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MCI Accused of Long-Distance Call Accounting Fraud
drcobb writes "According to the New York Times, MCI is under investigation again. This time for spoofing SS7 point codes to avoid paying access tariffs.
Federal prosecutors have opened an investigation in the United States and Canada into accusations that MCI, the nation's second-largest long-distance carrier, defrauded other telephone companies of at least hundreds of millions of dollars over nearly a decade, people involved in the inquiry said."
We are going to have a long inquiery followed by a long drawn out process to get the money out of them if found guilty?
Rus
Cheap UK and US VPS
This is off their web site:
Value. Simplicity. Innovation.
Better:
Slamming. Theives. Liars.
You can't legislate goodness. Let each to his own destiny, by will of his freely made choices.
I can't believe that a conspiracy that large and which touched on interactions with that many other rival carriers could have possibly gone on for a decade unnoticed. Is the biling and routing that automatic or is it just so screwed up that the fraud was lost in the noise?
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
I think it goes without saying that MCI has a terrible history of high level executive decisions to commit fraud, undermine various regulatory agencies and now stealing service from various other carriers. What's of more concern, however, is how many corporations engage in this sort of activity and evade detection.
:-)
On a lighter note, perhaps MCI will change their name again after this is all behind them?
I know this is off topic, but I find it interesting that Slashdot used a Google referer url in it's story. I mean, it's obvious Slashdot isn't Google, and while I'm happy to use the link, I wonder if the NYT will be happy about it, and/or do something about it.. this'll be an interesting one to watch, I guess.
(Maybe Slashdot can become an NYT partner..)
The central element of MCI's scheme, people involved in the inquiry said, consisted of disguising long-distance calls as local calls to avoid paying special access tariffs to local carriers across the country. Those tariffs are the largest single source of MCI's costs for carrying calls and data transmissions.
Accounting? Looks like just lying to me.
Justice Department officials have evidence that MCI may, in effect, have "laundered" calls through small telephone companies, and even redirected domestic calls through Canada, to avoid paying access fees or shift them to rival long-distance carriers, according to people involved in the investigation.
Remember, though, that MCI was Worldcom. (Worldcom changed their name to MCI).
"We were told that Project Invader was an exploitation of a tariff loophole, a trick. We kept the project a secret. The traffic was ramped up slowly to avoid detection."
Seriously, 'Project Invader'? Who comes up with these project names? Are you just asking to be caught?
please.
What does spoofing ss7 point codes have to do with this?
Oh, you can't really spoof ss7 point codes, otherwise the return ( cells? ) have no way of getting back to you, so how do you expect to terminate a call? hmmm?
dumbass.
get some clue before you write about telephony related things.
oh, every facilities-based provider gets around getting billed for access, especially when you're talking about intrastate calls. ILEC will bill you roughly 3.5 cents a minute, new CLECs do the same thing, older CLECs charge more but will have to reduce their access costs.
for interstate calls, you're getting hit for half a cent a minute.
there is a document on this somewhere on the fcc site describing how the rates have to go down, and what the rates have to be for intra/inter state access charges.
get some clue.
How do the honest companies ever stay in business, much less turn a profit?
Even though this suspected fraud happened over a decade, it gets me thinking just how much overhead telephone companies have on their calls, there's probably atleast three layers of cream and one for the actual costs on phonecalls.
So does this make MCI the most successfull hardcore Pheaker in history?
What would ss7 spoofer be called? A plaid box?
(I am not a telecoms specialist, this is second-hand knowledge...)
Most billing systems in telecoms infrastructure work on trust to some extent. That is, billing is based on information such as the originator address, but many telecoms systems do not verify this kind of data except in a limited way.
In a general sense, once you are on a telecoms network, your partners trust you to play fair, but there is not a general paranoia. Historically this was because nationalized telcos had no reason to cheat.
This is a particular headache for SMS operators, since it is relatively easy for fraudulent operators to send SMS traffic with spoofed originating addresses. The traffic is either billed to the wrong parties, or at the wrong rate.
Obviously whenever this kind of fraud gets uncovered, people tighten up their security. But often the cost of doing this is so high that it's a last step, not a first one.
Think of unsecured email and you get a fair analogy.
Perhaps a telco insider has a better view?
Ceci n'est pas une signature
Of all of the telephone companies that have lied to me while trying to sell me service, MCI was the most boldface lier.
I guess It's not surprising that they tried to cheat their competitors too.
We've never had MCI. Once they called, and told me wife that they were going to give us $20 to make up for all of the long distance phone problems we'd been having. When the verifier comes on the line [to verify that we wanted to switch to MCI], just say yes to all the questions.
I avoid MCI and AT&T. They are both liers.
Kevin
This is somewhat off topic, but only somewhat, ...
I want to ditch my local carriers entirely. They are too expensive by far and it's a monopoly I don't like (SBC.)
I want a cell phone as big as a class touchtone phone. Big buttons that my kids can use. A devoted 911 button. Real big phone. Weighs a few pounds. So big that you can't toss a book on top of it. It plugs into the wall for power. It's big and has a the best sound quality. And it has a built-in super duper antenna so that it always has five bars of reception.
Now it would be even better if it could share the same number as half a dozen other cell phones. When one rings, they all ring. It wonderful if I could stick a fax or modem jack into it.
Why can't I get that?
I think this make it official. Working in the telecom industry is now a shameful thing. Kinda like saying you're a used car salesman or something.
If Mr. Edison had thought smarter he wouldn't sweat as much. --Nikola Tesla
You might want to look into getting a cellsocket. It's not exactly what you are asking for, but it's a cradle for your cell phone that charges the battery, provides an external antenna hookup, and plugs into your phone jack. You can then use regular phones in your house, and it will send the call through the cell phone.
Let's hope they don't pull an Enron and start all of the sudden shredding all their old logs.
That is nothing.
I had a friend that worked for a company that did cold calls to retailers to distribute sporting goods.
She was taught the following.
She would be given a lead. The lead would have a contact name, address and telephone number on it.
She would call and say:
"I am calling from such and such. You guys ordered a quantity of sports jersey's from us 2 weeks ago. I am very sorry for how late the delivery is, but we seem to have some confusion with your address."
At which point she repeats the address (intentionally screwing it up) to the hapless employee on the other end of the phone.
While she is at it she also 'double checks' the payment and billing information.
She says 'Thank You' and hangs up the phone.
BLAAAAM now how is that for evil?
Now I used to do something that I don't think is nearly as evil as that. I used to work for a Window manufacturer and installer, Appleby Windows. For the most part they were honest. They didn't do scams like I described.
As a matter of fact I was encouraged to purge the schedules of single owner retired people cause it is just too sleazy to send a rep out to people like that.
My job worked something like this.
I had a territory that I was responsible for, say Allentown Pennsylvania.
I had a number of sales reps in that territory. Each rep was promised to have 1 lead a day M-F and 2 on Saturday. So I needed to supply a total of 7 leads a week for each rep.
Now these reps are pure commision. No sale, no eat. So they took those 7 leads dead serious.
Well anyone that has done this sort of work can tell you that crappy appointments are a real problem. Reps get to houses and they are stood up, a homeowner isn't present, it is a rental.. blah, blah, blah. There are a ton of problems that can make the trip out to the house by the rep a waist of time.
To resolve this problem we would have callers intentionaly overbook the schedules. Then I would call each home and 'confirm' the appointment with the homeowner. I was trained to firm up the appointments and to qualify them. If they passed my approval they got put on the schedule for that night.
Well I was required to have a demo rate of 85%. 85% of all my leads had to be saleable, no they didn't have to sell, but the reason they didn't sell must be on the reps end and not mine.
What this all turns into is that in order to give a rep 7 leads a week I actually have to book like 9 or 10. That way he gets 7 leads in spite of 15% of the ones I supply being crappy.
Sorry this is dragging on, but the evil thing I did wouldn't make any sense unless you understood the motivation for it.
So what happens when none of my leads are crappy and they are all good? We end up standing up good, qualified customers who just might buy our product.
So once I decide that everything is cool and I need to blow off the appointments here is what I did:
'Hello Mr Smith?'
'Yeah this is (insert my name) I am calling from Appleby. I am looking for my rep, Fred Wilson. I apologize for disturbing you during your estimate, but this is something of an emergency.'
At this point Mr. Smith's reaction varies. Some people are confused, others pissed - whatever I didn't care.
I try to say the next bit with a combination of relief, concern and if I can muster it just a little bit of distraction, like I am juggling stuff in an emergency situation.
'Oh dear he isn't there?!?! Ummm... I'll tell you what Mr. Smith this might just be good news.
But I need a favor.
Fred's son was just involved in an automobile accident. Apparently he is hurt pretty bad. Fred's wife is hysterical and trying to contact Fred. Fred carries a cell phone and I bet that she contacted Fred after she contacted me.
I can't blame Fred for standing you up, I think I would have to, all things considered.
But Mr. Smith if you could please promise me that if Fred shows up you will tell him just to contact his
Nothing says "News for Nerds" like "accussed of accounting fraud", this just seems like news for some other site to me...
Onward to the Aether Sphere!
and upper management jailed for 20+ year sentences after corporate misgivings are proven.
Let's face it. We, the working people, have been screwed for years under the "we're doing this for the shareholder" mantra. We've been asked to take pay cuts, work longer shifts, work weekends unpaid. Meanwhile, this is done not for the shareholders, which see no real increase, but for the top executives who use that extra productivity to support their continued bonus plan.
This has always been about bonuses for execs. This story proves that even more.
The only difference between organized crime and corporate America is where they get their suits tailored.
I always thought that the evil greed was with Worldcom, not MCI. From reading the article, it sounds like this started with MCI long before the merger. I was hopeing it was one of the other companies Worldcom of Borg assimilated. Wiltel or MFS or someone else.
Let's face it, fraud is a hard job. It's much easier and more profitable to be honest. It's more expensive to hire the lawyers, accountants and MBAs needed for fraud rather than the engineers, programmers and technicians a company needs to do an honest job.
I understand how this must look to the general public. But I can tell you, if you were in my shoes, you'd do exactly the same. Keeping up with the Joneses in my neigborhood gets very expensive and I've got three kids all looking to go to Ivy League colleges. The bonuses I raked in for this scheme were more than enough to cover this and put a new down payment on a beautiful home in White Plains. What are you doing to ensure your family prospers?
<a href="http://www.joblessjimmy.com">Work is dumb and so is Jobless Jimmy.</a>
The Bush goverment is just persecuting MCI for political reason. Their narrow-minded morale doesn't allow any creative accounting and business methods.
It's time for all accounting nerd to stand up and show their support !
First, we need some "free MCI Worldcom" bumper stickers and t-shirts. This wouldn't of course have any effect on the lawsuit, but we'll feel all great and warm inside.
We might also organize some protests in Washington nobody notices.
And when the MCI management comes out of prison we can all rush to buy their new book "Art of Fraud: Controlling the human element of accounting".
Owner of a Mensa membership card.
A tariff is not a tax. It is a regulated price for a service. In this case, the long distance company pays a few cents a minute to the originating and terminating local carriers for access and use of their networks.
Mea navis aericumbens anguillis abundat
Jusr goes to show what all those phone phreaks from the 1980's did when they grew up. I wonder if Cap'n Crunch works for MCI now.
You are in a maze of twisty little passages, all alike.
Nope, plaid box is taken. A plaid box is a a box for converting ma bell's pulse-phone lines to touch-tone lines.
More boxes than you can shake a handset at.
Forget thrust, drag, lift and weight. Airplanes fly because of money.
Then why did the Bush government GIVE (without competitive bid) MCI/WC an essentially unlimited contract to rebuild Iraq's communication infastructure....
"39cents + 3cents/minute, anywhere in the US to anywhere in the US or western Europa ."
Jesus Christ! Only $0.39 to talk to someone on a Jovian moon? Why hasn't NASA signed up for this?
I guess they make up their money by charging you for the minutes taken up by the light lag.
If any company ever deserved the death penalty, it's this gang of thieves. Do NOT let WorldCom/MCI/UUNet emerge from bankruptcy. Liquidate the company instead.
This article has funny timing for me, since I had just dealt with MCI's fraud protection (I think that's what it was called) department a little under a month ago.
I moved into an apartment after graduation, and tried to get phone service from another phone company, but MCI still had their service on the phone line from the previous tenant. They denied responsibility for the phone line, saying they had cancelled it.
A few long distance phone calls with no one to bill finally got their attention. Idiots....
Having spent US$60 trying to get MCI to shut down a virus infected host that was continually hitting me with multi-hundred kB emails (to no avail), I say, "MCI is in trouble? GOOD!"
The three constituant parts of this hydra (MCI, WCOM, and UUNET) each have a long history of irresponsiblity to the community - an attitude of "Screw you! We are making money any way possible! You No Likee? Suck ME!". UUNET hosting pink contract spammers, MCI screwing other phone companies, the whole WCOM stock deal.
I hope they get nailed. I hope their execs get sent to prison, and through an administrative mistake go to a nice maximum security prison rather than Club Fed, sharing a cell with an AIDS-infected serial sodomist who has nothing better to do than sign up for penis enlargement and Viagra spams. I hope the companies are forced into liquidation. As a resident of Known Space would say, "Break'em up for parts!"
www.eFax.com are spammers
Here is how something like this typically works.
First, how is it supposed to work. SS7 pointcodes are like the IP address of a telephone switch. Messages are routed through an SS7 network that runs between switches to route calls, identify the source and destination information, and generate billing data. There are rather simple ways to conceal the origin of these calls. The ILECs (who own the InterLATA tandems) have gotten their friends, the state PUCs, to continue with quite high orig/term interconnection tarriffs. This is a huge source of revenue for them. The original concept was to pay for the large upfront expenditures to install the interlata tandems with the breakup of AT&T and the entrance of the new (at the time) IXCs. Those switches (and the required capacity upgrades) have been paid for hundreds of times over. When you consider $.05/min long distance and the orig/term fees are $.03-.04/min for both ends you see the IXC isn't exactly making much. Its a little present to the ILECs from the PUCs.
Many companies are doing this today via what is known as the "enhanced service provider exemption". In short, this states that Inter-LATA traffic which is carried across an enhanced services network (VoIP, VoATM, VoFR, etc) is not subject to InterLATA termination fees at the distant end of the call. The rules are pretty vague here and there doesn't appear to be a minimum percentage in the quantity of calls which must be handled by the enhanced services network or a percentage of the overall call distance that must be handled by the enhanced services network. What you get is folks that buy some to handle perhaps a T1s worth of trunks, place them next to each other in the rack, and route a few calls through it within a single office. Under the current rules they now operate an "enhanced services network" and are thus exempt from paying the orig/term InterLATA tarriffs. There is at least one large calling card provider (especially catering to the Hispanic population in the US) that does exactly this. The company then finds a friendly CLEC to allow them to dump their calls into the local network via MF (tone signalled, non-SS7) trunking and the origin of the call will appear to be a local number.
In the old days (pre-1999) there were several companies doing this without bothering to claim the enhanced service provider exemption. I've personally seen companies locate in a CLEC colocation facility and house nothing but a patch panel in a closed cabinet. MF trunks from IXCs (long distance carriers) are brought in on one side, and MF local-access trunks head out the other. This is also known as "dump and term".
When you're MCI (WorldDom) this becomes trivially easy. MCI owns at least 2 CLECs. WorldCom bought Brooks (I ran local operations in 2 cities for Brooks) shortly before the MCI deal. They also bought MFS several years before that. It would be a very simple matter to use an intermediary in each LATA to launder the traffic via MF trunks back into their MFS/Brooks switches and then pass them off to the ILEC (incumbent local exchange carrier) as what appear to be local calls. There isn't any high-tech SS7 munging required here.
This could also be accomplished via some sexy work with SS7 on a switch. It would be like NAT and would rewrite the originating point code and phone number to a local one. The same SS7 hardware would take the messages coming back and rewrite them to go to the proper switch. We do NAT with IP addresses every day. Its not a large stretch to imagine doing it with SS7. I don't see much of a need to though. There are much simpler ways to accompish it.
Hell, if MCI/Worldcom doesn't mind the exposure just run the MF trunks between local and LD switches without the intermediary. It opens up a huge liability hole, but it may have been deemed acceptable.
Unless I am mistaken, MCI Sprint, WorldCom and now MCI have been ripping people off right and left, anyway they could, since the beginning (the 80's I think???). They have always been involved in fraud, who has had their service, carefully checked there bill, and NOT discovered getting overcharged for something. What I find shocking is that there are still people that will willingly do business with these folks.
HenryJamesFeltus.com
1) Inflate earnings
2) Falsify expenses
3) Slam 'n Cram Customers
4) Cheat business partners
5) Profit!!!
Looking back, was the monolithic monopoly of the Bell System REALLY that bad?