Resellers of inexpensive cellular phones risk being targeted as terrorists these days, since local and federal law enforcement officials are on the look-out for purchases of large numbers of prepaid cellular phones.
Five men of Middle Eastern descent were recently arrested in Michigan and Ohio on terrorism-related charges after buying hundreds of cell phones-however, they claimed that they were simply trying to purchase phones for resale later. In northern Michigan, three Texas men were arrested after attempting to buy about 80 handsets early in the morning at a 24-hour Wal-Mart store. Police found approximately 1,000 handsets in the men’s van and pictures of the five-mile long Mackinac Bridge that spans the states upper and lower peninsulas. But the men’s families insisted that they were simply in Michigan to buy phones that they planned to resell to a wholesaler in Texas, at a profit of about $5 per device. The men were two brothers in their early 20s and an 18-year-old cousin.
“The cell phones can be used as detonators. Batteries can be disassembled and used to make methamphetamine. Obviously there’s something wrong here,” Caro Police Chief Ben Page told the Associated Press.
While the terrorism charges were discarded, the government did charge the men with conspiracy to defraud customers, TracFone Wireless L.L.C. and Nokia Corp., the maker of the handsets; and with money laundering, due to the possible use of profits from the resale of the phones being used to purchase more.
Meanwhile, in Marietta, Ohio, two 20-year-old men from the Detroit suburb of Dearborn were arrested after police found a dozen cell phones, $11,000 in cash and airplane lists and security checkpoint information in their car. The men admitted having bought roughly 600 phones from southeastern Ohio stores in recent months and selling them in Michigan; defense attorneys said the airport information had been left in the car by a relative who worked at one. Several days later, charges against the men were dropped, with prosecutors acknowledging that they had no proof of a terrorism link.
Most of the phones were from TracFone Wireless Inc. TracFones are of particular interest to law enforcement because the company offers prepaid service via multiple carriers and its phones are considered untraceable.
TracFone officials responded to requests for interviews with a statement that read, in part: “TracFone is aware of instances where individuals are purchasing the lowest-priced TracFone models in bulk, with no intention of activating these handsets with TracFone wireless service, but to remove the TracFone software and resell the altered handsets at a profit. Sales to these individuals cause extensive losses to TracFone, as these handsets are not used with TracFone service and the practice greatly reduces the availability to those customers seeking to purchase and utilize TracFone products.
“TracFone works very closely with our retail and manufacturer partners to enforce limits on the sale of handsets to individuals, and with state and federal law enforcement to stop this practice. We encourage the public to report multiple handset purchases to their local law enforcement.”
The company recently dealt with two cases involving resellers filed in the U.S. District Court in Miami.
According to court documents, TracFone accused Pan Ocean Communications Inc. and its president, Samar Munir, and Vice President Syed Hussain of “purchasing TracFone prepaid wireless telephones from retail stores such as Wal-Mart, Target or Sam’s Club, hacking into and erasing or disabling the TracFone proprietary software that enables customers to access TracFone’s prepaid wireless service, and then reselling the wireless telephones as new for use on other wireless carriers’ networks/systems.”
The company claimed that the practice was “causing TracFone to incur millions of dollars in losses,” since TracFone said it sells its Nokia handsets at a discount and then hopes to recoup the money once the customer activates the phone and begins paying for TracFone minutes.
TracFone had filed a similar suit against Sol Wireless Group Inc., its president, Carlos Pino, and VP Jorge Romero last December. TracFone was awarded a permanent injunction against Pan Ocean earlier this month; Sol Wireless agreed to a settlement last February.
The Associated Press contributed to this report.
