|
|
(Apr 29, 1996 11:24 a.m. EDT) - On a snowy December evening, more than two dozen armed federal agents filled up rooms at New York's Waldorf Astoria hotel, wielding a battery of hidden cameras and eavesdropping gear. They lay in wait for the target of an elaborate, year-long sting.
Their quarry: Bernard Oskar Bowitz, a man federal agents describe as a sophisticated, high-tech thief who brazenly used the Internet to sell illegal tools for waging large-scale cellular-service fraud. Agents say he bragged of having ties to South American drug dealers, keen money-laundering skills and an arsenal of gadgetry.
Mr. Bowitz arrived alone at the Waldorf at 5 p.m. on Dec. 19. As the feds watched on video, he huddled with two supposed customers -- actually undercover agents -- in a $650-a-night suite on the 15th floor. Over shrimp dinner, he allegedly agreed to sell them $7,600 worth of forbidden cellular-phone gear. When he left, agents for the Drug Enforcement Administration and the Secret Service swooped down and arrested him without a struggle.
One day later, Mr. Bowitz made bail.
Mr. Bowitz himself was charged with fraud relating to access devices, conspiracy and money-laundering. His two alleged accomplices -- his wife, Rachel, and an associate named Gregory Brooks -- were charged with the first two counts. All three have pleaded not guilty.
Federal agents say Mr. Bowitz is the first major suspect they have been able to arrest as they pursue a new breed of computer-savvy criminals who use advanced gear and on-line commerce to ply the billion-dollar scam of cell-fraud. These cellular-service crooks sell thousands of illegal phones that hijack the airwaves to make unlimited free calls.
Mr. Bowitz bragged in conversations with an undercover DEA agent of setting up "a private phone company," a global satellite-phone network for world-wide drug rings, says Carlo A. Boccia, a DEA agent on the case. Secret Service and DEA agents say Mr. Bowitz sold sleek cell-theft gear more sophisticated than anything they had ever seen. His gadgets bear the stamp of high-quality, mass-production factories. They come with color brochures and elaborate instruction manuals. He takes American Express.
Equipment confiscated in previous arrests was "Stone Age stuff compared with what was seized" in the Bowitz bust, Mr. Boccia says.
The Bowitz investigation, much of which played out in cyberspace, underscores the high-tech game of cat-and-mouse that law enforcement will have to wage to crack down on electronic crime. "This case offers a glimpse into the future of crime in the 21st century," contends Zachary W. Carter, U.S. attorney for the Eastern District of New York, whose office is prosecuting Mr. Bowitz. "We'll be searching less in file cabinets and more in computer drives."
But Mr. Bowitz describes himself in terms that the cellular industry might find even more alarming: He says he is just a salesman, one of many in a world-wide electronics trade. In Hong Kong, hundreds of shopkeepers openly hawk cell-phone devices that are illegal in the U.S. The products are said to be manufactured en masse in Taiwanese factories, shipped to the U.S. and advertised for sale in electronics magazines.
Cellular thieves take advantage of the fact that when a cellular phone call is placed, the phone's unique electronic code is transmitted over the airwaves to update the cellular network on the user's location. Service thieves wait near busy areas -- highways, financial districts -- and use scanners to lift the codes from legitimate users. Thousands of such hijacked numbers can be later downloaded through a computer into "clone" phones. Thus, a clone phone lets a user place potentially hundreds of calls that are billed to the legitimate owner of the original number.
Prosecutors hope to pressure Mr. Bowitz into opening a door into this fraud-filled nether world. Theft of cellular service in the U.S. exceeds $1 billion a year. It started out as the crude work of small-time hoods but has steadily grown in sophistication and scale.
"I'm very flattered to hear they think I'm a mastermind," Mr. Bowitz says sarcastically of the federal agents who nabbed him. "I think they're watching too many Arnold Schwarzenegger movies."
Mr. Bowitz is an urbane, German-born 50-year-old electrical engineer. His wife describes him as "a genius in technology" and claims U.S. intelligence once tried to recruit him as a spy. Based in Hong Kong, Mr. Bowitz speaks four languages, travels the globe and surfs the Internet assiduously, often corresponding via a tiny Hewlett-Packard computer that can send and receive messages wirelessly.
To track his dealings, investigators used one of the first court-approved wiretaps of an on-line account. They rifled through Mr. Bowitz's electronic mail as he blithely zapped messages in allegedly striking deals with undercover agents. "There's intellectual arrogance involved, because he thought he was immune on the Internet," Mr. Boccia says.
The Bowitz investigation, in fact, got its start in cyberspace. He was discovered almost by accident -- and by a corporation, not by law-enforcement agents.
In April 1995, a security staffer at AT&T Corp. was trolling the Internet on the lookout for hackers. Browsing H&R Block Inc.'s CompuServe on-line service, he found a message that offered for sale a "model clone phone" and other gear being advertised by a Bernard Bowitz, according to a complaint filed in U.S. District Court in Brooklyn, N.Y.
AT&T executives passed on the tip to Michael Guidry, a Houston-based security consultant who had been trying to land the phone giant's business. The Texan had been a state trooper and corporate-security staffer before starting his own agency, Guidry Group, in 1986 because he says he wanted "a glamorous, John Wayne life."
Mr. Guidry, 41, had experience dealing with cellular fraud and had helped bust a big cell-fraud ring in Los Angeles. But Mr. Guidry says he has never met an adversary as smooth as Mr. Bowitz. Mr. Bowitz, for his part, maintains that he has never met with anyone named Mike Guidry. But according to the federal complaint, a torrent of e-mail messages between the two documented planned meetings.
Mr. Bowitz bills himself as a partner in a Hong Kong-based company that sells entirely legal satellite phones. Court records state that in e-mail messages, Mr. Bowitz claimed to be the managing director of Channel Link USA, the U.S. unit of Channel Telecommunications Inc., Hong Kong, but no information on either firm could immediately be found.
Mr. Guidry says his mission for AT&T was to buy illegal devices from Mr. Bowitz and lay the groundwork for a more elaborate sting by federal agents. While in Hong Kong in April 1995 for a conference on, of all things, cellular fraud, he faxed Mr. Bowitz and arranged to meet him the same day at the Shangri La hotel.
That, the Texan later realized, wasn't too smart: The Shangri La was the site of the fraud conference, and Mr. Guidry's name was on posters all over the hotel to promote a session he was hosting. Mr. Guidry says he used his real name in his transactions with Mr. Bowitz.
As Mr. Guidry tells it, Mr. Bowitz knocked on the door of Mr. Guidry's hotel room 20 minutes early and surprised his wary host by rushing past him and searching the bathroom and bedroom to make sure no one was hiding. The two then got down to business.
Mr. Guidry pretended to represent three Mexican drug families interested in buying some of the phones advertised on CompuServe. Mr. Bowitz showed off some gadgets he had brought with him.
One device, called a CellTracker phone, could be a potent countersurveillance tool: It intercepts radio signals and lets the user eavesdrop on nearby cellular calls. Another gizmo, known as the Lifetime phone, can be programmed with as many as 99 stolen numbers. Each call can be made on a new number -- rendering the phone virtually untraceable. The phone also can be easily programmed by typing the number in the key pad, unlike typical cloned phones that require a complex computer hook-up. To further demonstrate the Lifetime phone's capabilities, Mr. Bowitz successfully used it to "hijack" the cellular service of a phone user in the hotel lobby, according to Mr. Guidry.
"He got my attention," the private eye says of the hardware display.
The next day, Mr. Guidry says, he bought two CellTracker phones from Mr. Bowitz, paying $2,100 with his American Express gold card and arranging future transactions. During the next few months, Mr. Guidry says, he and Mr. Bowitz met in Hong Kong, New York and Las Vegas. They exchanged e-mail from all corners of the world.
AT&T later brought in the feds to take over. On Sept. 13 at a Holiday Inn near New York's La Guardia airport, Mr. Guidry says he introduced Mr. Bowitz to an undercover agent posing as a drug dealer.
At the meeting, bugged by the feds, the agent said he wanted Mr. Bowitz's help in laundering proceeds of a 200-kilogram heroin transaction, according to the complaint. The agent also bought cellular gear from Mr. Bowitz, including 17 Lifetime phones and seven CellTrackers.
Five days later, the federal agents delivered their coup de grace: They obtained federal court authorization to wiretap Mr. Bowitz's e-mail account. CompuServe, the conduit for the messages, complied with the judge's order.
With the wiretap in place, the feds began to tighten the noose. At an October meeting at the Waldorf Astoria, the DEA agent gave Mr. Bowitz $25,000 -- purportedly from heroin deals -- and Mr. Bowitz agreed to launder the money for a 7-percent commission, the federal complaint alleges. At a later meeting, Mr. Bowitz also agreed to launder an additional $200,000 in supposed heroin proceeds, according to the federal charges.
For the next eight weeks, the feds say they intercepted a flurry of e-mail messages between Mr. Bowitz in Hong Kong and his two alleged accomplices, Mrs. Bowitz in Las Vegas and Mr. Brooks in Seattle. The chatter related to various pieces of illegal cell-phone gear that Mr. Bowitz had agreed to sell to the undercover agent, the complaint states.
At one point, the undercover agent e-mailed Mr. Bowitz, saying he needed a way to eavesdrop on cellular calls. "You have anything like that?" Four hours later, Mr. Bowitz zapped back a reply, agreeing to provide such equipment, the complaint notes. The DEA agent later bought several "CellTracker" phones at $1,200 each.
The Secret Service and the DEA finally arrested Mr. Bowitz that December evening at the Waldorf Astoria, seizing his prized Hewlett-Packard "palmtop," which they hoped will be a potentially devastating piece of evidence. "Those are the keys to the kingdom," says Mr. Guidry. He adds that Mr. Bowitz had told him the small computer stored the names, contacts and transactions of all his clients.
But when the feds tried to crack the palmtop's information, any such listings were well hidden, if they in fact existed. Mr. Bowitz says they confronted him and demanded that he show them where the names were stored on the palmtop, but he responded: "It's only my mother's phone number." The feds won't comment.
A subsequent raid on a Hong Kong apartment allegedly owned by Mr. Bowitz uncovered an "electronics workshop," including dozens of illegal cell-phone devices, computer disks, cloned pagers, "bugging" gadgets and a copy of a manual titled "Cellular Telephone Hackers Guide Book," according to the DEA.
Mr. Bowitz's trial is expected to start in late summer. He faces three felony counts that could bring up to 35 years in prison, although the more likely penalty if convicted would be five years and up to $750,000 in fines, says Eric Friedberg, the federal prosecutor on the case. Mr. Bowitz has a previous felony conviction, in 1985, for conspiring to ship 6,000 military radios to Iran in defiance of an arms-shipment ban. At that time, he was ordered to leave the U.S. and did so.
Mr. Bowitz currently resides in Las Vegas while he awaits trial. He flatly denies any links to drug dealers. But when it comes to the illegality of cloning devices, he is more ambiguous: "If you are the owner of a baseball store and sell a bat to a customer who takes it and kills someone, are you in conspiracy with the murderer? You've got to be kidding."
The DEA calls that argument "naive."