Phone Unlocking Scam Mastermind Sentenced to 12 Years

Muhammad Fahd, a 35-year-old citizen of Pakistan and Grenada, has been sentenced to 12 years in prison for his leadership role in a seven-year phone unlocking scheme that defrauded AT&T Inc. of over $200 million.

According to court records, Fahd conspired with others to recruit AT&T employees at a call center in Bothell, Washington, to unlock large numbers of cellular phones for profit. Fahd bribed AT&T employees to use their AT&T credentials to unlock phones for ineligible customers and later installed custom malware and hacking tools that allowed him to unlock phones remotely from Pakistan.

Fahd’s scheme began in 2012 and continued until he was arrested in Hong Kong in 2018. During this time, he used the alias ‘Frank Zhang’ to contact AT&T employees through Facebook and offered them significant sums of money to help him unlock phones. Fahd also asked the employees to set up fake businesses and bank accounts to receive payments and create fictitious invoices for every deposit made into the fake businesses’ bank accounts.

AT&T implemented a new unlocking system in 2013, making it more difficult for Fahd’s bribed employees to unlock IMEIs. In response, Fahd hired a software developer to design malware that could be installed without authorization on AT&T’s computer system to unlock phones more efficiently and in larger numbers.

AT&T’s forensic analysis shows that a total of 1,900,033 phones were fraudulently unlocked by members of the scheme, resulting in a loss of $201,497,430.94. Judge Robert S. Lasnik ordered restitution of $200,620,698, reflecting the difference between this amount and the total loss, which includes restitution ordered against bribed AT&T employees in related prosecutions.

Fahd pleaded guilty to conspiracy to commit wire fraud in September 2020 and was sentenced to 12 years in prison. The case was investigated by the Seattle field office of the U.S. Secret Service, IRS-CI, and the U.S. Government. The Justice Department’s Office of International Affairs provided significant assistance.

Assistant U.S. Attorneys Andrew Friedman and Francis Franze-Nakamu prosecuted the case.

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