Alleged Hacking-Terror Effort Thwarted - WSJ.com

Alleged Hacking-Terror Effort Thwarted - WSJ.com

U.S. and Italian authorities said Friday they arrested a group of hackers and conspirators who allegedly stole from phone companies around the world. The illegal profits funded terrorist activities, Italian officials alleged.



A federal grand jury in New Jersey indicted three people Friday, including one man who has been linked to al Qaeda. The three suspects, who live in the Philippines, are accused of providing Pakistani nationals in Italy with access to stolen phone lines.

The same company that was used to pay the three hackers also financed the communications of terrorists in last year's Mumbai attacks, in which a small group killed more than 170 people, people familiar with the matter alleged.

Meanwhile, Italian officials arrested five Pakistani nationals Friday in an early-morning raid on 10 call centers suspected of involvement in the alleged scheme. Among those arrested were a husband-and-wife team who managed call centers in Brescia, Italy -- Mohammad Zamir, 40 years old, and Shabina Kanwal, 38.

Call centers -- storefronts providing local and long-distance phone service to the public -- are used widely throughout Italy.

The Pakistani conspirators allegedly sold phone service from phone lines that were hacked into and used the funds to support terrorist activities, according to Italian authorities.

According to the U.S. indictment, Mahmoud Nusier, 40; Paul Michael Kwan, 27; and Nancy Gomez, 24, conspired to break into the phone systems at 2,500 entities in the U.S., Canada, Australia and Europe.

Philippines authorities have alleged that Mr. Nusier, a Jordanian citizen, has ties to al Qaeda. All three were arrested last year by Philippines law enforcement and are currently free on bail. U.S. officials are seeking their extradition, said people familiar with the matter. The three couldn't be located for comment.

The hacked entities included the U.S. Federal Emergency Management Agency, whose phone system was breached last August, according to a person familiar with the matter. A FEMA spokeswoman declined to comment.

The hackers would probe an organization's electronic phone networks to find unused or insufficiently password-protected phone lines and reprogram them to provide remote access to their counterparts in Italy, according to the indictment.

They would then sell the phone service through call centers and via phone cards, pocketing the profit, according to the U.S. indictment and documents from the Italian inquiry.

Many of the phone calls were made over lines owned by AT&T Corp. While AT&T was not hacked, the 12 million minutes of stolen phone service are valued at $55 million, according to the indictment. AT&T cooperated with the investigation.

"We work with law enforcement authorities all over the world on a regular basis to help ensure that our customers' interests are protected, and we are doing so in this case," said AT&T spokesman Fletcher Cook.

The case shows that hacking is no longer the province of teenagers or even organized crime, said Erez Liebermann, the assistant U.S. attorney who is prosecuting the case. "With the connections outlined in the Italian and Philippines side, we have now moved into the realm of hacking as a financing mechanism for terrorism," he said in an interview. He credited cooperation between authorities in the U.S., Italy and the Philippines in bringing the case.

Payments to the hackers -- about $100 a hack -- were funneled through the Madina Trading Co., which provided wire transfers via U.S.-based money-transfer services, according to the indictment.

Madina is owned by one of the call-center operators in the alleged conspiracy, according to the indictment. Last year, terrorism investigators traced payments made through Madina to Internet-based phone accounts used by the Mumbai attackers to make calls to their handlers.

According to documents released by Italian authorities, the bulk of the telephone traffic routed through the hacked lines was destined for Saudi Arabia, Pakistan, Afghanistan, Egypt and India.