home *** CD-ROM | disk | FTP | other *** search
- DEATH OF THE BLUE BOX
-
- This article is reprinted from Full Disclosure. Copyright (c) 1991 Full
- Disclosure. Permission granted by publisher to reprint when subscription
- information provided: Full Disclosure, Box 903-R, Libertyville, Illinois
- 60048, Phone: (708) 395-6200, Fax: (708) 395-6022, BBS: (708) 395-3244, Toll
- free: (800) 786-6184. Subscriptions: $18 for 12 issues.
-
- This article will provide an historical review of the problem of ``Blue Box''
- telecommunications fraud. A blue box being the street name of one, of several
- electronic devices designed to allow the user to place free, long distance
- telephone calls. The information presented here consists of excerpts from the
- 1970's National Wiretap Commission Hearings. In some cases, answers that had
- clarifying questions interspersed have been merged together without the
- extraneous questions for clarity and space reasons.
-
- The excerpts from the following witnesses are used here: Neil Beller,
- Division Attorney, Central Telephone Company of Nevada; Michael Simon,
- Special Agent, Federal Bureau of Investigation, Las Vegas; and Karl
- Berolzheimer, Central Telephone Utilities and Utilities Corporation Counsel;
- William Caming, Attorney, American Telephone and Telegraph. Other individuals
- are members of the Commission.
-
- Mr. Feldman: Mr. Beller, would you tell us how many investigations you were
- involved in and the approximate period of time?
-
- Mr. Beller: From April 22, 1973, to October 15 of 1973, we gave approximately
- 32 numbers to the FBI.
-
- Mr. Feldman: . . . What does that indicate?
-
- Mr. Beller: We had reason to believe individuals were using some sort of
- device on their telephones.
-
- Mr. Feldman: Would you state on what basis you had that belief?
-
- Mr. Beller: We have a computer print out, a copy of which I have here, which
- was for selected numbers. These are toll-free network numbers, and studying
- these numbers and ascertaining where the called number was, we had reason to
- believe that the person was using a foreign device.
-
- The reason for that is that some of the numbers that were called were
- numbers, for example, to New York information, or the information office at
- TWA. And it is not logical for a person to talk to TWA for 20 minutes or a
- half-hour.
-
- Based upon that, we would put either a brush recorder or at a later date we
- subsequently acquired another device, which emitted a tape such as this. And
- from that we were able to ascertain that the person was, in fact, using a
- foreign device on the telephone line.
-
- Mr. Feldman: Agent Simon, how many cases ultimately resulted from the
- information provided you?
-
- Mr. Simon: The resulting investigative cases? We had five cases that were
- brought to indictment and subsequent prosecution. We had seven other cases
- that, because of the United States Attorney's position, prosecution was
- declined. And I will give you one specific example, where an individual made
- a blue box which was very unsophisticated in comparison to what Mr. Caming
- showed us. This box was approximately two-and-a-half feet long by two feet
- wide and about 18 inches tall.
-
- This man made it at home from various electronic parts, and his wife used the
- device to call her mother once a week in Miami, Florida.
-
- You have to understand, of course, that we did conduct extensive
- investigation to obtain all the facts we could before we presented them to
- the United States Attorney.
-
- There were other telephone numbers referred to us by Mr. Beller where we
- subsequently obtained affidavits in support of a search warrant and
- subsequent search warrant were executed and we had what is known as a ``dry
- hole.'' The device was not there.
-
- As we progressed with these investigations we became more sophisticated. We
- learn with each one.
-
- Mr. Feldman: If we could concentrate on the successful investigations, I
- believe that information came to you as to the FBI from a number of different
- sources, indicating that various defendants we using electronic toll fraud
- devices. I wonder if I you can state the different ways in which this
- information came to your attention.
-
- Mr. Simon: There were three different ways. Mr. Beller would furnish us with
- a computer tape printout, and after the issuance of a federal grand jury
- subpoena directed to Mr. Beller or his designee, he would furnish us with the
- name and address of the individual.
-
- We would then conduct a physical surveillance to determine if that person
- actually existed. It is always possible to have aliases. We did run into a
- number of instances where an individual who was subscribing to the telephone
- company service was not, in fact, the name that was on that card.
-
- So once we established this, and after obtaining a search warrant, we would
- notify Mr. Beller.
-
- Mr Beller, in turn, would notify one of the technicians who would tell us
- that were was, in fact, a device being utilized on that telephone.
-
- Mr. Simon: The second thing we had was confidential sources of information.
- [these were FBI informants who would provide information that electronic toll
- fraud was occurring just the same as they'd advise of a gambling offense].
- And Mr. Moore was first brought to our attention by a confidential source who
- furnished the information to an agent of the FBI, Mr. J. Lawrence Sullivan.
- Mr. Moore did not have any of these devices even though he was selling them
- in Las Vegas. We were able to pick up Michael Raymond Tullis who was
- subsequently tried and convicted for fraud by wire based on the confidential
- source information.
-
- Mr. Feldman: So you have computer printout information and informant
- information. Was there any other?
-
- Mr. Simon: Yes. On Frank Joseph Masterana -- he had been the subject of a
- number of legal Title III wire interceptions by not only the Law Vegas
- Division, but other Divisions of the FBI. He was at one time in Macon,
- Georgia, for sentencing on one of the gambling cases, at which time
- confidential source information was received that he was using in Macon,
- Georgia, at that time, a blue box to call Las Vegas.
-
- So bearing in mind and having additional information, two of our Las Vegas
- FBI agents, in August of '73, observed Masterana in an open pay telephone
- booth making a telephone call with what appeared to be a blue box. But they
- couldn't get close enough because he was quite surveillance conscious.
-
- Based up on that and subsequent investigations, we were able to assume that
- he was using a blue box, but we couldn't put it all together factually.
-
- In conjunction with advice furnished by Strike Force Attorney James Buff, who
- is assigned to the Las Vegas & California, Strike Force Office, we together
- with the telephone company, worked out a program whereby if we were able to
- come up with the various telephones that Masterana was using to make these
- alleged calls, Mr. Duff would give us authority to make an immediate arrest,
- providing the telephone company could verify the fact that Masterana was
- using an electronic device or a blue box.
-
- Mr. Simon: These were pay telephone booths. What was required was to send
- agents out in the field and survey Masterana on a continuous basis to find
- out what telephone exchanges he was using.
-
- After several days' work we were able to determine he was using three or four
- different exchanges. He was very careful. He would use an open pay phone in a
- drug store, for example, that was inside of the drug store, where he could
- view the exterior entrances into the drug store, watching for agents. And
- because of the size of the city of Las Vegas, it didn't take him very long to
- find out who we were. So it was difficult to surveil him.
-
- [Description of methods by phone company to verify use of toll fraud devices
- ommitted]
-
- Mr. Feldman: Mr. Beller, once you had verified to your own satisfaction,
- using the electronic equipment, that, in fact, electronic toll fraud was
- committed on the lines, what did you do?
-
- Mr. Beller: Concurrent with the subpoena from the FBI, we'd typically put on
- the recorder that particular individual's line. At that point in time, Mr.
- Simon would hand carry over a subpoena for any and all information that we
- would have relating to toll fraud. He would ask for the subscriber
- information card which denotes the name of the particular person who has the
- line, any other information that we might have, which would then be the paper
- tape.
-
- Mr Feldman: Agent Simon, I wonder if you could indicate what your next step
- was once you had received the information Mr. Beller has described.
-
- Mr. Simon: Once we received the information, again our investigative process
- was to verify the fact and physically observe the home or apartment to see
- that we had everything correct and based upon that information, I would take
- the information furnished by Mr. Beller on the 800 number, the toll free
- number, and I would call it that day or the next day to verify the fact that
- it was a toll free number to a particular place. In some instances that
- number was no longer actually working, but the person utilizing the blue box
- would get into the toll free telephone line system and use that number to get
- into it.
-
- Then I would take that information and prepare an affidavit in support of a
- search warrant. This affidavit was then brought before the U.S. Magistrate
- who reviewed it, and through the normal process a search warrant was issued.
-
- Then I would return to my office and contact Mr. Beller and tell him we had a
- search warrant at that time.
-
- The next step was that whomever Mr. Beller would designate -- one of their
- electronic experts -- would call me and say they had information that this
- particular time an electronic device was being used on this telephone.
-
- Mr. Feldman: Was that information gathered by continued use of the TTS-176
- (pen register)?
-
- Mr. Beller: Yes.
-
- Mr. Simon: This may have taken two days to prepare. Then there would be
- agents in the field and I'd notify them by radio. They had the search
- warrant, plus inventories in their possession, and they'd go in the house
- with a lawful search warrant and execute it.
-
- Mr. Feldman: And this was the same general procedure used in each of the
- cases?
-
- Mr. Simon: With the exception of the Masterana case. In the Masterana case
- the Central Telephone Company was able to put on the device after we had
- surveyed the phone he had used. If we could tell what exchange Masterana was
- using, the telephone company would put on their TTS-176 and be able within
- ten minutes to tell us whether he was using an electronic device, the
- possession of which was not in violation of the law so he had to be using it.
- And as a result, we arrested Masterana in a telephone booth specifically on
- October 15, 1973, in a public pay telephone booth, at which time he had two
- blue boxes in his possession, the one he was using, together with voluminous
- gambling records, and $18,836.53 was confiscated.
-
- Mr. Feldman: In the other four cases, when you executed the search warrant,
- who did you find in the premises and did you find a blue box in each house?
-
- Mr. Simon: Yes, in each case. In the Judith Dinah Douglas case, two blue
- boxes were found when the search warrant was executed. As a result of this,
- she, Douglas, was tried by stipulation of facts and found guilty. She was
- sentenced to serve five years in custody of the Attorney General of the
- United States on July 2, 1974, provided she'd submit to psychiatric
- examination, and come back within 90 days for resentencing.
-
- Subsequently, her case was appealed to the Ninth Circuit on two separate
- occasions. The Ninth Circuit upheld the conviction. She has not to my
- knowledge begun serving her sentence, nor is she though with her legal
- recourse. Apparently she is going to appeal again.
-
- On the Michael Raymond Tullis case, upon execution of the search warrants
- based upon confidential source information, we did find one device in his
- apartment, and this case when to jury trial.
-
- He subsequently appeared on March 15, 1974, with counsel in Las Vegas and was
- sentenced to five years in the custody of the Attorney General, with the
- first 90 days to be served in custody, and the balance of the sentence was
- suspended and he was placed on probation for the additional period.
-
- In the Frank Victor Scaramuzzo case, with a valid search warrant we recovered
- a blue box and went to trial. He was found guilty on March 28, 1974, by the
- jury. On May 10, 1974, the United States District Judge in Las Vegas
- suspended the sentence and placed him on three years' probation.
-
- At this time, he also ordered that Moore make restitution to the Central
- Telephone Company.
-
- He filed a notice of appeal to the Ninth Circuit and the Ninth Circuit upheld
- the conviction.
-
- The last matter was David Louis Goldberg and H. Jordan Rabstein. In this
- particular matter, in the fall of 1973, we had a court authorized wire
- interception on Mr. Goldberg's residence phones. During that period of time,
- while we were monitoring and recording, we found on a repetitive basis that
- Rabstein would attempt to use the blue box or the electronic device to
- circumvent the telephone toll call recording equipment. It was a
- sophisticated type of blue box, slightly larger than the one Mr. Caming
- presented.
-
- We heard him on numerous occasions make mistakes and because of the slowness
- with which he had to manipulate the call numbers, it apparently would not
- work successfully. Once in a while he'd complete a call and be completely
- elated. Mr. Goldberg, on the other hand, was much more efficient.
-
- Subsequently, Mr. Beller came to us with computer tape printouts, and we went
- through our normal process of obtaining an affidavit in support of a search
- warrant and subsequently a search warrant and executing the same, at which
- time we found the blue box in his residence, next to his night stand, which
- he had access to -- his wife would, too, but he was the one who normally used
- it. Also also we were able to seize three illegal, unregistered firearms that
- he had in the apartment.
-
- Mr. Goldberg, subsequently, together with Mr. Rabstein and with counsel, were
- charged with violation of the Title 18 Sections 1084 and 1343 of the United
- States Code. And they appeared and entered a plea of guilty.
-
- They were subsequently sentenced on August 18, 1974, at which time Goldberg
- was sentenced to one year in custody of the Attorney General of the United
- States for violation of Section 1343, and Goldberg was placed on one year
- probation for violation of Title 18, Section 1084, both sentences to run
- consecutively.
-
- Mr. Feldman: Agent Simon, you have already indicated that Section 1343 does
- not specifically prohibit the possession of blue boxes.
-
- Mr. Simon: To my knowledge, the manufacture or possession.
-
- Mr. Feldman: And in all cases, expect the Masterana case, I assume, you
- arrived there sometime after the call had been concluded?
-
- Mr. Simon: It was circumstantial.
-
- Mr Feldman: That is my point. The evidence on which convictions were
- subsequently obtained was circumstantial.
-
- Mr. Simon: That is right.
-
- Mr. Feldman: I wonder if you can describe the type of circumstantial evidence
- that was used in these cases?
-
- Mr. Simon: We had the computer print out and the TTS-176 tapes -- not only
- that was previously given to us but that day, of the time, the Central
- Telephone Company had the TTS-176 installed on that phone or particular
- phones. That became part of the evidence we presented. Plus the fact that
- these people were the only ones in the apartment when the search warrant was
- executed helped us, of course.
-
- In one instance, in the Scaramuzzo case, he called his attorney in the
- presence of Special Agent John Kinsinger -- and I am going to paraphrase what
- Scaramuzzo said. He said, ``They caught me with one of them things,'' or
- ``They caught me with one of them boxes and I was using it.''
-
- What he was saying is he had just set it down when the agents entered the
- room. And he set it down to answer the door and the phone was off the hook.
- We were able to introduce this and it was very strong
-
- Mr Feldman: And that was the basis on which convictions were obtained?
-
- Mr. Simon: That is correct.
-
- Mr. Berolzheimer: I want to make clear that Central Telephone Company,
- although it operates in nine states, has only had experience with this
- problem is Las Vegas. We only have experience in one area. You will notice
- from the material we have submitted to the Commission it all occurred during
- a relatively short period of time in 1973. It deals with one community, Las
- Vegas, which has relatively compact and flat geography with wide streets and
- low buildings.
-
- It also happens to be the center of legalized gambling which also attracts a
- certain amount of illegal gambling and transmission of gambling information.
-
- So we have in Las Vegas a combination of unique circumstances, in including
- its geography, its size, the interest of both the FBI and the prosecuting
- agency; I think also the existence of a grand jury and the ability of the FBI
- to obtain search warrants.
-
- We also had cooperation between the telephone company and the FBI, as has
- been described by the witnesses, with surveillance and radio control, so that
- they could swoop in and get the blue box.
-
- I don't know, because we don't have the experience, but I certainly can
- conceive it would be most difficult to obtain that kind of evidence in a
- major metropolitan area. I just don't think you could coordinate it that
- well. Your ease of movement wouldn't be the same. Your distances would be
- greater; you'd have different kinds of courts.
-
- And I'm not convinced, although we were successful -- that is the United
- States Attorney was successful -- in securing convictions in these six cases,
- without positive identification of the user, I don't know that the evidence
- would be convincing in every court. It had not become a critical issue in the
- cases tried in Las Vegas, but I can conceive of a court taking the position
- that without voice identification of the user a conviction could not be
- obtained.
-
- Mr. Westin: . . . Do you believe these techniques would not be feasible in a
- large metropolitan center or under conditions that vary from the Las Vegas
- one?
-
- Mr. Simon: I think all of the comments were very valid. Because of the fact
- that I spent ten years in Chicago, I can only express an opinion, but I can't
- conceive of this working in an apartment complex, a high rise, third floor
- walk up. I think it would be almost impossible. If the technology was
- available we might be able to proceed, but I do not think we could enter the
- residence within from one to five minutes after the telephone company says
- ``The electronic device is being used right know by an unknown party in
- Apartment no. so and so.''
-
- I think it would be almost impossible to have the physical surveillance work
- because of the largeness of the metropolitan area. I think it would be almost
- impossible to surmount. I just don't know how it could be done.
-
- Mr Hodson: . . . does Bell also use the system we have just heard about?
-
- Mr. Caming: First, I might like to say, Mr. Hudson, I am in general agreement
- with everything said by Mr. Simon and the gentlemen from Central Telephone.
- In fact, we agree completely. And we have found in a number of cases where
- we, too, have been fortunate because of proximity and circumstances in the
- thousand or so cases we have been involved in in the last decade, if we could
- catch them using it or in circumstances very close to that, as Mr. Simon so
- ably described in one or two of the cases, then we either would obtain a plea
- of guilty or they would be found guilty.
-
- But we have found in the majority of our cases, and those that are the
- greatest problem to the industry as a whole, that we have not been able to
- have such a happy admixture of factual circumstances. And let me give you
- three cases just as an example of what we have been through.
-
- Problems of identification have been very great. We had one recently that we
- received invaluable help from law enforcement authorities on. And I might
- generally say that over the years, in many areas, not not only electronic
- fraud, the cooperation of the Bureau has been consistently outstanding. And I
- think it is worthy to express what is a personal feeling but a tribute to
- their industry and dedication. As far as one case, it is a case that might be
- denominated -- the Bremson Case -- only because he was one of the original
- architects. Since time is of the essence, I will quickly synopsis it. It
- involved the general cooperation of 14 Bell Telephone companies and two
- General Telephone companies between December 1971 and September 1972.
-
- I will just name the cities that were principal cities: Minneapolis,
- Cleveland, Houston, Dallas, Los Angeles, Santa Monica, Atlanta, Washington,
- DC, Chicago, Detroit, Des Monies, Memphis, St Paul, Miami, New York, Denver,
- Knoxville, New Orleans, Milwaukee -- among others.
-
- We finally resulted in gathering evidence -- as you can see, this was a very
- widespread conspiracy of manufacturers, nationwide distributors, and users
- such as businessmen. The purpose was to not only very substantially
- manufacture and distribute blue boxes, but to use them in an extensive number
- of businesses where you might have offices populated by a large number of
- people, and where it was virtually impossible to maintain surveillance of any
- intimate character.
-
- Also, these people used them at homes scattered throughout a large area.
-
- It finally resulted in 20 arrests, 19 indictments, at least 14 convictions --
- a number of investigations are still going on.
-
- In another case, to show you how cogent the problem is, financier Bernard
- Kornfeld was involved. He apparently had a home with I understand was huge,
- something like 90-odd rooms, in the California area. There was a large number
- of people, both male and female, constantly in and out of there. There were
- indications from various sources of some use by somebody of blue boxes in
- some parts of this rather cavernous place.
-
- Finally, it resulted in apprehension by chance of one of the secretaries
- using the blue box, and she was arrested on January 28 of 1975. The question
- of identification could not have been made except for the very limited voice
- recording.
-
- It ultimately resulted in the seizure of two boxes. And even with all that,
- it took six months more to develop the case, to indict Mr. Kornfled on June
- 5, 1975, by a federal grand jury in Los Angeles, some six months later, for
- making 344 calls to Europe over a period of time.
-
- The witnesses at offered a solution to the problem. The following is the
- statute they proposed:
-
- ``Fraudulent Communication Devices.<R> ``(a) Whoever willfully<R> ``(1) sends
- through the mail, or sends or carries in interstate or foreign commerce,
- or<R> ``(2) imports or otherwise brings into the United States or any
- territory or possession under its control or jurisdiction, or<R> ``(3) makes,
- assembles or possesses, or<R> ``(4) sells, gives or otherwise transfers to
- another, or<R> ``(5) offers, or places in any newspaper, magazine, handbill
- or other publication any advertisement, to sell, give or otherwise transfer
- to another, or<R> ``(6) purchases or in any other manner obtains, receives or
- conceals,<R> ``any electronic, mechanical or other device, instrument,
- apparatus or equipment or plans, specifications, instructions or other
- information for making, assembling or using any such device, instrument,
- apparatus or other equipment, or publishing any such plans, specifications,
- instructions or other information,<R> ``with intent to use it, or knowing or
- having reason to know that it is intended to be used or that its design
- renders it primarily useful, to obtain any communication service from a
- communication common carrier,<R> ``by rearranging, tampering with, or making
- any unauthorized connection, whether physically, electronically,
- acoustically, inductively, or otherwise to, any telephone instrument,
- equipment or facility of any such communication common carrier, to avoid the
- payment, in whole or in part, of the lawful charge for such communication
- service, or to from any such communication common carrier or from any lawful
- authority the existence or place of origin or termination of any
- communication,<R> ``or by using any communication service knowing or having
- reason to know that such rearrangement, tampering or connection existed at
- the time of use,<R> ``shall be fined not more than $1,000 or imprisoned not
- more than five years or both.
-
- The first amendment aspects of this statute were brought up, but due to a
- lack of time were not addressed in any detail. The whole problem of this type
- of fraud and statutes to deal with it became moot when industry step in and
- plugged the technological holes. In a February 1990 article in SECURITY
- MANAGEMENT in discussing the problem, aptly noted that ``[i]t took a series
- of innovative technological developments by the Bell System to defeat them.''
-
- Today, the attempts to solve the unauthorized access of computers and current
- day telecommunication fraud parallel the blue box situation. They will be
- equally ineffective.
-
- Even a statutory change to reduce the burden on law enforcement agencies
- would have still necessitated an on going investigation, prosecution and
- incarceration program sufficient to deal with many thousands of individuals
- using toll fraud devices. Nonetheless, there still exists today a periodical
- based in blue box technology and mentality. It is called 2600.
-
- The above is reprinted from Full Disclosure Newspaper. Subscribe today and
- get interesting articles like the above, plus more... pictures, graphics,
- advertisement, and more articles. Full Disclosure is your source for
- information on the leading edge of surveillance technology. Print the
- following form, or supply the information on a plain piece of paper:
-
- ----
-
- Please start my subscription to Full Disclosure for:
-
- [ ] Sample issue, $2.00
-
- [ ] 12 issue subscription, $18.00
-
- [ ] 24 issue subscription, $29.95
- With 24 issue susbcription include free one of the following:
- [ ] Directory of Electronic Surveillance Equipment Suppliers
- [ ] Citizen's Guide on How to Use the Freedom of Info/Privacy Acts
- [ ] Maximizing PC Performance
-
- Also available separately:
-
- [ ] Directory of Electronic Surveillance Equipment Suppliers, $6.00
-
- [ ] Citizen's Guide on How to Use the Freedom of Info/Privacy Acts, $5.00
-
- [ ] Maximizing PC Performance, $6.00
-
- Illinois residences, add 6.5% sales tax on above 3 items.
-
- Enclosed is payment in the form of:
-
- [ ] Check/Money order, [ ] Visa, [ ] Mastercard
-
- Card no:___________________________________ Exp date:_______
-
- Signature:__________________________________________________
-
- Phone:______________________________________________________
- (required for credit card orders)
-
- My name/address:
-
- Name:_______________________________________________________
-
- Street:_____________________________________________________
-
- City/State/Zip:_____________________________________________
-
- Return to: Full Disclosure, Box 903, Libertyville, Illinois 60048
-
-
-
-
-