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Dallas FBI Raid About VoIP Scam, Not Wolverine
AT&T and Verizon at heart of FBI's push...
by Karl Bode 10:54AM Tuesday Apr 07 2009 Tipped by djweis See Profile
Last week we noted how an FBI raid on a Dallas data center disrupted business for around fifty companies -- including DSL provider Lighning Bolt Technologies, who told us their users couldn't authenticate with the RADIUS server held at the location. Companies impacted guessed that the raid was because of the Wolverine leak. However, the FBI affidavit (pdf) has since been unsealed, and indicates the raid had to do with a VoIP scam being perpetrated against AT&T and Verizon. The document gets interesting around page 11:
quote:
On or about January 26, 2009, Verizon officials contacted the FBI and reported they were the victims of a fraud for in excess of $1,000,000. Verizon officials advised they believed AT&T had also been victimized by the same fraud for similar losses. During a teleconference between Verizon/AT&T fraud investigators and myself, investigators explained that they believed a group of individuals working together had defrauded them of over 120,000,000 physical connectivity minutes valued at $6,000,00 in a three to four month period and that these individuals had charged their customers $.01 per minute, for a profit of $1,200,000.
At the heart of this scam attempt is a man named Mike Faulkner, who the warrant alleges tried to con both AT&T and Verizon under the umbrella of a number of companies, including an outfit called Premier Voice Inc. and/or Premier VoIP. According to the warrant, the FBI investigators traced the scam to four individuals (listed on pages 20 & 21), one of which (Faulkner) the FBI alleges has a long history of software piracy and scams.

The allegations against Faulkner in the warrant run pretty deep and include spam, software piracy, and similar scams run against XO Communications back in 2005 and 2006. On page 28, the FBI notices that Faulkner's home Verizon connection has outbound traffic five times higher than inbound. Faulkner, who goes by the handle of "CygonX" online, is well-known in VoIP scambuster circles. Google quickly brings up example correspondence between an abrasive Faulkner and annoyed, unpaid companies from last June.

Ultimately, FBI agent Allyn Lynd concludes that Faulkner and others are responsible for bilking AT&T and Verizon out of millions, and that evidence of the activities was suspected at the Dallas data center:
quote:
Based on my training and experience and my discussions with AT&T/Verizon officials, I know that the computer equipment installed by AT&T and Verizon at 2323 Bryan Street, Cabinet 24.02.900, Dallas, Texas, 75201, contains evidentiary information of the fraud, including bandwidth usage. Further, I also believe there is evidence of the fraud on the computer equipment abandoned by Premier Voice at this location, including transactional records which will further detail the fraud involved.
The warrant makes little reference to Matthew Simpson, CEO of Core IP Networks -- who you'll recall last week blogged about the FBI raid at his office. On page 23, the warrant references the use of an informant who claims Faulkner and Simpson met at one of Faulkner's offices, though he doesn't appear directly tied to criminal activity. The tail end of the warrant explores the careful procedures necessary to obtain computer data -- though the multi-day outage suggests the actual FBI acquisition of this data wasn't particularly delicate.

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Transmaster
Don't Blame Me I Voted For Bill and Opus

join:2001-06-20
Cheyenne, WY

3 edits

I am sure Wolverine.....

would have been more then helpful if the FBI had not invaded the place like a bull in a china store. Core IP Networks could have had things setup so the FBI got what they wanted without disrupting the business's this data center serves.
--
I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's.
- Mark Twain in Eruption

insomniac84

join:2002-01-03
Schererville, IN

Re: I am sure Wolverine.....

Wolverine is a movie. I think you mean Matthew Simpson.

Transmaster
Don't Blame Me I Voted For Bill and Opus

join:2001-06-20
Cheyenne, WY

Re: I am sure Wolverine.....

said by insomniac84:

Wolverine is a movie. I think you mean Matthew Simpson.
Thanks for pointing that out. This is what happens when I try writing something before my morning dose of caffeine
--
I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's.
- Mark Twain in Eruption

jester121
Premium
join:2003-08-09
Lake Zurich, IL
I was very confused by that, I thought Wolverine was some sort of Conflickr variant or something. Forgot about the movie...

sivran
Seamonkey's back
Premium
join:2003-09-15
Irving, TX
kudos:1

Re: I am sure Wolverine.....

Ok, now THAT gave me a laugh

jmn1207
Premium
join:2000-07-19
Ashburn, VA
kudos:1

Re: I am sure Matthew.....

said by Transmaster:

would have been more then helpful if the FBI had not invaded the place like a bull in a china store. Core IP Networks could have had things setup so the FBI got what they wanted without disrupting the business's this data center serves.
That is most likely true, however, because an informant mentioned the meeting with Faulkner, it was probably more of a "trust but verify" type of action. In other words, Matt is not a suspect in any criminal activity, but it is a remote possibility, and why give him the opportunity to cover his tracks?

RARPSL

join:1999-12-08
Suffern, NY

Re: I am sure Wolverine.....

said by Transmaster:

would have been more then helpful if the FBI had not invaded the place like a bull in a china store. Core IP Networks could have had things setup so the FBI got what they wanted without disrupting the business's this data center serves.
That assumes that the FBI felt that Simpson was not involved and was an innocent bystander. If he was involved, then asking him to help would be the wrong approach since he could hide or destroy the evidence. While I agree that the FBI screwed up by harming the other companies that were colo'ed there, I can see how they might want to assume the worst possible situation and not involve Simpson in their investigation.
patcat88

join:2002-04-05
Jamaica, NY
kudos:1

Re: I am sure Wolverine.....

said by RARPSL:

That assumes that the FBI felt that Simpson was not involved and was an innocent bystander. If he was involved, then asking him to help would be the wrong approach since he could hide or destroy the evidence. While I agree that the FBI screwed up by harming the other companies that were colo'ed there, I can see how they might want to assume the worst possible situation and not involve Simpson in their investigation.
Lets have a "trusted witness" say you operate a kidney laundering and stealing business. Hooker in Vegas hotel style. FBI will be breaking down your door.

Tomek
Premium
join:2002-01-30
Valley Stream, NY

So who would compensate

genuine companies operating from that datacenter?
They suffered losses, maybe together exceeding that ones from Verizon and ATT.
Should they sue the government?
--
Semper Fi
hottboiinnc
ME

join:2003-10-15
Cleveland, OH

Re: So who would compensate

Normally you can't get anything from the government in the event of a raid or warrant was brought in. Its like if they raid your house and kick your door in, they will not pay for the door. If they take your computers, they do not have to give them back.

The FBI can claim that what they did was required to fully obtain the information they needed for their investigation.
wierdo

join:2001-02-16
Tulsa, OK

Re: So who would compensate

said by hottboiinnc:

Normally you can't get anything from the government in the event of a raid or warrant was brought in. Its like if they raid your house and kick your door in, they will not pay for the door. If they take your computers, they do not have to give them back.
This is only true if you are actually part of the criminal enterprise.

They couldn't, for example, steal my neighbor's computer because they thought I had done something wrong.

Nor can they keep the equipment unless it was actually used in furtherance of a crime.
--
It's wierdo, not weirdo. Yes, I know that's not the 'proper' spelling of the similar english language word.
IanR

join:2001-03-22
Fort Mill, SC
I supect that no judge would have authorized any such "raid", in such a manne,r had he, or she, known that the likely damages or revenue losses to innocent companies would probably exceed the size of the potential original crime being investigated. Those suffering should hire a lawyer to approach said judge and discuss the situation. Perhasps these 2 parties could agree a course of action.
It cannot be that law enforcement can unilaterally create a larger commercial problem than that of the original complaint.

RadioDoc
Premium,ExMod 2000-03
join:2000-05-11
La Grange, IL
kudos:2

Re: So who would compensate

This was a criminal investigation so I'm not sure civil damages are even on the radar.

KrK
Heavy Artillery For The Little Guy
Premium
join:2000-01-17
Tulsa, OK

Re: So who would compensate

said by RadioDoc:

This was a criminal investigation so I'm not sure civil damages are even on the radar.
Valid point... and if they were, they'd say "Take it up with the crooks.... IE the losses from your downtime are their fault."
--
"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini

Krisnatharok
Caveat Emptor
Premium
join:2009-02-11
Earth Orbit
kudos:12
Actually, considering that the judges usually were DAs first, they probably have a pretty good idea of what an FBI raid looks like.

At the end of the day, though, the most admission you will get is that the loss in revenue for other businesses is "regrettable".

It would be like the FBI closing your office's street down because some store across from you is laundering crack. You lost business to their "operational security" (OPSEC). You can't sue against that, assuming due diligence on their part.
rahvin112

join:2002-05-24
Sandy, UT
You don't sue the government. You sue the agent who is named in the warrant for failing to take appropriate precautions to avoid harming innocent people. This is the equivalent of having a bad guy shooting at you and shooting and killing every innocent bystander in between you and the bad guy.

SAL678944

@scar.utoronto.ca

So..

So, whats up with going to Simpson's house and tracking him down like a dog about?

stroonzaa

@bellsouth.com

complexity

This pretty much should demonstrate the complexity of co-locations.

JohnNWPVNJMH
Premium
join:2007-03-26
Berkeley Heights, NJ

2 edits

Internal / External Storage Device

See List of Items to be Searched or Seized part 4 in the warrant PDF.

How is a "Video Display Monitor" a "storage" device?

They FBI may as well just say the truth in such search warrants and say "everything and anything we want to take we will take" otherwise they risk sounding foolish to any technical minded people.

JohnNWPVNJMH
Premium
join:2007-03-26
Berkeley Heights, NJ

Re: Internal / External Storage Device

Wow, after fully reading that warrant over some fresh coffee I can say those guys deserve the chair! I can't believe what a web of deception they ran.

Out of curiosity a whois on one of their fake companies claims that over 300 domains are associated with the email address noc@crydon.net. I suspect there is allot more fraud that will be uncovered.

»whois.domaintools.com/crydontech.net

»whois.domaintools.com/crydon.net