Latest Scam Taps Lines Inside Phone Boxes

Thieves are breaking into telephone boxes, tapping into the lines of homes and businesses and selling long-distance calls on the spot in a new kind of low-tech phone fraud that authorities fear could cost the industry and phone customers millions of dollars.

Cases of so-called “clip-on” fraud first emerged early this year; 10 to 15 new incidents a week are now reported in California alone, officials with Pacific Bell say.

The hacking of phone boxes appears to be the latest variation in a vast and lucrative telephone fraud industry that has already produced little crime waves involving credit card fraud and theft of cellular phone numbers. Such fraud costs phone companies an estimated $4 billion to $8 billion yearly.

It is unknown exactly how much the tampering has cost, but authorities believe that several million dollars in illegal calls have been rung up since January.

Although the fraud has popped up in urban centers across the nation, Los Angeles, with its vast international community, provides an ideal market of people willing to engage in the illicit calls to make cheap contact with friends and family overseas. As a result, investigators said, this area has been the center of activity.

Customers racked up more than $30,000 in long-distance bills when the bandits hooked into phone lines of the nonprofit group Concerned Citizens of South Central Los Angeles.

“It was devastating to have a phone bill like that,” said executive director Juanita Tate. “If we had to pay a bill like that, we would have to close shop.”

Phone companies have found no easy or reliable method of detecting and thwarting the crimes.

Because the same method is used each time, investigators believe this latest fraud wrinkle emanates from a single source, a group of knowledgeable and technically proficient thieves.

“We feel that it is just a small elite group right now that knows how to do this and is perpetuating these break-ins,” said Patsy Ramos, manager of Pacific Bell’s centralized fraud bureau. “We’re taking this very seriously right now and putting a lot of focus on the prevention end--trying to secure the boxes..”

The bandits target connection boxes--called “b-boxes”--that act as a junction for the phone lines of hundreds of homes and businesses in a neighborhood. The gray or green b-boxes are typically located on the sidewalk, standing about 4 feet high and 3 feet wide, and require special tools to open.

After opening the boxes, the hackers clip onto the phone lines with other specialized tools, diverting a dial tone into a hand-held receiver from which customers can make calls. Both businesses and residences are hit. Ramos said the bulk of the activity thus far has been during evenings and weekends.

The hackers find customers for the phone calls by handing out fliers; word of mouth brings in many more.

A more sophisticated variation of the break-ins has emerged in Southern California in which a phone line’s dial tone is forwarded to a nearby pay phone, where willing customers line up to make calls for $5 to $20 a pop. Investigators would not reveal information about how the dial tone is forwarded, fearing copycats.

That is how it worked when the phone bandits struck Tate’s organization.

On June 15, thieves broke into the box serving the organization’s phones and forwarded lines from her office on Central Avenue to several pay phones, ringing up $11,000 in AT&T; long-distance calls to South and Central America, Europe and Egypt.

Tate said she suspected something was fishy when the 14 lines of her telephone system were tied up almost the entire day.

“We couldn’t make any calls in or out all day,” Tate said. “You would push a button and you’d hear somebody trying to dial a number and then you’d push another button and there would be a voice asking to speak to somebody you never heard of.”

Despite efforts by phone officials to secure the box, the bandits struck again Aug. 14, running up nearly $20,000 in Sprint charges to places such as Mexico, El Salvador, Guatemala, Peru, Guyana and Honduras. Since Tate’s organization has an account only with AT&T;, investigators have yet to determine exactly how the Sprint charges showed up on her bill.

Tate said she has heard of other incidents of phone box break-ins in her neighborhood.

The illegal activity shows up as direct-dial calls on the customer’s phone bill; many people are confused by the charges and do not realize that they are crime victims.

AT&T; officials said suspected clip-on fraud cases must be verified by the local phone company whose equipment is being tapped in order to credit consumers for the bills. But they acknowledge that the crime is a growing concern.

“The industry has been clamping down more and more on other types of phone fraud, so they are coming up with more exotic ways of doing things,” said Larry Watt, division manager for network security in AT&T;’s New Jersey office.

Six people caught in the act have been arrested for phone-line break-ins this year in Los Angeles, Burbank, Montebello, San Francisco and Toronto, said Ramos.

Lt. Edward Skvarna of the Burbank Police Department said the department has arrested a couple of people caught after receiving calls from Pacific Bell.

Skvarna said the phone hackers typically are former phone company employees or people with knowledge of telephone systems. “It’s not something just anyone would know how to do,” he said.

James Bauer, special agent in charge of the Los Angeles office of the Secret Service, which investigates phone fraud, said culprits could be charged under the federal statute that applies to credit card fraud, a felony that can carry a 10-year sentence and a substantial fine.

“I imagine that we will be getting together with phone company officials to go after those who are doing this,” Bauer said.

Ramos said her unit has already stepped up its monitoring in an effort to detect suspicious patterns of calls. And she said customers who see unauthorized people meddling with phone equipment can call a Pacific Bell hotline for phone fraud--(800) 953-5366.

Times staff writer Beth Shuster contributed to this story.