SCOTTSDALE, Ariz. - Text messages are at the center of a federal lawsuit filed by Verizon Wireless.
The suit claims Jawa, a Scottsdale-based company that creates cell phone applications, was involved in a “complex scam” to defraud Verizon customers by cramming fees onto phone bills.
Among Verizon's allegations, whether consumers were made aware they would be charged as much as $10 per month for premium text message services, receiving things like recipes, jokes, and video game codes.
“It's disgusting,” Hamid Shojaee said.
Shojaee is in the software development industry.
Just last month, he and Jawa owner Jason Hope, were mentioned in Scottsdale Mayor Jim Lane's ‘State of the City’ address.
In the speech, Mayor Lane bragged about both of the budding businesses, and how Jawa quadrupled their workforce in 2010, growing from 50 to 200 employees.
“And they plan to double that next year,” Mayor Lane continued in the speech.
But the lawsuit, since filed by Verizon, questions how the company, and its owner Jason Hope, became so successful.
Hope frequently makes headlines for his lavish lifestyle including his half-million dollar party where he flew in Ludacris and Snooki.
He's also building a 100,000 square foot home in north Scottsdale, complete with zip lines, a three-story night club and the first residential I-max theater.
“When your company comes under scrutiny, this type of scrutiny, a lot of people say this guy has padded his pockets off consumers, unsuspecting consumers,” 3 On Your Side Carey Pena said.
“The allegations are completely baseless,” Hope replied.
Hope, who sat down with 3 On Your Side, said this lawsuit is not about protecting consumers.
He said it's about Verizon making more money, potentially hundreds of millions of dollars.
Getting back to that text message Verizon presents as evidence, Hope said they have manufactured evidence in the case.
Hope maintains consumers can clearly see what they're signing up for with these text messages.
While this high-rolling CEO didn't want to answer questions about his lifestyle, he claims the way he's making the money is legit.
“Right now,” he continued, “the last thing on my mind is my lifestyle. The allegations being made are serious and we are doing everything we can to get these dismissed.”
A Verizon spokesperson said the company isn’t sure how many of its 95 million customers were charged $9.99 a month for the text messages, but they've set up a system to offer refunds.
Jason Hope says his company is also offering refunds.
To find out if you’re a victim of cramming, check your cell phone bill and if you see any charges you didn’t authorize, contact your carrier immediately.
The Verizon lawsuit isn't the only trouble for Jason Hope and his company.
The Texas Attorney General's Office has also filed a lawsuit, centering around claims that Jawa sent text messages offering their services and consumers have to text back to opt out.
Hope denies these allegations as well and said he plans to fight both lawsuits.
UPDATE: AT&T SUSPENDS JAWA FROM NETWORK
One of the nation's largest phone companies, AT&T, has suspended text "shortcodes" used by Jawa on its network, AT&T spokesperson Marty Richter said. The move temporarily stops Jawa from making money off its premium text messaging services on AT&T.
Richter says AT&T has hired a thirdy party company to investigate Jawa for cyber fraud, and that Jawa is cooperating. He did not know how long the investigation would take.
3 On Your Side will continue to follow this story.