6 ms·

Former Owner of T-Mobile Store Guilty of $25M Scheme to Unlock Cellphones

49 points by commoner 4y ago

markdown 4y ago
lol, madness that phones can be "locked" to a network.
- curiousgal 4y ago
  How do you expect them to get people to pay for their phones then? Edit: judging by the downvotes people seem unaware that phones are unlocked once their monthly plan is paid. I'm perplexed as to how you think it's okay for you to get a phone for like 8 bucks and then move to a different carrier without paying the rest.
  - LadyCailin 4y ago
    With money, but not through coercion and anti-competitive lock in.
    - ars 4y ago
      That's how T-Mobile does it - unlike other companies, once you pay off the phone your bill goes down. It's literally a monthly payment plan for a phone, and they lock it until you pay it in full. I see nothing bad about this at all. It's not like in the past where they lock your phone forever - with T-Mobile as soon as you fully pay for it they unlock it.
      - markdown 4y ago
        Imagine if your car dealer could restrict which roads you could drive on until you paid it off. Or if Best Buy restricted your internet usage to a limited number of websites until you paid it off.
  - sensitivefrost 4y ago
    The same way it works in other countries? lol
    - lotsofpulp 4y ago
      Which is the same way it works in the US.
  - worewood 4y ago
    I know, it may sound ridiculous but what about charging customers the _actual_ price of the phone? Or, maybe, give a discount contractually bound to staying with the operator for a fixed amount of time instead of locking the phone forever? It may sound outrageous but what about providing quality service so that customers willingly stay with the operator instead of keeping them hostages?
    - ars 4y ago
      See my other posts - that is basically what T-Mobile does! The take the price of the phone, divide it into 12, add that to your monthly bill until you pay it off, and unlock it when you are done with the payments.
    - PragmaticPulp 4y ago
      > I know, it may sound ridiculous but what about charging customers the _actual_ price of the phone? You can! Nothing stopping you from buying, say, the latest iPhone at retail price without the postpaid subsidies. The law also requires that carriers unlock any locked phones after the postpaid contract period is up (if customer actually paid it off): https://www.fcc.gov/general/cell-phone-unlocking https://www.fcc.gov/general/cell-phone-unlocking If you're suggesting that we restrict rights to optionally buy/sell subsidized phones and pay them off over a 12-month period, I can't get behind that. Let the people choose which financial model they want. No need to restrict postpaid programs just because people don't like the idea of locking during payback periods.
      - bena 4y ago
        Yeah, I buy all my phones unlocked from the get go. It's really no hassle at all.
    - lotsofpulp 4y ago
      >I know, it may sound ridiculous but what about charging customers the _actual_ price of the phone? It does not sound ridiculous, because unlocked phones have been available for purchase at full price for over a decade in the US, and longer in most other countries. No one has been forced to enter into a contract with a mobile network that stipulates their phone be locked to the network for a long, long time.
  - heywoodlh 4y ago
    Sincere question: is this a suggestion that locking phones to networks ensures users pay off their devices? In my mind, you could still allow people to purchase and pay off hardware while allowing them to be on a separate phone plan. I.E. buy my phone with a hardware payment plan from T-Mobile but use Verizon -- but incentivize users to be on T-Mobile's network because you get better payment options/perks. But even in asking that it kind of highlights that their money probably comes from locking people into their network rather than selling hardware... EDIT: T-Mobile is also probably the perfect example because their network coverage sucks in comparison to Verizon -- at least where I have lived. They probably lock their phones because nobody would use their network (again, at least where I live).
    - throwaway742 4y ago
      They would just stop paying T-Mobile for the hardware and use the phone on Verizon.
      - heywoodlh 4y ago
        I feel that this is how it should work in the US but it doesn't. And I think it's because of my realization at the end of my comment: they probably don't make as much money on hardware compared to strong-arming users into remaining on their network.
  - markdown 4y ago
    > How do you expect them to get people to pay for their phones then? They can pay for the phones up front like almost everywhere else in the world, or they can pay for it in instalments like buying a freezer or car. What has network service got to do with the price of the phone itself?
- PragmaticPulp 4y ago
  FYI, in the United States carriers are required to unlock phones after contract periods are up, or after 1-year for subsidized prepaid phones: https://www.fcc.gov/general/cell-phone-unlocking https://www.fcc.gov/general/cell-phone-unlocking It's been like this since 2014. I actually wonder how many of the people using this guy's service simply didn't know that they could get their phones unlocked for free from the carrier (assuming they were actually paying their bills for their postpaid subsidized locked phone).
  - u801e 4y ago
    The fact that carriers are still selling locked phones is really strange. Imagine if Verizon, Comcast, or Cox sold locked Dell or Lenovo laptops at a discount and only allowed you to connect to the internet using their ISP service.
    - Cerium 4y ago
      They probably would try if they didn't already have monopolies on most markets they operate in.
ed25519FUUU 4y ago
At first I thought maybe he helped facilitate SIM card transfers used in 2FA hijacking, but this guy was just unlocking phones so they could be used on other networks. What a stupid thing cell phone locking is. Good job FBI doing nothing but carrying water for large corporations against users.
- vorpalhex 4y ago
  Hacking and phishing t-mobile employees and using those credentials to sell unlocks to the tune of millions is.. actually pretty bad, yeah. That was probably the right for the FBI to stop.
  - LadyCailin 4y ago
    If only the FTC and/or Congress went after these anti consumer practices with the same vigor.
    - ars 4y ago
      There is nothing anti consumer about a monthly payment plan for a phone. You are probably thinking of years ago where they would lock the phone, even if you paid for it. That's not the case with T-Mobile - as soon as the phone was paid off your monthly bill goes down (since you have finished the monthly payments), and they unlock it.
      - harry8 4y ago
        you know what, if the phone isn't paid off they can repo the thing. The end. Locking to a network is not justified for that or any other reason.
        acchow 4y ago
        Disagree. A used car might recover much of its value if repossessed, but not a used phone
curiousgal 4y ago
Imagine making 25 million dollars illegally and using it to buy real estate in the US. I would be on an island in the middle of nowhere.
PragmaticPulp 4y ago
So after T-Mobile first caught on and terminated his contract, he switching to phishing credentials away from T-Mobile employees: > To gain unauthorized access to T-Mobile’s protected internal computers, Khudaverdyan obtained T-Mobile employees’ credentials through various dishonest means, including sending phishing emails that appeared to be legitimate T-Mobile correspondence, and socially engineering the T-Mobile IT Help Desk. Khudaverdyan used the fraudulent emails to trick T-Mobile employees to log in with their employee credentials so he could harvest the employees’ information and fraudulently unlock the phones. > Working with others in overseas call centers, Khudaverdyan also received T‑Mobile employee credentials which he then used to access T-Mobile systems to target higher-level employees by harvesting those employees’ personal identifying information and calling the T-Mobile IT Help Desk to reset the employees’ company passwords, giving him unauthorized access to the T-Mobile systems which allowed him to unlock and unblock cellphones. Does anyone know how much he was selling unlocks for? I'm shocked that he brought in $25 million doing this. The Wayback machine shows that one of his website also advertised AT&T and Sprint unlocks: https://web.archive.org/web/20171203060414/http://www.unlocks247.com/ https://web.archive.org/web/20171203060414/http://www.unlock... I'm assuming he was also phishing those employees, but they just haven't sued him yet. EDIT: There's a lot of misinformation about unlocking in this thread. US carriers have been required to provide unlocking services for phones since 2014 after the 1-year payback period is up ( https://www.fcc.gov/general/cell-phone-unlocking#:~:text=Carriers%2C%20upon%20request%2C%20will%20unlock%20mobile%20wireless%20devices%20no%20later,Notice https://www.fcc.gov/general/cell-phone-unlocking#:~:text=Car.... ). Locked cell phones were usually sold at a discount or via promotions with the locking used as a way to enforce recoupment of the subsidy. Back then, you could often buy an unlocked version of the phone at a higher retail price because it wasn't subsidized. That's mostly disappeared now and phones aren't really subsidized the same way much any more.
- krolden 4y ago
  T-Mobile is probably saying they lost $25m in revenue due to his services. Oh nevermind >Khudaverdyan obtained more than $25 million for these criminal activities. He used these illegal proceeds to pay for, among other things, real estate in Burbank and Northridge. I bet a lot of those phones would have ended up in a landfill anyway.
ece 4y ago
I remember buying $2 codes from ebay to unlock $30 cellphones, good times. Also: https://www.justice.gov/opa/pr/fraudster-sentenced-prison-long-running-phone-unlocking-scheme-defrauded-att https://www.justice.gov/opa/pr/fraudster-sentenced-prison-lo...
lalopalota 4y ago
The stacking of charges seems ridiculous. Basically he is getting multiple charges (and potential sentence time) for the same crime. wire fraud + conspiracy to commit wire fraud money laundering + conspiracy to launder money accessing a computer to steal information + to defraud If (I admit I don't know the details) those pairs were both for the same activity, it shouldn't be allowed to double charge an offender.
- SnowHill9902 4y ago
  Conspiracy is a separate crime which involves two or more people planning to commit a crime. It’s understood to be more intentional than acting alone as it involves putting it into words and communicating at a higher level of consciousness.
  - lalopalota 4y ago
    Thanks for the info. I was curious why conspiracy to commit money laundering is 20 years and money laundering is 10. Still, something about the process seems "unfair" to me.
WatchDog 4y ago
$25 million, wow, that is a lot of phones.
fsckboy 4y ago
everybody in here is saying that US carriers unlock your phone when your contract is up... is this literally true, automatically? or does it mean that they will unlock your phone if you ask them to?
- diggernet 4y ago
  It used to be you had to basically beg them to, but it has gotten better since they generally shifted from subsidized phones to paid up front. Having just helped someone move off Verizon, I know that currently Verizon automatically unlocks phones 60 days after purchase. No first hand knowledge, but likely the others are similar.
deleted 4y ago
[deleted]
musicale 4y ago
I think I'd prefer clear rent-to-own pricing over opaque subsidy pricing.

49 points by commoner 4y ago

markdown 4y ago

lol, madness that phones can be "locked" to a network.

curiousgal 4y ago
How do you expect them to get people to pay for their phones then? Edit: judging by the downvotes people seem unaware that phones are unlocked once their monthly plan is paid. I'm perplexed as to how you think it's okay for you to get a phone for like 8 bucks and then move to a different carrier without paying the rest.
- LadyCailin 4y ago
  With money, but not through coercion and anti-competitive lock in.
  - ars 4y ago
    That's how T-Mobile does it - unlike other companies, once you pay off the phone your bill goes down. It's literally a monthly payment plan for a phone, and they lock it until you pay it in full. I see nothing bad about this at all. It's not like in the past where they lock your phone forever - with T-Mobile as soon as you fully pay for it they unlock it.
    - markdown 4y ago
      Imagine if your car dealer could restrict which roads you could drive on until you paid it off. Or if Best Buy restricted your internet usage to a limited number of websites until you paid it off.
- sensitivefrost 4y ago
  The same way it works in other countries? lol
  - lotsofpulp 4y ago
    Which is the same way it works in the US.
- worewood 4y ago
  I know, it may sound ridiculous but what about charging customers the _actual_ price of the phone? Or, maybe, give a discount contractually bound to staying with the operator for a fixed amount of time instead of locking the phone forever? It may sound outrageous but what about providing quality service so that customers willingly stay with the operator instead of keeping them hostages?
  - ars 4y ago
    See my other posts - that is basically what T-Mobile does! The take the price of the phone, divide it into 12, add that to your monthly bill until you pay it off, and unlock it when you are done with the payments.
  - PragmaticPulp 4y ago
    > I know, it may sound ridiculous but what about charging customers the _actual_ price of the phone? You can! Nothing stopping you from buying, say, the latest iPhone at retail price without the postpaid subsidies. The law also requires that carriers unlock any locked phones after the postpaid contract period is up (if customer actually paid it off): https://www.fcc.gov/general/cell-phone-unlocking https://www.fcc.gov/general/cell-phone-unlocking If you're suggesting that we restrict rights to optionally buy/sell subsidized phones and pay them off over a 12-month period, I can't get behind that. Let the people choose which financial model they want. No need to restrict postpaid programs just because people don't like the idea of locking during payback periods.
    - bena 4y ago
      Yeah, I buy all my phones unlocked from the get go. It's really no hassle at all.
  - lotsofpulp 4y ago
    >I know, it may sound ridiculous but what about charging customers the _actual_ price of the phone? It does not sound ridiculous, because unlocked phones have been available for purchase at full price for over a decade in the US, and longer in most other countries. No one has been forced to enter into a contract with a mobile network that stipulates their phone be locked to the network for a long, long time.
- heywoodlh 4y ago
  Sincere question: is this a suggestion that locking phones to networks ensures users pay off their devices? In my mind, you could still allow people to purchase and pay off hardware while allowing them to be on a separate phone plan. I.E. buy my phone with a hardware payment plan from T-Mobile but use Verizon -- but incentivize users to be on T-Mobile's network because you get better payment options/perks. But even in asking that it kind of highlights that their money probably comes from locking people into their network rather than selling hardware... EDIT: T-Mobile is also probably the perfect example because their network coverage sucks in comparison to Verizon -- at least where I have lived. They probably lock their phones because nobody would use their network (again, at least where I live).
  - throwaway742 4y ago
    They would just stop paying T-Mobile for the hardware and use the phone on Verizon.
    - heywoodlh 4y ago
      I feel that this is how it should work in the US but it doesn't. And I think it's because of my realization at the end of my comment: they probably don't make as much money on hardware compared to strong-arming users into remaining on their network.
- markdown 4y ago
  > How do you expect them to get people to pay for their phones then? They can pay for the phones up front like almost everywhere else in the world, or they can pay for it in instalments like buying a freezer or car. What has network service got to do with the price of the phone itself?
PragmaticPulp 4y ago
FYI, in the United States carriers are required to unlock phones after contract periods are up, or after 1-year for subsidized prepaid phones: https://www.fcc.gov/general/cell-phone-unlocking https://www.fcc.gov/general/cell-phone-unlocking It's been like this since 2014. I actually wonder how many of the people using this guy's service simply didn't know that they could get their phones unlocked for free from the carrier (assuming they were actually paying their bills for their postpaid subsidized locked phone).
- u801e 4y ago
  The fact that carriers are still selling locked phones is really strange. Imagine if Verizon, Comcast, or Cox sold locked Dell or Lenovo laptops at a discount and only allowed you to connect to the internet using their ISP service.
  - Cerium 4y ago
    They probably would try if they didn't already have monopolies on most markets they operate in.

ed25519FUUU 4y ago

At first I thought maybe he helped facilitate SIM card transfers used in 2FA hijacking, but this guy was just unlocking phones so they could be used on other networks. What a stupid thing cell phone locking is. Good job FBI doing nothing but carrying water for large corporations against users.

vorpalhex 4y ago
Hacking and phishing t-mobile employees and using those credentials to sell unlocks to the tune of millions is.. actually pretty bad, yeah. That was probably the right for the FBI to stop.
- LadyCailin 4y ago
  If only the FTC and/or Congress went after these anti consumer practices with the same vigor.
  - ars 4y ago
    There is nothing anti consumer about a monthly payment plan for a phone. You are probably thinking of years ago where they would lock the phone, even if you paid for it. That's not the case with T-Mobile - as soon as the phone was paid off your monthly bill goes down (since you have finished the monthly payments), and they unlock it.
    - harry8 4y ago
      you know what, if the phone isn't paid off they can repo the thing. The end. Locking to a network is not justified for that or any other reason.
      - acchow 4y ago
        Disagree. A used car might recover much of its value if repossessed, but not a used phone

curiousgal 4y ago

Imagine making 25 million dollars illegally and using it to buy real estate in the US. I would be on an island in the middle of nowhere.

PragmaticPulp 4y ago

So after T-Mobile first caught on and terminated his contract, he switching to phishing credentials away from T-Mobile employees: > To gain unauthorized access to T-Mobile’s protected internal computers, Khudaverdyan obtained T-Mobile employees’ credentials through various dishonest means, including sending phishing emails that appeared to be legitimate T-Mobile correspondence, and socially engineering the T-Mobile IT Help Desk. Khudaverdyan used the fraudulent emails to trick T-Mobile employees to log in with their employee credentials so he could harvest the employees’ information and fraudulently unlock the phones. > Working with others in overseas call centers, Khudaverdyan also received T‑Mobile employee credentials which he then used to access T-Mobile systems to target higher-level employees by harvesting those employees’ personal identifying information and calling the T-Mobile IT Help Desk to reset the employees’ company passwords, giving him unauthorized access to the T-Mobile systems which allowed him to unlock and unblock cellphones. Does anyone know how much he was selling unlocks for? I'm shocked that he brought in $25 million doing this. The Wayback machine shows that one of his website also advertised AT&T and Sprint unlocks: https://web.archive.org/web/20171203060414/http://www.unlocks247.com/ https://web.archive.org/web/20171203060414/http://www.unlock... I'm assuming he was also phishing those employees, but they just haven't sued him yet. EDIT: There's a lot of misinformation about unlocking in this thread. US carriers have been required to provide unlocking services for phones since 2014 after the 1-year payback period is up ( https://www.fcc.gov/general/cell-phone-unlocking#:~:text=Carriers%2C%20upon%20request%2C%20will%20unlock%20mobile%20wireless%20devices%20no%20later,Notice https://www.fcc.gov/general/cell-phone-unlocking#:~:text=Car.... ). Locked cell phones were usually sold at a discount or via promotions with the locking used as a way to enforce recoupment of the subsidy. Back then, you could often buy an unlocked version of the phone at a higher retail price because it wasn't subsidized. That's mostly disappeared now and phones aren't really subsidized the same way much any more.

krolden 4y ago
T-Mobile is probably saying they lost $25m in revenue due to his services. Oh nevermind >Khudaverdyan obtained more than $25 million for these criminal activities. He used these illegal proceeds to pay for, among other things, real estate in Burbank and Northridge. I bet a lot of those phones would have ended up in a landfill anyway.

ece 4y ago

I remember buying $2 codes from ebay to unlock $30 cellphones, good times. Also: https://www.justice.gov/opa/pr/fraudster-sentenced-prison-long-running-phone-unlocking-scheme-defrauded-att https://www.justice.gov/opa/pr/fraudster-sentenced-prison-lo...

lalopalota 4y ago

The stacking of charges seems ridiculous. Basically he is getting multiple charges (and potential sentence time) for the same crime. wire fraud + conspiracy to commit wire fraud money laundering + conspiracy to launder money accessing a computer to steal information + to defraud If (I admit I don't know the details) those pairs were both for the same activity, it shouldn't be allowed to double charge an offender.

SnowHill9902 4y ago
Conspiracy is a separate crime which involves two or more people planning to commit a crime. It’s understood to be more intentional than acting alone as it involves putting it into words and communicating at a higher level of consciousness.
- lalopalota 4y ago
  Thanks for the info. I was curious why conspiracy to commit money laundering is 20 years and money laundering is 10. Still, something about the process seems "unfair" to me.

WatchDog 4y ago

$25 million, wow, that is a lot of phones.

fsckboy 4y ago

everybody in here is saying that US carriers unlock your phone when your contract is up... is this literally true, automatically? or does it mean that they will unlock your phone if you ask them to?

diggernet 4y ago
It used to be you had to basically beg them to, but it has gotten better since they generally shifted from subsidized phones to paid up front. Having just helped someone move off Verizon, I know that currently Verizon automatically unlocks phones 60 days after purchase. No first hand knowledge, but likely the others are similar.

deleted 4y ago

[deleted]

musicale 4y ago

I think I'd prefer clear rent-to-own pricing over opaque subsidy pricing.