Man gets 7 years for forcing modems to call premium numbers

A New Hampshire man who made US$8 million by installing unwanted dial-up software on computers and then forcing them to call expensive premium telephone numbers was handed down an 82-month sentence on Monday.

Prosecutors say that between 2003 and 2007, Asu Pala and others put together a lucrative business by setting up premium telephone numbers in Germany -- similar to the 1-900 numbers used in the U.S. -- and then infecting German PCs with software that would automatically dial the numbers for short periods of time.

"The victims were generally unaware that their computers' telephone modems were calling these numbers and charging them with expenses," the U.S. Department of Justice said in a press release.

These dialers were a major, but largely unreported, problem in Europe in the early part of the last decade. In 2006, two men were given stiff sentences by an Austrian court for running a scam that brought in €12 million ($16.5 million). And while dial-up modem usage has dwindled, shrinking the number of possible victims, this type of software is still in circulation in Europe.

Pala, a Turkish immigrant to the U.S., ran a small Massachusetts Internet service provider called Sakhmet when he was approached by others -- men he believed to be the brains of the operation -- and enticed into building the back-end infrastructure for dialer software that was then downloaded onto the German computers, his lawyer, Geoffrey Nathan, said in an interview Tuesday.

The money was good. Pala was caught after he was flagged by federal authorities after paying cash for his second Lamborghini sports car, Nathan said. By May 2009, Pala had begun cooperating with federal authorities and was training U.S. Federal Bureau of Investigation agents across the country on how the Trojan downloader scam worked. He was also secretly working on a sting, trying to nail the two men who had introduced him to the scam. But they couldn't be enticed into a meeting, and the feds ultimately pulled the plug on the operation.

At his sentencing, Pala was given a break for his cooperation with the government, but had the sting worked, it would have cut years more off his sentence, Nathan said. "The case reflects the pitfalls and the success of a cooperation agreement," he said.

The people Pala had been trying to turn in, however, are still running the scam, Nathan said. "Most regrettably, it turns out that the big fish got away with the crime and they remain in operation."

Pala pleaded guilty to fraud and tax evasion charges in U.S. District Court for the District of Massachusetts in April 2010. In addition to the 82-month sentence, he must pay a $7.9 million fine, along with $2.2 million in back taxes to the U.S. Internal Revenue Service.

Robert McMillan covers computer security and general technology breaking news for The IDG News Service. Follow Robert on Twitter at @bobmcmillan. Robert's e-mail address is robert_mcmillan@idg.com

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