High-tech hackers with suspected links to black-market phone services and drug dealers broke West Valley and Provo's long distance telephone codes and rang up more than $35,000 in fraudulent bills last year.
The theft was revealed when the West Valley City Council approved a settlement agreement this week with the city's long-distance phone company.According to terms of the confidential agreement, West Valley taxpayers will pay $6,400 of a $20,505 bill, with AT&T paying the balance. Also, the city will get a free security audit and state-of-the-art security devices to deter unauthorized access to its phone system.
City Manager John C. Patterson said he was not at liberty to discuss the details of the fraud or the settlement agreement, but he confirmed that the city's phone system was tapped by unidentified computer hackers in January and February 1993.
"They ran up lots and lots and lots of calls," Patterson said. "The incident was investigated by our own people, AT&T and federal authorities. The breech came from outside; it didn't involve any city employees."
Noting that many of the calls were to Colombia, Honduras and other countries along the international drug route, Patterson said investigators theorized that big-time drug dealers may have been responsible for much of the fraud.
Hackers broke Provo's code about a month earlier and dialed up about $15,000 worth of long-distance calls in a single weekend, said Tom Martin, the city's chief executive officer.
"We believe it was a very sophisticated, high-tech, major organized operation," Martin said. "Calls were made all over the world using our code."
According to Martin, the hackers apparently used computer dialing programs that employ a trial-and-error technique of finding numerical passwords. "It just keeps dialing possible codes until it gets through," he explained.
In West Valley's case, the thieves finally broke the code after 117 failed attempts.
Robert West, Provo assistant city attorney, said toll fraud is a national problem that is costing local governments, businesses and long-distance carriers millions of dollars each year. Earlier this week, for example, West was contacted by Houston officials who wanted information on how Provo had handled the problem.
Martin said the nature of the calls on Provo's bill hint at a possible black-market phone service. The long distance calls were made from cities with large immigrant populations, with some of the conversations lasting more than a hour, he said.
"We surmised that our code was used to make calls for people, say someone on a work visa. That person would call home and then pay somebody a certain amount of dollars for the service," Martin said.
West said Provo negotiated a "fair resolution" with AT&T. "They undertook a criminal investigation, and they were willing to work with us to resolve the issue."
Both cities received technical assistance and devices to secure their phone lines. Martin said the new software and security procedures make it "virtually impossible" for hackers to break in.
"But it seems we're in a day of technical advances where every time you invent a new black box, someone comes along and invents a better one," Martin said.