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Friday, May 24, 2024 | Back issues
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$250 Million Phone Cloning Scam Alleged

WHITE PLAINS, N.Y. (CN) - Federal prosecutors charged 12 people Wednesday, and arrested five, in what the U.S. attorney called a $250 million cell phone cloning scheme.

"The defendants' sophisticated cell phone cloning operation allegedly stole information from the cell phone accounts of tens of thousands of people and used this information to run a lucrative black market in international calling," U.S. Attorney Preet Bharara said in a statement announcing the indictment.

The conspirators used confidential customer information from at least two cell phone service providers to clone customers' cell phones, prosecutors said. The ring then emailed the phone numbers and codes to each other and used them to reprogram new cell phones, which would appear on the companies' networks as legitimate customers.

The ring attached "hundreds of the cell phone clones to computers and used them to place international calls to Cuba, Jamaica, and other countries with high calling rates," using Voice Over Internet Protocol hardware, to make the calls on the Internet, prosecutors said.

The ring profited by charging bargain rates for the calls, prosecutors said: for instance, 50 cents a minute for calls to Cuba and 14 cents a minute for calls to Haiti, while the cell phone companies were charging $2.10 a minute to call Cuba and $1.96 per minute for calls to Haiti.

"Certain co-conspirators would receiver payments for these black market calls from a Chinese telecommunications company. [Defendant Juegers] Veloz, after being found in a Reading, Pennsylvania residence that contained VoIP hardware, stated that a Chinese national sent him computer equipment and modems and paid him to keep the Internet and cell phones running," according to the U.S. attorney's statement.

Charged were Miguel Jesurum, Saul Perez, Juegers Veloz, Sayra Velas, Ruben Dario Vasquez, Moises Rone, Victor Manuel Leon Duran, Ariel de los Santos, Carlos Rafael Jesurun Tejada, Rosmil Roda, Joshua Payne and Raul Silverio. Seven of them are still at large.

Nine other members of the ring were arrested previously and all pleaded guilty. Four of them have been sentenced to terms of a year and a day to 5 years in federal prison.

The 12 new defendants are each charged with conspiracy to commit wire fraud, which is punishable by up to 20 years in federal prison, and aggravated identity theft, punishable by a mandatory minimum of 2 years, which must be served consecutively with other counts, the U.S. Attorney's Office said.

Bharara said the investigation is not over.

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