The federal authorities arrested a Miami resident Wednesday in what they said was a hacking scheme involving the resale of Internet telephone service.
The suspect, working with at least one other person, was said to have illegally tapped into the lines of legitimate Internet phone companies, saddling them with the expense of extra traffic, while he collected more than $1 million in connection fees.
The case, one of the first involving Internet phone hacking, illustrates how Internet-based communications may be criminally exploited, and raises fresh questions about the security of phone traffic moving over largely unregulated networks.

Prosecutors said that starting in November 2004, Edwin Andres Pena, 23, a Venezuelan who has permanent residency in the United States and lives in Miami, used two companies that he started to offer wholesale phone connections at discounted rates to small Internet phone companies.

Instead of buying access to other networks to connect his clients’ calls, Pena is said to have worked with other hackers to create “what amounted to ‘free’ routes by surreptitiously hacking into the computer networks” of unwitting Internet phone providers, and then routing his customers’ calls over those providers’ systems, the federal complaint says.

To evade detection, Pena is said to have hacked into computers run by an unsuspecting investment company in Rye Brook, New York, commandeered its unprotected servers, and rerouted his phone traffic through them. These steps made it appear as if that company was sending calls to more than 15 Internet phone companies.

In one three-week period, for instance, prosecutors say that one of the victimized Internet phone providers, based in Newark, New Jersey received about 500,000 calls that were made to look as if they came from the company in Rye Brook. The Newark company was left having to pay $300,000 in connection fees for routing the phone traffic to other carriers, without receiving any revenue for the calls, prosecutors said.
The companies in Newark and Rye Brook and others said to have been victimized were not identified by name in the complaint, which was filed with the United States District Court in Newark.
Pena, the government said, 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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Filed under: Security - @ June 9, 2006 3:15 am