2 Wisconsin men indicted in pay phone schemeTwo Wisconsin men whose pay phone company raked in $1.2 million by auto-dialing toll-free numbers were indicted Wednesday on federal fraud and money laundering charges.
By: By Ed Treleven, The Wisconsin State Journal, Superior Telegram
Two Wisconsin men whose pay phone company raked in $1.2 million by auto-dialing toll-free numbers were indicted Wednesday on federal fraud and money laundering charges.
Jeff Frost, 53, of Brookfield, and Colin Nordstrom, 48, of Coon Valley, programmed pay phones to take advantage of a fee that pay phone owners receive when their phones are used to dial toll-free numbers, according to the U.S. Attorney's Office in Madison.
Each faces up to 20 years in prison if convicted on wire fraud, wire fraud conspiracy and money laundering conspiracy charges. Nordstrom faces another possible five years for allegedly lying to federal agents in January and to a grand jury in March.
According to the indictment, FCC regulations require that toll-free number subscribers pay a 49.4-cent per call fee to payphone owners, called "dial around compensation," each time their pay phones are used to call toll-free numbers.
Frost, Nordstrom and their employees searched for toll-free numbers that had automated answering systems with options that placed the call into what they called "automated hell," according to the indictment.
The phones were programmed to place toll-free calls and choose the options that would keep the phone connected long enough to ensure that it would get the compensation fee, then hang up.
The phones were also programmed to repeatedly re-dial the toll-free numbers and to call specific numbers at specific times every day for months at a time, the indictment states.
Between 2004 and 2007 the scheme brought in more than $1.2 million in compensation fees for the company, the indictment states.
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