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Hacker Resells VOIP For Profit 155

Posted by Zonk from the lots-and-lots-of-profit dept.
uncleO writes "The New York Times tells the story of today's arrest of Edwin Andres Pena, 23, who 'hacked into computers run by an unsuspecting investment company in Rye Brook, N.Y., commandeered its unprotected servers, and re-routed his phone traffic through them,' then 'used more than $1 million he received from his customers to go on a spending spree, buying real estate in south Florida, a 40-foot Sea Ray Mercruiser motor boat, and luxury cars including a BMW and a Cadillac Escalade.'"
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Hacker Resells VOIP For Profit More

Hacker Resells VOIP For Profit

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  • Ha! (Score:2, Insightful)

    by Scott Lockwood ( 218839 ) *
    Too bad he wasn't smart enough to put it away in the Cayman Islands or a Swiss account!

    • Re:Ha! (Score:4, Insightful)

      by RickPartin ( 892479 ) * on Wednesday June 07, 2006 @04:45PM (#15490485) Homepage
      I wonder if moving the money offshore would have been more obvious. These days moving large sums of money around is monitored very closely due to terrorism concerns. Unless you know what you're doing, the government is going to be asking some questions.
      • True. But considering that he was caught, I don't think it would have been much more of a flag raising than he already did. Hell, at least that doesn't have a picture identified w/ it, like posting his picture on the internet did (with his cars).

      • Re:Ha! (Score:3, Insightful)

        by geekoid ( 135745 )
        Get a swiss acount, move mney from your business on a regular basis. Assuming his clients were paying per month, it would look like a legitimate regular transaction. Point in fact it would be a legitimate transaction.

        • Re:Ha! (Score:4, Informative)

          by ottothecow ( 600101 ) on Wednesday June 07, 2006 @08:16PM (#15491556) Homepage
          Except that you cant get numbered swiss bank accounts anymore.

        • Howto: Launder Money (Score:4, Interesting)

          by hughk ( 248126 ) on Thursday June 08, 2006 @03:13AM (#15493025) Journal
          Washing cash is hard, but once in the banking system, life becomes a little easier. The challenge is just to show that you are not linked to the money and it shouldn't be taxable.

          First you set up an offshore legal entity. It should raise the invoices and receive the payments. There should be no visible link between the entity and you and the entity should not be registered/domiciled in a country of increased risk for money laundering.

          Forget Swiss accounts, they are passe and the numbered accounts (anonymous) are no more. Useful for avoiding a bit of income tax but that is about it. Even then, if you are high-profile (i.e., involved in illegal activities), the Swiss won't want your money.

          Even a lesser known friend, Austria is trying to phase out the bearer savings-accounts, i.e., he who has the savings-book has account access, without giving a name.

          Lichtenstein is slightly more positive but even there beneficiaries aren't totally anonymous. The Caribbean is definitely out because even if you find a neutral risk country there, the transactions are watched closely because of drugs. Forget shell-banks, they aren't considered acceptable at all.

          Although the money involved with financing 9/11 was minuscule, this has been used as an excuse to force through anti-money-laundering legislation so large cash transactions and international payments are monitored closely. If you are in the US or the UK, it is quite hard now but not totally impossible. The easiest is to live outside either country if you want to enjoy your criminal gains.

          Note anyone taking the above seriously must remember that you can launder money and get away with it, but you may find the places that will take you are not the places you want to live!!!!

      • ...which is one reason couriers exist.
    • WHO CARES...... VOIP is the devil, I had one but then I had an anureism in my left temporal lobe that exploded and blew out my eyeball causing me to stumble and fall down some stairs and cracked open my leg and got gangrene and then had ot have it amputated below the knee. So now I am known as the anti-VOIP pirate. when the going gets weird, the weird turn pro - figure it out
    • As the saying goes, this is one in a million. And sadly, I suspect that it is. There are plenty of people who bright enough to move the money to places that are off limits.

    • He obviously wasn't too smart (Score:5, Insightful)

      by the_mighty_$ ( 726261 ) on Wednesday June 07, 2006 @05:21PM (#15490708)

      TFA says that his operation cost the real VOIP guys about $300,000. He received $1,000,000 in revenue. If he had just done the same thing, but legitimately, there would have been $600,000 profit. If he had only does things the right way....

      Crime can pay--for a short while. But real innovation and hard work can *really* pay, and you don't have to be looking over your back the whole time.

      • But real innovation and hard work can *really* pay, and you don't have to be looking over your back the whole time.

        Except when some patent company exercises their patent for "Electron to Sound" patent, and licenses you right out of business.

        I'd say the number of looking over your back is about even between legitimate and crime.
      • They claim it cost them $300,000. I doubt they were adding additional hardware to meet capacity because he was using their systems. More likely this number is mostly bullshit, and takes into account time spent dealing with it once it was discovered, and bandwidth bills. Your theory also neglects to take into account the startup cost of building a business like that, overhead, et cetera. It's a lot easier to be profitable when someone else is paying the bills, and has already built the infrastructure.

      • Re:He obviously wasn't too smart (Score:5, Informative)

        by Clod9 ( 665325 ) on Wednesday June 07, 2006 @06:14PM (#15491003) Journal
        The way I read it, 15 companies had to foot real bills from real companies, and the largest of these 15 bills was $300,000. The other companies all paid less, but the total may have been up to (or even more than) $1 million.
        (Oops, I went and read the article before posting again. Silly me.)

    • Re:Ha! (Score:2, Funny)

      by mikalveli ( 978602 )
      Too bad he wasn't smart enough to put it away in the Cayman Islands or a Swiss account!

      He should have gotten a Nigerian Prince to find someone that can help him hide the money. That's what I would have done.

  • Hero or Bad guy? (Score:5, Funny)

    by jaymzter ( 452402 ) on Wednesday June 07, 2006 @04:42PM (#15490465) Homepage
    I'm never gonna get used to VOIP. Caffineated bacon? Baconated grapefruit? ADMIRAL Crunch?

    Here's reference [wikipedia.org] for you young whipper snappers

  • The real crime... (Score:5, Funny)

    by gnomeza ( 649598 ) on Wednesday June 07, 2006 @04:44PM (#15490480) Homepage
    in this story is that he went and bought a Cadillac...
  • Yeah, like buying all those luxury items was most definately not a red flag that something was up. He should have high-tailed it out of the country while he had the chance but he got greedy and decided to live it up. Hope he enjoys absolute poverty in his jail cell.

  • Bad Taste (Score:5, Funny)

    by ewhac ( 5844 ) on Wednesday June 07, 2006 @04:51PM (#15490530) Homepage Journal
    ...used more than $1 million he received from his customers to go on a spending spree, buying real estate in south Florida, a 40-foot Sea Ray Mercruiser motor boat, and luxury cars including a BMW and a Cadillac Escalade. [emphasis mine]

    Why is it that most thieves have no taste? The BMW is okay, but most of that is tacky sh*t you could win on The Price is Right.

    Schwab
    Elitist Scum

    • Bad taste and no brains. If the real estate was in Mexico, he'd be free, happy and rich now.
    • I'm no expert on these matters, but if I'm not mistaken Florida state laws work differently with respect to seizing property to retire debts (i.e., it's harder than in most places). This means that he may be able to hang on to some or all of his stuff, and if he gets a decent lawyer he can be out of jail in a year or two. Then he can sell off his assets and take it easy, at least for a little while. If you throw in opportunities working as a security/network engineer for VOIP companies (or anyone, really

    • More importantly, how did he get all that with just $1m?!

  • If you can't trust the internet why do you have to trust voip? yeah its cheaper but its definitely not as safe for investors.

  • Bet he was NOT... (Score:5, Funny)

    by Linker3000 ( 626634 ) on Wednesday June 07, 2006 @04:52PM (#15490543) Journal
    ...allowed one phone call when arrested!!

  • Hmmm... (Score:2, Funny)

    by Davus ( 905996 )
    This article sounds like a HOWTO! -click-
    • I wonder how much money he would of made doing this legitimately? 90% of the footwork must of been getting customers....
    • $Id: crime-gc-howto.html, v 1.38 2006/03/17 22:52:50 johnh Exp $

      HOWTO: Make a million dollars illegally and go straight the fuck to jail

      ------

      (Stop reading here. The joke's over, and I'm not Ferris Buehller.)

  • Why was he arrested? (Score:4, Funny)

    by CatWrangler ( 622292 ) on Wednesday June 07, 2006 @04:54PM (#15490557) Journal
    If he was in the Government, he would have gotten a medal of freedom, and a nice no-bid contract after this was done.

  • Scam Artist Beware! (Score:5, Interesting)

    by crazyjeremy ( 857410 ) * on Wednesday June 07, 2006 @04:55PM (#15490561) Homepage Journal
    When will they learn? If you ever find a get rich quick scheme that ACTUALLY WORKS and makes you millions you should spend it slowly. Don't go for the Escalade and McLaren. Don't buy a home on the coast of Florida. Do learn about banks in Switzerland.
    • When will they learn?
      Thing is, you only hear about the ones who don't. I'm sure this sort of thing happens all the time--it's just that the smart ones don't get caught.
    • Ahah, then move to Egypt where you could live very happily for a whole lifetime on a million dollars with nothing but verbal contracts with Arabic farmers to track where it's all going.

      A million dollars is great, but in most of the western world you can spend it too quickly (you should talk to Jennifer Lopez' accountant I'm sure he'll give you a few spending tips).
    • Actually, buying the Florida home may be a smart idea. Florida's homestead laws are especially generous, so an expensive home is a good way to shelter your assets.
    • Yes, do learn about banks in Switzerland, which haven't hidden money in more than a decade. Also, learn about selecting to whom to listen carefully.
  • 1: Set up VoIP web site

    2: Get customers to pay for VoIP

    3: Connect customers at someone else's expense.

    4: Profit$$$$

    Sounds like a clever business model to me.
    • I don't get it... An ISP in France, called "Free" (sic) http://free.fr/ [free.fr] offers for 30 euros/month Internet (DSL 20mb/sec), TV (80 channels including HD TV and VoD) and phone (local, national and international (US fix/mobile, China, UK, etc.) for free/unlimited). Why people still pays for phone calls ?!?
      • That sort of thing isn't particularly available in the US, and the majority of the offerings (that I'm aware of) are from 2nd Tier companies that very few Americans seem willing to give business to.

        They'd rather pay Comcast, Verizon, at&t, etc for that service (which most of them do NOT currently offer in most of their markets, if at all). We also seem to be more fond of dropping landlines for cellphones, too ;)

  • Toll fraud (Score:5, Interesting)

    by porkThreeWays ( 895269 ) on Wednesday June 07, 2006 @05:00PM (#15490597)
    I used to work in the VoIP business writing software a few years ago. There's A LOT of illegal activity that goes on. Much more than you think. Espically in wholesale. These guys do this stuff all the time. I guess the real story is that it happened in the US. Mostly it happens outside of the US. But trust me, it happens all the time. The shitty thing is, you have to pay for minutes you were ripped off. It's one of the few businesses that you can have stolen more than you have. If I have a warehouse ripped off, I am only out the equipment in that warehouse. With tollfraud, I can be out 300,000 dollars more than my whole business is worth.

    It's bound to happen. A lot of these guys just buy a cheap-o softswitch and throw it in a noc. Some of them do their billing in MS Access.
    • hahahaha VOIP = high-tech MS Access = low-tech *confused*

    • Re:Toll fraud (Score:4, Insightful)

      by IntelliTubbie ( 29947 ) on Wednesday June 07, 2006 @05:40PM (#15490835)
      The shitty thing is, you have to pay for minutes you were ripped off. It's one of the few businesses that you can have stolen more than you have. If I have a warehouse ripped off, I am only out the equipment in that warehouse. With tollfraud, I can be out 300,000 dollars more than my whole business is worth.

      Actually, you can lose more than you're worth whenever you buy something on credit -- this isn't unique to VOIP at all. Monthly billing, essentially, lets you buy minutes on credit until you have to repay your debt at the end of the month. Suppose you ran a retail store and bought your inventory on credit, expecting to pay for it with the revenue from selling the inventory. If your store gets robbed, you're in the same boat -- you owe money that you don't have. (Or suppose you run a restaurant, and your fridge breaks down, spoiling all the food that you bought on credit ...)

      The problem is obviously solved if you already own all your inventory, in which case you can only lose what you've already paid for. With VOIP, the same would be true if you pre-paid for your minutes.

      Cheers,
      IT
      • In either case, you just hope your insurance company can sort things out quickly enough for your debtors.

        Yep, insurance. Businesses have it to.
        If you have a good policy (meaning you aren't a cheapskate) you'll be fine.
      • This can happen with leased equipment too. Lease agreements for anything substantial will typically require insurance, though.

  • To the rest of us pulling the same scheme. (Score:5, Funny)

    by ptelligence ( 685287 ) on Wednesday June 07, 2006 @05:03PM (#15490615)
    Disconnect! Disconnect! The Gig is up!
  • How could you expect to get away with this? Like a little bandwith here and a little there is not going to show up on someone's radar...
  • Jeez, what an idiot. All he had to do to stay out of trouble was to split all the traffic off to the NSA so they could eavesdrop on it all. They'd have leaned on the FBI to keep him out of the lockup. Probably would've gotten a medal from W even...
  • Why is it that so many corrupt enterprises are based in Florida? Everytime you hear about something like this some or all of the people involved are in Florida.

  • Shouldn't the title really say (Score:3, Funny)

    by OYAHHH ( 322809 ) * on Wednesday June 07, 2006 @05:21PM (#15490711)
    Hacker Resells VOIP For "Fun" and Profit

  • Uggghhhh (Score:1, Redundant)

    by commo1 ( 709770 )
    A Caddilac.

    A Caddilac Escalade.

    Has the man no taste?

  • I live in Rye Brook. That is some weird stuff right there.

  • The Real Hero (Score:3, Interesting)

    by Frightening ( 976489 ) on Wednesday June 07, 2006 @05:26PM (#15490743) Homepage
    in this little tale is man by the name of Robert Moore(RTFA), who did all the hacking.

    But in order to do this, new accounts with the SIP registrar servers had to be created, so how the hell did those go undetected? Also, there seems to be a misunderstanding about the Invesment company. In the end you HAVE to have real IPs even if you use proxy servers because that's how you communicate.

    I dont think it's possible to use port forwarding with current protocols. Or am I wrong?
  • Come on, this is America.. They're not gonna saw your hands off here, all right? The worst thing they'd ever do is to put you for a couple of months into a white-collar minimum security resort! Shit, we should be so lucky! Do you know they have conjugal visits there?
    • Conjugal!? We're talking about a hacker, remember?
    • There is an excellent chance that something much much worse than time in a country club prison is going to happen to this guy.

      From the article:
      Prosecutors say that starting in November 2004, the man arrested in Miami -- Edwin Andres Pena, 23, a Venezuelan who has permanent residency in the United States -- used two companies he created to offer wholesale phone connections at discounted rates to small Internet phone companies.

      Actually, he stands almost a 100% chance of losing his permanent residency and be
    • I think he's going to be sent to the Pound-me-in-the-ass Federal Prision.
  • Greed is what gets criminals. Ego makes them believe they can't be caught.

  • Gen Y (Score:5, Funny)

    by rijrunner ( 263757 ) on Wednesday June 07, 2006 @06:01PM (#15490944)

    Well.. I, for one, never really bought into the myth that kids today are unmotivated. It is good to see someone with ambition and drive. I am, like many others, sadly noting the use he put his money to.

    Dude, its not Swiss bank accounts or the Cayman Islands. Its Vegas Baby.. Alcohol, women, drugs, gambling... In my day, we did not give a damn about the future as we knew we could always steal more. They can take your possessions away, but never your memories. In my day, we created companies that sold nothing and listed money invested by venture capitalists as "sales" and gave ourselves huge bonuses.. This plan would have really worked, if you have followed the 1990's model and not actually provided any services...

    On the serious side tho.. Doesn't this raise some fundamental questions about VOIP security? If I am reading this correctly, they did not hack the VOIP software itself, but a computer on which they resided, then ran the software normally. That opens a lot of systems worldwide to this sort of scheme.

  • Odd with whom the sympathies rest (Score:5, Insightful)

    by k1980pc ( 942645 ) on Wednesday June 07, 2006 @06:04PM (#15490954)
    Majority of the comments here tells what-he-should-have-done-to-not=get-caught. He is a cheat, he got caught. Serves him right. And with the amount he would have siphoned off, there will be enogh lawyers with snake oil to let him out. I do not think he need any sympathies and advice from /. crowd
    • I do not think he need any sympathies and advice from /. crowd

      This is slashdot - we love giving advice (on anything to anyone). Here is my advice for the hacker: A minimum security prison is no picnic. - The trick is: kick someone's ass the first day or become someone's bitch. Then everything will be all right.
    • Sure, he deserved getting caught. But it's just disappointing that a guy that has enough brains to earn $1M that way didn't have enough to just vanish and live quietly in another country before the police came looking.

      It's quite amazing what people manage to pull off sometimes, like this: http://www.wired.com/news/business/1,52114-0.html [wired.com]

      It's like the plot from a bank robbery movie! Thieves get in, steal traffic control equipment, then happily *eat and smoke* in the place, and drive away without hurry as the
      • But it's just disappointing that a guy that has enough brains to earn $1M that way didn't have enough to just vanish and live quietly in another country before the police came looking.

        That's because people that pull that kind of stuff are narcissistic and sociopathic. They think they'll never get caught because they're "too clever." It has nothing to do with brains and everything to do with pathology. The people who think like you do are the kind of people who wouldn't do it in the first place.

    • Majority of the comments here tells what-he-should-have-done-to-not=get-caught.

      It's a technical discussion of flaws in the system. Not sympathy.

      When /.ers discuss flaws in IE, it's not because they're trying to help crackers.
  • Sea Ray makes boats that people who know nothing about boats buy.

    Key Features

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    Full-beam master stateroom aft with elongated windowsport and starboard.

    Standard three staterooms.

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  • Kids these days (Score:3, Funny)

    by StikyPad ( 445176 ) on Wednesday June 07, 2006 @09:43PM (#15491965) Homepage
    In my day, we resold VOIP for fun. The profit was just a nice side benefit.

  • Hacker or cracker? (Score:1, Insightful)

    by iamdead ( 964713 )
    When do people realize that they are commonly using word "hacker". In this case cracker should be used instead!!!
    • Welcome to 1993. The people you're pretending to be one of moved on long before you ever learned the word. As a general rule of thumb, try to get angry about things you're not an obvious outsider to.
  • Someone who illicitly breaks into computer systems is a "cracker", not a "hacker". (Haven't we spent the last twenty years trying to explain that to the suits? If Slashdot can't get it right....)

    Someone who sells stolen property is a "fence", not a "reseller".

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