The executive of two Florida VoIP wholesale companies was arrested on Thursday for fraud and expected to appear the same day before a federal judge in Miami. The U.S. Attorney for New Jersey is accusing Edwin Andrew Pena, 23, owner of Fortes Telecom Inc. and Miami Tech & Consulting Inc. of hacking into other providers networks, routing his customers calls onto those platforms, then billing those companies and pocketing the proceeds.
U.S. Attorney Christopher J. Christie so far only has named New Jersey-based Net2Phone, now part of IDT Corp., and a New York hedge fund as victims of the scheme. Net2Phone did not return a call for comment.
The federal government also has filed a criminal complaint against Robert Moore of Spokane, Wash., saying he was the professional hacker with whom Pena worked to penetrate the networks. The government said Pena and Moore made it appear that the hedge fund company initiated the calling traffic that ended up on the networks of Net2Phone and other providers. Those providers were billed for the traffic that appeared to come from the hedge fund.
Between November 2004 and May 2006, officials allege, Pena sold more than 10 million minutes of Internet phone service to other telecom providers at what it termed deeply discounted rates. They said Net2Phone was billed for more than 500,000 unauthorized telephone calls that were sold to Penas customers, who were unaware of the plot.
A spokesperson for the U.S. Attorneys office in New Jersey said officials were not discussing how they found out about Penas alleged illegal activity. A federal news release did state that Net2Phone, along with the other unidentified providers, was unable to track the sender of the re-routed calls; that meant the companies could not bill for routing costs that totaled approximately $300,000 per provider.
How It Worked
The federal government said Moore scanned other companies computer networks of other companies, searching for vulnerable network ports to use to route calls. The New Jersey U.S. Attorneys office said it obtained records from AT&T Inc. showing that, between June and October of last year, Moore ran more than 6 million scans for those susceptible ports.
Then, Pena and Moore acquired other wholesalers proprietary codes, which identify and accept authorized calls for routing on their networks. The codes, known as prefixes, are part of the call data that must be transmitted with each VoIP call. Pena allegedly flooded providers with test calls that carried different prefixes. When a proprietary prefix finally matched up with a test call, Pena was able to get into the other networks, according to the government. Once that happened, officials said Pena programmed the networks of companies including Net2Phone to use his prefix to route his customers calls.
In all, the government said Pena racked up more than $1 million, spending the money on real estate, new cars and a 40-foot motor boat. Officials said Pena put all of the illegally obtained property in someone elses name, to avoid being discovered.
Pena is a permanent legal resident of the United States from Venezuela. He is being charged on one count of wire fraud and one count of computer hacking. Wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine. Computer hacking carries a maximum penalty of five years in prison and a $250,000 fine.
Moore confessed to the FBI details about his part in the fraud; he said Pena paid him $20,000 for his work. The federal government did not say whether Moore would get a plea deal.