Man Pleads Guilty in a Scam Charging Unwitting Customers for Premium Phone Calls

ID THREATPOST:42EA26C89907E2B00F6A70452DD03A0F
Type threatpost
Reporter Brian Donohue
Modified 2013-04-17T20:09:07


UPDATED: A New Hampshire man has pleaded guilty in Federal Court to charges of conspiracy to commit computer fraud and failure to file income taxes stemming from a scam forcing telephone modems to call premium service numbers without their owner’s consent.

Thirty seven year-old Asu Pala of Hudson, New Hampshire, admitted to orchestrating a scheme from 2003-2007 that defrauded victims, mostly in Europe, of millions of dollars in fraudulent phone charges, according to court documents.

Pala, who has a history of domestic violence, gambling, and substance abuse, admitted to writing, testing and installing computer programs that caused computer owners’ telephone modems to call premium telephone numbers, also leased by Pala, without those individuals’ knowledge. Pala and his associates netted an estimated $7.9m from the scam, according to a report filed at the United States District Court of Massachusetts. Also, Pala was convicted of failure to file an income tax for revenue stemming from this fraud and any other income he may have accrued from 2003-2007.

According to Pala’s Lawyer, Geoffrey Nathan, authorities began investigating Pala’s finances after he repeatedly purchased Lamborginis with cash.

According to the terms of a plea agreement, Pala will serve a 82 month term of imprisonment followed by 36 months of supervised release. He must forfeit any property derived from the scam and pay a restitution of $2.3 million in back taxes to the IRS and a $15,000 fine.

Authorities still do not know the exact number of victims of Pala’s crimes, which targeted victims outside the U.S. However, they speculate that there must have been very many victims in order that Pala’s fraud went unnoticed with enough people to accumulate nearly $8 million.

Premium number scams are common in the cybercriminal underworld. So-called ‘SMS Trojans’ have been found in the wild and are increasinlgy common in Russia, Eastern Europe and China. One recent piece of malware that runs on the Android mobile OS and make money for their creators by secretly sending SMS text messages to premium numbers.

An earlier version of this story was published claiming Pala would serve 92 months, which was based on court documents. Geoffrey Nathan then informed Threatpost that Pala’s sentence was lessened by 10 months for cooperating during the investigation.