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Money Laundering Law Report
October 1994 How Cellular Phones Are Used To Commit Money LaunderingBy Roseanna DeMariaThe 1990’s have spawned a new addition to the high-level money launderer’s inventory—the cellular telephone. A cellular phone enables money launderers, as well as other criminal potentates, to conduct their business at all times, in all locations. Their communications typically include: directions to subordinates, coded pager communications, fax communications and wire instructions for fund transfers. While none of this is particularly startling, there is an additional element to the criminal’s cellular telephone usage that renders it worthy of law enforcement attention: cellular telephone fraud. Cellular telephone fraud is the playing field for the 1990’s criminal enterprise. This fraud enables criminal organizations to satisfy their “corporate” need for instant communication through free phone service while concealing the criminal’s identity. The ‘Clone’ PhoneCurrent investigations have shown that “clone” phones are a vital part of the 1990’s criminal entrepreneur’s arsenal. Currently, one of the most ominous trends in narcotics trafficking and money laundering is the “cloning” of cellular telephones. Sophisticated narcotics organizations, particularly the Columbian cartels, have the technological means to read the broadcast signals of cellular telephones in order to identify their mobile identification numbers (i.e. the telephone number) and electronic serial numbers (ESN). These “ESN readers” are typically used by phone bandits alongside main highways and in airport parking lots, where cellular telephones are likely to be in use. Once the necessary numbers have been read, they are then sold to a phone cloner, who programs them into cellular phones owned by or available to the traffickers and their money “mule” for approximately $250 to $300 with a 30-day guarantee. The cloner then has a happy customer, and the criminal has a useful means of communication that is safely insulated from law enforcement. The cloned victim doesn’t feel a thing and is the last to know.The phone cloner is nothing less than the racketeer for the 1990’s. His or her product has no legitimate, legal market, and as such he or she is a service provider to criminal industry. These fraudsters, however, are servicing illicit criminal industries. Investigating cellular fraud will lead to the identification and ultimate eradication of those criminal organizations. Thus, this fraud is worthy of law enforcement attention. Education is necessary to enable law enforcement to utilize this tool effectively. Meaningful state legislation proscribing this fraud is equally necessary to enable productive enforcement efforts. Finally, the continued cooperation of the cellular telephone industry is indispensable to any law enforcement initiative in this area.
Roseanna DeMaria is Corporate Vice President, Risk Management, of Lin Broadcasting, Inc./McCaw Cellular Communications Inc. in Rochelle Park, NJ
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