Detroit-area man sentenced in multi-million dollar cellphone trafficking scheme
DETROIT — A Detroit-area man was sentenced Thursday to 12 months in prison and ordered to pay $600,000 for his role in a scheme to traffic in fraudulently-obtained cellphones. The sentencing caps a more than three-year probe by special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), dubbed Operation Jailbreak.
As part of the sentencing, Jason Floarea also forfeited his interest in approximately $1,000,000 in seized funds and assets and was ordered to pay a $120,000 forfeiture money judgment. In addition, Floarea will be under the supervision of the court for a period of 24 months following his release.
Floarea used his company, ACE Wholesale, to sell fraudulently-obtained cellphones. The phones were modified to function on any mobile network – a process known as “jailbreaking” – and subsequently shipped to overseas buyers at costs far more than retail. He admitted his role in the scheme in October 2014.
“Today’s sentencing will no doubt send shock waves throughout the illegal, underground cell phone trafficking network which continues to be a source for robberies and other violent crimes in metro areas throughout the country,” said Marlon Miller, special agent in charge of HSI Detroit. “The individuals and groups operating these schemes should be warned that HSI has the unique authorities and expertise to bring down these networks wherever they operate.”
During one 2012 outbound inspection, special agents discovered 10 boxes containing 300 cellphones, which were later determined to be obtained by fraud.
In 2012, HSI special agents searched heavily-fortified businesses, homes and warehouses belonging to Floarea in the Detroit-area and Atlanta. Special agents seized thousands of documents which detailed Floarea’s activities. Floarea’s Detroit-area and Atlanta offices were equipped with armed guards, surveillance cameras and bulletproof glass.
The investigation also revealed that Floarea would obtain phones from straw purchasers who entered into cellphone contracts that provided buyers with phones at either no or low promotional costs, a practice called “credit muling.” Credit muling occurs when street vendors solicit persons to purchase cellphones in bulk by entering into contracts which they have no intention of fulfilling.
The following agencies assisted with the investigation: the Taylor and Romulus Police Departments and the Wayne County Airport Authority.
The latest industry studies estimate credit muling contributes to approximately $50 million in annual losses to the telecommunications industry. Analysts say stolen and lost cellphones cost American consumers up to $30 billion each year.
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