mayor Jim Lane. In his speech, Jim highlighted two Scottsdale-based tech companies as an example of what is great about Scottsdale. He highlighted Axosoft and our work with AZ Disruptors and he also highlighted Jawa, a company that I had never heard of until that point.

During the speech, we learned that Jawa, a local tech company focused on mobile development, went from 50 employees to 250 in 2010. That's a 500% increase in employee count alone. Wow! I thought. How did I miss this incredibly awesome new tech company, which happens to be less than 1/2 mile from Axosoft's offices?

After the Mayor's address, I rushed up to Jason Hope, the founder and CEO of Jawa, to introduce myself and find out what Jawa does. Jason was very brief, seemed very uncomfortable to talk to me and he gave me a quick line that "we're in the mobile apps business" and rushed off. I thought to myself, "that was weird." 

So when I got back to my office, I went to Jawa.com to find out what Jawa does. Unfortunately, except for a couple of Facebook games that were supposedly in beta, I couldn't find much on their web site. I couldn't figure out how Jawa made money. There was lots of information about supposed charity work and philanthropy, but nothing about how to buy something from them. It didn't add up, but I figured I must be missing something and didn't think about it again.

Then, just last week, I saw this article in Network World about how Verizon is suing Jason Hope plus 5 of his associates and a network of more than 20 different LLCs that they have setup to run a fraudulent text message business. WHAT!?!?!

Verizon Wireless claims (from the lawsuit file):

Those are some amazing accusations. So how does Verizon say Jawa did it?

You see, to ensure that you don't get unwanted SPAM and false charges through text messages, the wireless industry has created "Consumer Best Practices Guidelines for Cross Carrier Mobile Content Services" and an organization called "Mobile Marketing Association" (affectionately known as the MMA). This is a good thing. It's the reason you don't get penis enlargement offers, Viagra offers or any letters from your cousins in Nigeria through text messages. To be compliant, an organization wanting to send text messages or charge cell phone users to send premium text messages, the organization must first apply for short codes. You know, those 5-digit numbers you always see on TV to vote for your favorite dance star.

Having friends that have gone through it, I hear the application process is actually very grueling and carriers like Verizon are extremely careful about who they let use their network to send text messages. To get approved, one must comply with a whole set of rules which prevent fraud. Verizon claims to bypass these rules, Jason Hope and his associates set up a network of different LLCs with addresses in different states to appear as completely independent entities. They would then apply for short codes by creating legitimate-looking web sites that seemed to be fully compliant with the MMA Best Practices. To be compliant, you would have to spell out the details of your terms, get double-opt in (with a confirmation text from the user) that they fully understand the charges they will receive.

Verizon claims that once a particular short code and the many associated marketing campaign were live and operational (there were over 120 of them known by Verizon) , they would then change their sites to be non-compliant to obtain cell phone numbers.

For example, if a person searched for the term "Great Quotes" on Bing.com, they might be presented with an ad claiming "Greatest Famous Quotes" like this (from the Verizon filing):

Clicking on the ad, the person would receive a web page that looked like this:

Notice how the entire site is "disabled" with the focus on the pop-up that asks for the user's cell phone number in order to access the quotes. What the user doesn't see here is that to get the "Greatest Famous Quotes" they will be charged $9.99 on their cell phone bill, every single month!

It gets even better. To make sure that they don't get caught, if anybody clicked on such ads from a known Verizon IP Address (such as Verizon's auditors who look for MMA Best Practice compliance), the same ad would redirect to somebody else's web site. In the example above, anybody hitting the ad from Verizon would be directed to:

Unbelievable stuff! Verizon claims they ran these campaigns for a ton of different commonly searched terms. "Food network recipe", "funniest jokes ever" and many others. Each resulting site would scam the user into thinking they are signing up for free text messages, not knowing they are really subscribing to a $9.99 monthly plan.

Because the scams are based on a monthly recurring charge, the charges can add up quick. If 1,000 people per day got scammed, that would add up to 30,000 people after 1 month, but the next month, another new set of 30,000 people might be added to the list. After a few years of this and it could add up to millions of dollars every month!

Who is Jason Hope?

Verizon's law suit claims that the mastermind behind the scams is Jason Hope, founder and CEO of Jawa. So who is this guy? A quick Google Search reveals a number of sites that talk about him, including:

• http://www.jasonhope.com/
• http://www.jason-hope.com/
• http://www.jasonhopeaz.com/ (which now redirects to jasonhope.com/philanthropy - see below for the content cache that Google shows for this site)
• http://www.jasonhope.me/
• http://www.jasonhopeGives.com/
• http://www.jasonhopeBlog.com/
• http://www.jasonhopeCures.com/
• http://www.jasonhopeScience.com/
• http://www.jasonhopeSpace.com/

Man, Jason Hope is one hella busy guy! With all his philanthropy work, giving, cures, science and space activities, how does he find time to run Jawa? That is some impressive amount of web sites talking about Jason Hope. What I love about these web sites is that they seem to all have similar content showing what an awesome, amazing guy Jason Hope is. Here is a sampling of the sites:

One thing is for sure. Jason Hope is one passionate dude!

He's not shy about spending money either. This article in the Arizona Foothills Magazine claims that Jason Hope is building a 100,000 sq ft house in Silverleaf, Scottsdale's most elite housing community, making his house the largest home in North America! Complete with indoor basketball court and a 3-story club.

For the Jawa Christmas party, this TMZ article claims that Jason Hope spent $500,000 to fill the place with stars. Remember, Jawa has only a couple of hundred employees. The article claims they spent $100,000 for Ludacris, another $17,500 on Snookie and others.

When I first met Jason Hope and heard about the success of Jawa, I couldn't wait to write an article about Jawa and Jason in the AZ Disruptors blog. I assumed that article would highlight the amazing path that he's taken to build a successful software startup. I assumed he would have tremendous insight and knowledge to share and help others get their companies started. Not for a second did I imagine that I would be writing an article that, if true, might be exposing Jason Hope and Jawa's elaborate scams. A part of me still hopes (no pun intended) that Verizon is wrong; that Jawa is legit; that Jason Hope is the good guy. But the cynical part of me has seen too many Enrons and Bernie Madoffs to think this is all just a misunderstanding.

What a shame! What a douchebag.

Back to work.