VoIP Fraudster and Fugitive Edwin Pena pleads guilty

Updating a story we have literally been following for years ever since it broke back in July 2006, the FBI recently issued a news release indicating that Edwin Pena pled guilty in what we have been calling the “Pena/Moore VoIP fraud case”. From the news release:

Edwin Pena, 27, a Venezuelan citizen, pleaded guilty before U.S. District Judge Susan D. Wigenton to one count of conspiracy to commit computer hacking and wire fraud and one count of wire fraud. Judge Wigenton continued Pena’s detention without bond pending his sentencing, which is scheduled for May 14.

The news release goes on to provide a summary of what Pena admitted:

At his plea hearing, Pena, who purported to be a legitimate wholesaler of these Internet-based phone services, admitted that he sold discounted service plans to his unsuspecting customers. Pena admitted that he was able to offer such low prices because he would secretly hack into the computer networks of unsuspecting VOIP providers, including one Newark-based company, to route his customers’ calls.

Through this scheme, Pena is alleged to have sold more than 10 million minutes of Internet phone service to telecom businesses at deeply discounted rates, causing a loss of more than $1.4 million in less than a year. The victimized Newark-based company, which transmits VOIP services for other telecom businesses, was billed for more than 500,000 unauthorized telephone calls routed through its calling network that were “sold” to the defendant’s unwitting customers at those deeply discounted rates.

Pena admitted that he enlisted the help of others, including a professional “hacker” in Spokane, Washington. The hacker, Robert Moore, 24, pleaded guilty before Judge Wigenton in March 2007 to federal hacking charges for assisting Pena in his scheme. Judge Wigenton sentenced Moore to 24 months in prison on July 24, 2007. At his plea hearing, Moore admitted to conspiring with Pena and to performing an exhaustive scan of computer networks of unsuspecting companies and other entities in the United States and around the world, searching for vulnerable ports to infiltrate their computer networks to use them to route calls.

Pena admitted that rather than purchase VOIP telephone routes for resale, Pena—unbeknownst to his customers—created what amounted to “free” routes by surreptitiously hacking into the computer networks of unwitting, legitimate VOIP telephone service providers and routing his customers’ calls in such a way as to avoid detection.

After receiving information from Moore, Pena reprogrammed the vulnerable computer networks to accept VOIP telephone call traffic. He then routed the VOIP calls of his customers over those networks. In this way, Pena made it appear to the VOIP telephone service providers that the calls were coming from a third party’s network.

By sending calls to the VOIP telephone service providers through the unsuspecting third parties’ networks, the VOIP telephone service providers were unable to identify the true sender of the calls for billing purposes. Consequently, individual VOIP Telecom providers incurred aggregate routing costs of up to approximately $300,000 per provider, without being able to identify and bill Pena.

According to the Complaint, in order to hide the huge profits from his hacking scheme, Pena purchased real estate, new cars, and a 40-foot motor boat, and put all of that property except for one car in the name of another individual identified in the Complaint as “A.G.”

So it looks at long last we can end this particular chapter in the story of VoIP security. I suppose we may mention whatever jail time he gets in May… but at this point he has pled guilty and admitted what he has done.

The lesson for security professionals in this whole episode really came out of the interview I participated in with Robert Moore, mostly that you need to remember “IT security 101” and use strong passwords, ensure your systems are patched appropriately, etc., etc., so that your systems aren’t used in a scheme like this!

In any event, this particular story seems to be drawing to an end…

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2 thoughts on “VoIP Fraudster and Fugitive Edwin Pena pleads guilty

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