How Filipino phreakers turned PBX systems into cash machines for terrorists

Sean Gallagher

A quartet of hackers based in the Philippines have allegedly bilked AT&T and possibly other telecommunications companies out of millions, which they channeled to their own bank accounts and to accounts associated with a terrorist organization. And apparently, AT&T helped them collect the money.

On November 24, the Philippine National Police’s Criminal Investigation and Detection Group and the FBI staged raids in Manila, arresting Macnell Gracilla, Francisco Manalac, Regina Balura, and Paul Michael Kwan. The CIDG said in a statement that the hackers had been financed by Jemaah Islamiyah, a terrorist group that the FBI has said funded the November 2008 attacks in Mumbai. While few details have been offered up by AT&T or law enforcement, at least one of the the four has been involved in previous "phreaking," or phone hacking, of telecom customers’ private branch exchanges (PBXs) in the past—and in fact was indicted in the US in 2009 for a similar crime. The arrests are part of an FBI effort to crack down on PBX hacking that dates back to 1999.

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