Updated at 4:11 p.m. ET
The Justice Department says the U.S. has extradited a Pakistani man from Hong Kong and accused him of bribing AT&T employees to unlock more than 2 million cellphones.
Muhammad Fahd, 34, allegedly committed the crimes as part of a scheme that unlocked and resold stolen iPhones.
"This defendant thought he could safely run his bribery and hacking scheme from overseas, making millions of dollars while he induced young workers to choose greed over ethical conduct," Brian Moran, the U.S. attorney for the Western District of Washington, said in a statement. "Now he will be held accountable for the fraud and the lives he has derailed."
If a phone is unlocked, it can be used on other carriers, not just AT&T. That could be very lucrative for an illegal enterprise. For example, an unlocked iPhone XR is currently retailing for $749. If it is connected to the phone network's plan, customers pay a fraction of that cost in the form of monthly installments. By unlocking phones connected to AT&T and removing them from their service plans, the conspiracy effectively cost the company more than $9.5 million, prosecutors say.
AT&T said in a statement that the company has "been working closely with law enforcement since this scheme was uncovered to bring these criminals to justice and are pleased with these developments."
Fahd bribed "impressionable" AT&T employees to unlock long lists of phones, according to court documents. Eventually, after some of the employees who worked with Fahd were fired, he allegedly persuaded some remaining co-conspirators to develop and install malware in the company's system that would allow him to remotely unlock phones.
The malware "used valid AT&T network credentials that belonged to co-conspirators and others, without authorization, to interact with AT&T's internal protected computer network and process automated unauthorized unlock requests submitted from an external server," the indictment states.
In exchange for their help, the AT&T employees allegedly received a total of more than $1 million in bribes. More than 2 million phones were unlocked because of the conspiracy, according to the indictment.
Fahd's alleged scheme started no later than April 2012, according to the indictment, and lasted about five years.
Three former AT&T employees have pleaded guilty to taking part in the scheme and are cooperating with the government, according to court documents. Fahd allegedly worked with another person to bribe the employees, though prosecutors say that person has since died.
Fahd made his first appearance in a federal court in Seattle on Monday, where he faces a 14-count indictment, including wire fraud and accessing a protected computer in furtherance of fraud. He was arrested in Hong Kong in February 2018 because of a U.S. extradition request and arrived in the U.S. on Friday.
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