Lies, love affairs and lawsuits: MOD Systems founder Mark Phillips is out of prison and wants a new trial

mod1Mark Phillips is out of prison, and now he’s looking to clear his name. The 38-year-old former CEO of MOD Systems, who was sent to prison in July 2011 on fraud and money laundering charges, is back in court asking a federal judge for a new trial. He’s also filed a fresh lawsuit against a number of players in the MOD case, including the estate of the late Seattle angel investor Bob Arnold. That suit alleges fraud, conspiracy, breach of contract, among other charges.

Representing himself, Phillips submitted a lengthy motion on March 29th in which he claims that key government witnesses repeatedly lied about his role in the scheme.

The motion reads like a steamy crime novel, and the legal salvo marks the latest chapter in one of the more bizarre stories ever to emerge from the Seattle tech community. Phillips writes:

This is a complex, intricate case involving millions of pages of documents and testimony. It has every element of a suspense movie; alleged fraud, an illicit love affair, a con artist, tens of millions of dollars in contracts, and a young, somewhat naïve protagonist. But it is not a movie, it is Mr. Phillips’ life. When only part of the story is told, some of the acts or statements lack context and can be spun to fit any narrative. But Mr. Phillips believes that when all the facts are disclosed, the full context is understood and the “interests of justice” demand a new trial.

So much of the evidence was not introduced at trial, whether because of the sheer size of the documentation, negligence, or malfeasance; is not important. What matters is that the evidence not introduced tells a strikingly different story, one that would alter the outcome in this case. There are several striking reasons that should compel the court to grant a new trial.

Phillips goes on to write that the evidence suggests that “each and every key witness relied upon by the government lied about material facts.”

Much of Phillips’ argument revolves around the role of his former girlfriend and business consultant Jan Wallace, a Canadian resident who he calls an “accomplished con artist.” In his suit, Phillips notes that Wallace “made incalculable misrepresentations and misstatements of material facts.”

Legal documents submitted last month allege that Wallace, who was granted immunity in exchange for her testimony, lied about her father’s death and concocted a “rape for hire” scheme involving her teenage daughter in order to manipulate Phillips.

“Her entire life is a fabrication. No interaction between Ms. Wallace and plaintiff was honest. It is believed that Ms. Wallace, from the inception of their relationship, planned to steal from plaintiff anything of value that she could acquire either by herself or in concert with others.”

Phillips motion goes on to say that Wallace’s testimony “so tainted the trial, so prejudiced the jury, that the verdict cannot stand.”

It’s unclear whether Wallace has yet been served, and we’ve been unable to contact her or her attorneys for the story. Christopher Cavallar Mason, an attorney who is representing the estate of Bob Arnold, attorney Jeffrey Smyth and Arnold’s longtime CPA Julia De Haan, issued this statement to GeekWire.

“The latest allegations are baseless, and will be dismissed,” said Mason. “They are only the latest attempt by Mr. Phillips to blame others for his misconduct. It is unfortunate that he continues to refuse to take personal responsibility for his actions.”

Phillips was released from prison last week, earlier than expected in part because the tech executive successfully reversed the mail fraud charge that he was originally convicted on.

Nonetheless, at the time of his sentencing, U.S. District Judge John Coughenor said that Phillips’ conduct was “deficient, dishonest, imperfect and wrong,” though he also added that the entrepreneur was “no Bernie Madoff.”

MOD Systems, which is no longer in existence, developed digital media kiosk technology for the electronic distribution of movies and TV shows at airports and other retail locations. It was heavily funded, including backing to the tune of $40 million from the likes of Toshiba and NCR, and led by top technology executives in the Seattle area.

Here’s the document in which Phillips requests a new trial.

20130329 Phillips Motion Under Rule 33 (Signed Final) w Exhibit TOC (Conformed) by LEGAL DOCUMENTS

Here’s the suit that Phillips has filed against Bob Arnold, Jan Wallace and others:

Phillips Complaint

The most recent legal salvo by Phillips was filed Tuesday:

Phillipscase Show Temp

  • guest

    Give it a rest Mark. You got caught in your web of lies and took your medicine. Now go find something productive to do with your time. Working in a soup kitchen or homeless shelter might be good for your soul.

    • Jenn

      Guest, if your “opinion” had any weight to it, I’m sure you wouldn’t be so terrified of identifying yourself. Hmm?

  • Ed

    This story may be called “bizarre,” but the reality of people and their attorneys ripping off their partners is quite routine, especially in the high tech start-up world (The Social Network barely scratches the surface.) DeHaan and Smyth attack Phillips in this article and sued him in civil court, That trial is going on right now (anyone know a link?) But, their arguments have been destroyed and they have been made to look foolish.

    • Ed

      PS: Phillips is innocent.

  • Ex-MODer #261

    Mark may have been released early, but not because of the mail fraud reversal. I’ve been tracking his release since his conviction and 3-29-13 was the target for some time (you can track federal inmate release dates online)

    I always find it interesting when people represent themselves – sorry Mark you will never be able to get funding ever again regardless of what happens now. A bit of a shame but you got what was coming to you.

    • “Ex-MOD Board Member #262″

      First, you represent yourself anonymously, coward. Why not use your real name? Second, the documents read like they were prepared by an attorney. (Did you even read anything?) Whether Mark is representing himself or using an attorney, I’m sure it’s strategic. Certainly online, he has a criminal attorney representing him, and several civil attorneys, so your inference about “how interesting when people represent themselves” being broke is not as informed as you may think. Third, Mark has been funded multiple times since leaving MOD, and was the only one responsible for MOD’s funding. The ashes of MOD lay testimony to that. Certainly, someone who posts anonymous worthless comments could never raise a dime for anything, including Saturday night dates….don’t you have anything better to do than to post ignorant comments? “Ex-MODer” #261….(riiiiight).

      • Ex-MODer #261

        Mark’s only chance at earning a living is at the expense of investors which will never happen as long as he’s a felon. Most successful leaders go broke to build their companies so they can reap the rewards later. He got greedy and ruined what could have been a good thing.

        • “Ex-MOD Board Member #262″

          Mark went broke building MOD and then when $35 million was invested in MOD, he was locked out. Did you even read any of the documents above?

          You think HE got greedy? Did you not read that he returned the $1.5 million, loaned MOD another $1 million and was never paid his salary that the MOD Board approved several times? And he has no restitution? Even the Judge found that the 8-9 year sentence that the prosecutors asked for was ridiculous and sentenced him to 4 years.

          And the most obvious question of all, how can Mark be greedy when Arnold and his co-conspirators all attacked Mark, only to squander the $35 million and burn MOD to the ground.

          • Ex-MODer #261

            You obviously think he’s 100% innocent. Who’s the ignorant one now?

          • Chad Rudkin

            He is innocent!

          • Ex-MODer #261

            You might have better results if you click your heels three times when you say it next time.

          • Jenn

            Ha! I can’t take it. This is amusing. Clicking my heels now, like Dorothy. I love that movie. I’m milking your wishful thinking metaphor, wishing you were actually funny, but so far it’s not working.
            Read up before you make yourself look any more foolish. You will not score points anywhere acting like a know it all if you’re this flagrantly ignorant.

        • Mark Clark

          OMG..What? He spent 20k on furniture? what a criminal…so blown out of proportion. Bay is the crook!

    • Jeff

      I don’t understand what you mean about what Mark “got what was coming to [him]?” Can you be specific about what he did? Did he do something to you personally?

    • Kirkland RE

      So you really have had nothing better to do than track Marks release date since 2011?? You must have been a HUGE ASSET to MOD… Get a life..
      Court of Appeals reversed his mail fraud conviction, that’s why he was released early..

    • Josh D. Whit

      I know Mark as a close friend and I’ve read ALL his court documents. Arrogant–yes. Genius–yes. Criminal–no.

    • Mark Clark

      Your a looser and a liar. Your probably Bay. Patience….

  • I can read!

    Chris Mason representing Jeff Smyth? Isn’t he a witness and co-conspirator by stealing Phillips’ brokerage statement and threatening, “Money will make us go away?” That’s what the lawsuit says.

  • Hollywood producer

    “Baseless” says Chris Mason, Exhibit O is Jeff Smyth’s interview with the FBI admitting he stole information? And Exhibit D is Jan Wallace’s tax evasion and money laundering details? When is the movie coming out?

  • Jen

    All I know is that this guy needs to bathe more. He hit on me and my friend
    the other day near Columbia Tower and it was gross.

    • another guest

      Cut him some slack! His prison dates were probably more tolerant of that sort of thing.

      • guest with stupid

        your comment = stupid, your ability to get dates at all = none.

      • Antbot

        She was talking about Smyth. He does have a ratlike odor.

    • Ivory

      Wow, you are so full of it.

    • Alyssa Davis

      I would do Mark, he’s hot, I bet my girlfriends would do a three-way with him too! Mark, call me, I’m at SMG.

      • guest

        Count me in on that party!

      • Hot Love 69

        I want to come!

    • Soap dropper

      Smyth IS stinky! Yes, he will love prison.

    • Red glasses w Sprinkles

      Old man Smyth has hit on me too (He must be approaching 60 years). He thinks he’s all that, and what’s with the loser red glasses with random sprinkles? I hear he has a Ferrari, can anyone say small penis?

    • Red glasses to match Red car

      Old man Smyth has hit on me too. Geez, how old is that guy 60? How can he think that red glasses with weird sprinkles is remotely cool? How hard is he trying? And he told me that he had a Ferrari, like that is going to impress me? All that tells me is that his you know what is tiny.

    • Mark Clark

      You seem to know who he is. Obviously, you have reasons to say stupid stuff. Mark is a well dressed and neat freak…So, your comment is stupid.

  • Duckhorn

    Speaking of flirting, in the lawsuit against Jeff Smyth, p 61, “Over the same period of time, third parties have witnessed Mr. Smyth and Ms. Wallace engaged in a personal flirtatious and drunken relationship, further cementing their conspiracy against plaintiff.” Doesn’t Smyth have offices at Columbia Tower on the 71st Floor?

  • John F

    How is that no one comments on the numerous alaises that Cane and Wallace use and that the lawsuit attaches an IRS form which details their money laundering and tax evasion? How “baseless” is Arnold’s cohorts for partnered with them? Where is Anthony Bay in all this?

  • Mark Clark

    Was Bay arrested today?