Thursday, June 8, 2006

Latest Telephone Scam: Selling Someone Else's VOIP Calls

I won't pretend that I have any more than the faintest idea how Voice Over Internet Protocol (VOIP) telephone service works, or why Vonage's IPO has done so poorly.  But anything that involves the internet as a key component means that it is possible to engage in fraudulent conduct.  The U.S. Attorney's Office for the District of New Jersey arrested the owner of two Miami-based companies on a criminal complaint (here) charging wire and computer fraud for selling deep-discounted VOIP calling plans to businesses by having a hacker route the calls through another company that had to pay the freight for over 500,000 calls made through its network.  A press release (here) issued by the USAO states:

A Miami man who purported to be a legitimate wholesaler of Internet-based phone services was arrested today for allegedly running a sophisticated fraud, by secretly hacking into the computer networks of unsuspecting Voice Over Internet Protocol (VOIP) telephone service providers, including one Newark-based company, to route his customers’ calls . . .

Through his scheme, defendant Edwin Andres Pena, is alleged to have sold more than 10 million minutes of Internet phone service to telecom businesses at deeply discounted rates. The victimized Newark-based company, which transmits VOIP services for other telecom businesses, was billed for more than 500,000 unauthorized telephone calls routed through its calling network that were “sold” to the defendant’s unwitting customers at those deeply discounted rates, according to a criminal Complaint unsealed with Pena’s arrest . . .

As a result of not having to pay the Newark-based company or other actual VOIP providers, revenues for Pena’s telecom companies – Fortes Telecom, Inc. and Miami Tech & Consulting, Inc. – were virtually all profit. The Complaint states that law enforcement was able to identify more than $1 million he received from his telecom business customers that were directed into various bank accounts connected to Pena.

To disguise the money obtained from the hacking scheme, Pena purchased real estate, new cars, and a 40-foot motor boat, and put all of that property except for one car in the name of another individual identified in the complaint only as A.G.

A separate criminal complaint (here) was filed against Robert Moore for his role as the computer hacker who obtained access to the network of another provider that permitted Pena to sell the VOIP plans without having to pay for the calls. (ph)

Computer Crime, Fraud | Permalink

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