Man sentenced to 12 years in $200 million phone-fraud scheme

SEATTLE (AP) — A Pakistan resident has been sentenced to 12 years in prison for a conspiracy to “unlock” phones from AT&T’s network, a scheme the company says cost it more than $200 million.

Muhammad Fahd, 35, of Karachi, recruited an employee of an AT&T call center in Bothell, Washington, via Facebook in 2012, and began bribing that employee and his coworkers to use their credentials to unlock phones.

That allowed the phones to be removed from AT&T’s network, even if customers had not finished paying for the expensive devices or their service contracts had not expired. The customers could then buy cheaper service for their phones.

Fahd later had workers install malware on the company’s network, allowing him to unlock the phones from Pakistan. He persisted even after the company detected the initial scheme and fired two of the workers involved, prosecutors said.

Fahd sold the illegal phone-unlocking service through online retailers, raking in millions. His extravagant lifestyle included frequent trips abroad, $1,000-a-night hotel stays in Dubai and a $30,000 watch. He bragged of hiring the British singer-songwriter Jay Sean to play his wedding for $100,000, according to the U.S. Attorney's Office in Seattle.

He paid three AT&T workers $922,000 from 2012 to 2017 before he was arrested in Hong Kong in early 2018. More than 1.9 million phones were unlocked as part of the conspiracy, AT&T's forensic analysis found.

The company based its $200 million loss amount on just phones that were removed from its network before customers fully paid for them — not including the amount it lost on service contracts. Prosecutors said such losses would have been passed on to consumers, in terms of higher overall prices, and shareholders.

Fahd was extradited to the...