Published: Wed, August 07, 2019
Markets | By Otis Pena

AT&T says it lost $5 million a year from illegal unlocking scheme

AT&T says it lost $5 million a year from illegal unlocking scheme

The Justice Department says the US has extradited a Pakistani man from Hong Kong and accused him of bribing AT&T employees to unlock more than 2 million cellphones.

Court documents describe how Fahd several years ago recruited and paid AT&T insiders to use their computer credentials and access to disable AT&T's proprietary locking software that prevented ineligible phones from being removed from AT&T's network.

Muhammad Fahd, who has been extradited to the US from Hong Kong, allegedly paid as much as $420,000 to individual AT&T call center staff to unlock devices tied to the carrier's network.

The Pakistani man was arrested in Hong Kong in February 2018, however, he was only extradited to the United States on August 2, 2019.

The charges against Fahd are: conspiracy to commit wire fraud, conspiracy to violate the Travel Act and the Computer Fraud and Abuse Act, four counts of wire fraud, two counts of accessing a protected computer in furtherance of fraud, two counts of intentional damage to a protected computer, and four counts of violating the Travel Act.

The scheme had Fahd contacting insiders at AT&T via telephone, Facebook and other channels offering to pay them to unlock cell phones.

Court documents revealed that three former AT&T employees pleaded guilty to being part of the scheme and are cooperating with the government.

Fahd instructed employees to get burner phones and emails to communicate with him and to create shell companies to receive payments, the Department of Justice said.

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According to the indictment, a Pakistani man named Muhamad Fahd paid call center employees to install malware and hardware devices that gave him access to AT&T's internal computers. Most of Fahd's insiders were either fired or left the company. He used a number of front companies to make the payments.

If a phone is unlocked, it can be used on other carriers, not just AT&T.

It's not clear exactly how the baddies profited from unlocking all these phones but a couple of methods are suggested. A co-conspirator, Ghulam Jiwani, who allegedly gathered the IMEI numbers and paid the bribes, is believed to have died in the years since the alleged fraud occurred.

"This defendant thought he could safely run his bribery and hacking scheme from overseas, making millions of dollars while he induced young workers to choose greed over ethical conduct", said U.S. Attorney Brian T. Moran of the Western District of Washington.

"Now he will be held accountable for the fraud and the lives he has derailed".

At first, FAHD allegedly would send the employees batches of worldwide mobile equipment identity (IMEI) numbers for cell phones that were not eligible to be removed from AT&T's network.

"We have been working closely with law enforcement since this scheme was uncovered to bring these criminals to justice and are pleased with these developments", AT&T said in a statement. Fahd, Jiwani, and others allegedly "bribed insiders to plant malware on AT&T's internal protected computers for the goal of gathering confidential and proprietary information on how AT&T's computer network and software applications functioned".

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