COLUMN ONE : Illegally Dialing for Dollars : Phone card pirates do a big street business in selling cheap calls to El Salvador, Nigeria and other lands. Tracking such fraud is tricky and often a low priority for police.

TIMES STAFF WRITER

The man by the pay phone is the button man, the call maker. And the people in line, waiting their turn, are his customers.

The button man takes their money and punches in the numbers they ask him to call. And in moments, a telephone is ringing in some distant land. He can work his trade because he owns a valuable tool: someone else's telephone credit card number.

This scene is common to many Southern California neighborhoods where there are new arrivals--people wanting to call home to El Salvador or Nigeria or Peru. The man with the number obliges them for a $10 or $20 bill.

In some cases, hundreds of thousands of dollars worth of calls have been charged to a single credit card in days. In a sting operation last April, Huntington Park police discovered that an estimated $12,000 worth of illegal calls were made within a few hours from street pay phones.

And the man with the number--the bottom end of the credit card fraud chain--almost always walks away with a pocketful of cash, with little risk of being caught.

No one has an exact figure on the cost to phone companies, but it is expected to be a hefty chunk of the estimated $4.3 billion in long-distance time that will be stolen this year nationwide.

Southern California, with its huge international community, is a prime spot for this brand of thievery.

"Los Angeles seems to be the center of the universe for these kinds of things," said James Bauer, the special agent in charge of the Los Angeles office of the Secret Service, the federal agency that investigates telephone fraud. It is also a problem in other cities with large numbers of immigrants, including New York, Chicago and San Francisco.

The pay phone has long been a magnet for crime, ranging from drug deals to cash box break-ins. But using it to commit fraud has evolved into a sophisticated, elusive scam. Besides button men, variations include legally installing phones in a storefront and passing the word on the street that cheap phone time is available using stolen card numbers. Or an empty storefront is leased, a phone company is hired to install jacks, calls are billed to a long-distance carrier and the site is abandoned before bills come due.

Tracking down phone fraud suspects is difficult. It often is a low priority for police who are busy with more pressing business. Stealing phone time, after all, pales next to the violence they face on the streets.

Phone crimes also are low on the public sympathy scale: owners of stolen card numbers are not charged for illegal billings. So the victim is seen as the rich telephone companies. Law enforcement officials say cases can be difficult to prosecute because juries must be made to understand the complicated process of how money is lost and how phone companies must pay long-distance carriers for time used.

And with evolving technology and techniques, "it seems like the telephone thieves are always one step ahead of the telephone companies," said John Haugh, a Portland, Ore., security expert.

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One brilliant Sunday morning, Huntington Park Police Detective Shawn Moore shifted his black Ford Mustang into gear and began cruising down Pacific Boulevard. Moore was beginning to flag. He had spent much of the night investigating the beating death of a victim in a petty robbery.

Moore is one of the officers who worked with LDDS Metromedia Communications, a Westlake Village telephone company, to make the street bust last year in which 20 people were arrested. He says there has not been another sting since then, mostly because of more serious crimes in this working-class suburb.

Close to noon, lines began to form at the phones across the street from a hamburger stand on Pacific. First, two men, then another, then two more men and a woman gathered, drawn by the lure of a cheap call home. They had heard--either by word of mouth or through pamphlets passed out on the street--that this was the place to make their calls that day.

A heavy-set man in a brightly colored shirt dialed the phone, then handed the receiver to the man next to him. Less than 10 yards away, the small but steadily growing clump of people stood in the shade. When the caller hung up, another walked over and took his place.

"It looks more like a drug transfer, doesn't it?" said Moore, who watched from a nearby shopping center parking lot. "He'll call them over and then make the next phone call. They'll be on the phones for hours now. Sometimes, it just gets ridiculous, like on Mother's Day. Then the number of people making calls is phenomenal."

Those who make the calls cite a variety of reasons, most involving expediency and cost. One man who said he otherwise was law-abiding could not resist the temptation to call El Salvador last year for $10.

"It was on a Sunday and I had to call home and I didn't have much money," said the man, who asked not to be identified. "So I saw these guys and they said the call would cost $10, so I did it. I talked for half an hour."

Carlos Vaquerano, a longtime Salvadoran community activist, said most people who make illegal calls are so poor that they cannot afford to phone their families any other way. In many cases, he said, they do not even have a telephone.

"They don't pay attention to the fact that they are violating the law and it might get them in trouble or the fact that it's costing thousands of dollars to others," he said. "It's the only way they can keep in touch with their loved ones. Sometimes they call because they have to arrange things with their families. Like sometimes when they are sending a remittance to their families, they have to call to say the money is coming."

Moore gunned the engine and moved back onto the street. He was not out to make arrests that day, only to point out where the fraud was happening. Further up the boulevard, a man in a pale green T-shirt was standing by a pay phone. No one made a call on that phone, Moore said, without the man's permission.

"It's kind of like it's their phone. It's their line of communication and tool of their business," Moore said. "They've got their own block that they stay in."

A few minutes later, Moore pulled up again near the hamburger stand. One of the men in the parking lot pointed to the police car. The button man, meanwhile, had moved to a phone bank half a block away.

"We've been burned here," Moore said. And then he gave a quick burst of his siren as a farewell to the group.

*

The button men's numbers most often come from a technique called "shoulder surfing."

It can be as simple as watching a business traveler punch in a credit card number and then writing it down. Still other shoulder surfers speak into a tape recorder as the number is being dialed.

Haugh, the security expert, tells of one woman working a bank of phones at Chicago's O'Hare International Airport:

"I watched her for a long while," he said. "She wasn't writing anything down. She didn't have a recorder. Finally, I went over to her and told her that I wasn't a cop, and wasn't going to do anything to her, but just wanted to know how she was shoulder surfing. Turned out she had a microphone in the sleeve of her blouse that was picking up the telephone tones."

Haugh said the woman, a college student majoring in criminal justice, was making about $1,100 a day selling her numbers to middlemen, who then sold them to people on the street.

Pay phone fraud operations have only begun to surface as a major problem in the last three to five years, and, according to the Secret Service, arrest and conviction figures are still extremely low.

Jim Serna of Pacific Bell's fraud bureau said the increased theft has spawned a small but growing number of telephone security specialists. He said the call-sell operations, as the illegal sale of long-distance time is known, are on the rise.

"It is very profitable and has a very minimum risk," he said.

Shoulder surfing is now the Model-T, with number theft taken to new heights via computers.

The industry is so prosperous that experts worry that telephone company workers may more often be tempted to download credit card phone numbers and sell them to middlemen.

Last year, an MCI Communications employee in North Carolina was charged with stealing about 60,000 credit card numbers.

Computer hackers have become the bane of phone companies' security experts. In another case last year, an international ring of hackers was broken, but not before an estimated 140,000 calling card numbers were stolen and resold. Not only do some of the numbers make it to the street, they also are used by hackers to link themselves to other computers.

"These are the ones that are far more dangerous than shoulder surfers," Haugh said. "This way, you can get 20,000 numbers at a time. And a lot of these operations are well-financed and able to pay big money for these numbers."

Ed Simonson of Teledesign Management, which specializes in communications systems security, said access to major company switchboards is being sold on the streets. Through them, one can get a dial tone to call anyplace in the world without a credit card.

Simonson said this is becoming increasingly common because more pay phones have safeguards that do not allow international dialing.

Despite such challenges, phone companies are making some progress at tracking down fraud. They have become more sophisticated at using computers to detect unusual calling patterns and finding switchboards that have been compromised.

Chad Ferar, a fraud expert for AT&T;, said switchboards that have been illegally accessed can be more quickly identified. He said the dollar amount of losses in those cases has decreased 75% because of the speed of detection.

"We definitely are closing the gap," he said. "Everybody across the industry is getting much better at this."

Serna of Pacific Bell said tracking down telephone theft probably has been his biggest challenge in more than 30 years of law enforcement work.

For officers such as Moore of Huntington Park, phone fraud creates problems with more grit than those being tracked by telephone company detectives. He said the competition for territory among peddlers of illegal calls often leads to violence.

"We've had knife fights and stabbings and a lot of physical altercations because of guys fighting over territory," he said.

For most illegal users, though, the pay phone and the button man do not represent crime. Instead, the scam is simply a cheap way to call home.

"People know right where to go on a Sunday morning," Moore said.

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