(Time Magazine - August 15, 1994 - Page 30)

Someone's on the Line: Telephone companies struggle to disconnect wily thieves
                       who rip off cellular customers.

By John Greenwald

      The remarkable thing about the customers who filed in and out of
Allman's Fashion Discount, a small Miami apparel shop, was that they never
bought any clothes.  Instead, say the police, they flocked to 17 cellular 
phones at the back of the store to call family and friends in Central and
South America for just fifty cents a minute - less than half of the nighttime
rate for standard phones.  Even at that low price the shop's owners, who had
rigged their phones to bill the calls to other people's numbers, managed to 
rake in up to $200,000 in just six months before police raided the store in
June.  "They were basically operating their own phone company," says Bill 
Brush of the Secret Service, the agency involved in breaking up the ring.
"It was just pure profit."

      Paydays like that have helped turn cellular-phone fraud into a 
high-tech crime wave that costs the cellular industry about $300 million a 
year.  Such breaches of security could threaten the growth of a booming $11
billion market that has 17 million U.S. customers and is gaining new ones
at the rate of 14,000 a day.

      That's why both AirTouch Communications and Nynex Corp. last fall
began testing a system to thwart telephone thieves that was developed by
aerospace conglomerate TRW.  The pirates typically use radio scanners to 
record the serial number and subscriber identity number that each cellular
phone transmits at the start of a call.  Then they program the numbers into 
their own phones, leaving the victim to get the bills.  But TRW engineers 
have come up with a proprietary method for analyzing and storing a third
signature of cellular phones - their unique radio-frequency signal, which
cannot be cloned.

      Police agencies are also taking steps to thwart the pilfering of 
cellular numbers.  Since 1991 more than 5,000 federal and local officers
have completed industry-sponsored training that focuses on detection and
prosecution.  That has paid off across the country, especially in the Los
Angeles area, where authorities are arresting nearly 40 phone defrauders
a month - up from just one offender a month two years ago.  Among them: 29-
year-old Rodney Phillips, who ran up $2 million worth of fraudulant calls
from a home he had turned into a minifactory for snatching numbers.  Police
found more than 20 cellular phones there, along with two computers equipped
with the software to reprogram them.  L.A. law enforcement officials also
nabbed a suspect while he was casing a neighborhood in a car filled with
crowbars and gloves - and using a stolen number to talk on the phone.  
Though the man avoided being charged with burglary, he faces four years
in prison for making $8000 worth of bogus calls.

      While some victims of rip-offs may wind up with astronomical bills, the
industry tries hard to see that their subscribers don't.  Most companies
monitor any unusual jumps in a customer's calls and can immediately inquire
whether the subscriber has made them.  Harder to spot is illegal activity in
large corporate accounts or small thefts that take place over time.  Thus 
cellular companies warn consumers to watch their bills closely and report any
suspicious charges.  The last thing this booming industry wants is to have 
pirates plunder their customers and send them back to wired phones.
                                      
       -Reported by David S. Jackson/San Francisco and Jane Tassel/New York