AT&T says phone-unlocking scheme cost it $200 million

A Pakistani resident was sentenced to 12 years in prison for a conspiracy to “unblock” phones from the AT&T network, a scheme that the company claims has cost more than $ 200 million.

Muhammad Fahd, 35, of Karachi, recruited an employee at an AT&T call center in Bothell, Washington, via Facebook in 2012 and began bribing that employee and his colleagues to use their credentials to unlock phones.

This enabled the phones to be removed from AT & T’s Dallas network even if customers hadn’t paid for the expensive equipment or their service contracts hadn’t expired. Customers could then buy cheaper services for their phones.

Fahd later had employees install malware on the company network that enabled him to unlock the phones from Pakistan. It persisted even after the company exposed the original plan and laid off two of the workers involved, prosecutors said.

Fahd sold the illegal phone unlocking service through online retailers, bringing in millions. His flamboyant lifestyle included frequent overseas travel, hotel stays for $ 1,000 a night in Dubai, and a watch for $ 30,000. According to the US Attorney’s Office in Seattle, he bragged about hiring British singer-songwriter Jay Sean for his wedding for $ 100,000.

He paid three AT&T employees $ 922,000 from 2012 to 2017 before being arrested in Hong Kong in early 2018. More than 1.9 million phones were unlocked as part of the conspiracy, according to AT & T’s forensic analysis.

The company based its $ 200 million loss only on phones removed from its network before customers paid for them in full – excluding the amount it lost to service contracts. Prosecutors said such losses would have been passed on to consumers and shareholders in the form of higher overall prices.

Extradited to the US in 2019, Fahd pleaded guilty to wire fraud a year ago and was convicted on Thursday.

“This defendant is a modern day cybercriminal who has combined his technological know-how with old-school techniques such as bribery, intimidation and exploitation,” said incumbent US prosecutor Tessa M. Gorman in a press release.

Fahd apologized in a letter to US District Judge Robert Lasnik – but he did not go so far as to help the US government recover ill-gotten assets, prosecutors found. They said Fahd made at least $ 5.3 million due to the limited records they could find.

“Over time, I became obsessed with the money and any thought that I was doing something wrong disappeared,” Fahd wrote. “I didn’t know, but I was on the way to self-destruct. Worse still, my wrongdoing has destroyed the lives of my fellow human beings. “

Lasnik asked him to pay more than $ 200 million in compensation.

Two AT&T employees who played minor roles in the conspiracy were given suspended sentences. Last week, Lasnik sentenced a third, Marc Sapatin, Fahd’s main contact at the company, to 18 months in prison.

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