The Security Concerns Regarding Prepaid Cell Phones

August 14, 2006

Three Texas men remained in custody in Michigan on Aug. 14, a day after police there discovered about 1,000 prepaid cell phones and several photographs and videos of Michigan's Mackinac Bridge in the suspects' van. An early investigation revealed that Adham Othman, Louai Othman and Maruwan Muhareb had purchased a suspiciously large number of phones at convenience stores in several states. Employees of one of the stores alerted police after the men purchased 80 phones at one time.

At first glance, the concern might be about the phones themselves -- that they would be used as timers and/or detonators for improvised explosive devices (IED) targeting the bridge, which connects Michigan's north and south peninsulas. In fact, cell phones have been used for these purposes in the past, although devices such as garage door openers and wrist watches can be used just as easily. From an operational security standpoint, had the suspects intended to attack the bridge, the purchase of that many phones would draw too much attention their activities. Given the large number of phones purchased, therefore, it seems more likely the three intended to resell the phones for profit. The question then becomes whether the suspects were acting for personal gain or whether they intended to funnel the profits into an organization that might want to do harm, such as a militant Islamist group.

Prepaid phones are intended to be widely available and relatively inexpensive in the United States, typically costing about $20. Furthermore, by paying in cash, anyone can purchase these phones anonymously, and then use a false name to register the number. Given their ease of purchase in the United States, and the worldwide demand for prepaid cell phones, their resale can be a profitable venture for those willing to risk investigation. Purchasers in China and Pakistan, for example, will pay up to three times the U.S. market price for such phones.

Beyond their potential source of income for militant groups, prepaid phones remain an ongoing security concern both domestically and internationally because they are nearly impossible to track. Once the preset minutes on a specific phone are used, the device is discarded. Arrests of drug traffickers along the U.S.-Mexican border have revealed the use of these prepaid phones as a means of communication.

The phones in the Michigan case were purchased legally -- albeit suspiciously -- though the profits from the resale could have been funneled to militant groups overseas. In 2002, a Hezbollah cell operating in North Carolina ran nearly $500,000 worth of cigarettes and other contraband across interstate lines, funneling their profits overseas. The cell purchased the cigarettes at lower taxed or untaxed rates on Indian reservations in New York and North Carolina and then resold them at the taxed rate in Michigan.

Large purchases of items that are rarely bought in bulk should raise a suspicious flag in retail stores everywhere. In this latest case, it was not until alert store employees notified authorities that police were able to make the arrests. Had the men not called attention to themselves by buying so many phones at one time, they could be shipping the phones overseas for resale. Three Texas men remained in custody in Michigan on Aug. 14, a day after police there discovered about 1,000 prepaid cell phones and several photographs and videos of Michigan's Mackinac Bridge in the suspects' van. An early investigation revealed that Adham Othman, Louai Othman and Maruwan Muhareb had purchased a suspiciously large number of phones at convenience stores in several states. Employees of one of the stores alerted police after the men purchased 80 phones at one time.

At first glance, the concern might be about the phones themselves -- that they would be used as timers and/or detonators for improvised explosive devices (IED) targeting the bridge, which connects Michigan's north and south peninsulas. In fact, cell phones have been used for these purposes in the past, although devices such as garage door openers and wrist watches can be used just as easily. From an operational security standpoint, had the suspects intended to attack the bridge, the purchase of that many phones would draw too much attention their activities. Given the large number of phones purchased, therefore, it seems more likely the three intended to resell the phones for profit. The question then becomes whether the suspects were acting for personal gain or whether they intended to funnel the profits into an organization that might want to do harm, such as a militant Islamist group.

Prepaid phones are intended to be widely available and relatively inexpensive in the United States, typically costing about $20. Furthermore, by paying in cash, anyone can purchase these phones anonymously, and then use a false name to register the number. Given their ease of purchase in the United States, and the worldwide demand for prepaid cell phones, their resale can be a profitable venture for those willing to risk investigation. Purchasers in China and Pakistan, for example, will pay up to three times the U.S. market price for such phones.

Beyond their potential source of income for militant groups, prepaid phones remain an ongoing security concern both domestically and internationally because they are nearly impossible to track. Once the preset minutes on a specific phone are used, the device is discarded. Arrests of drug traffickers along the U.S.-Mexican border have revealed the use of these prepaid phones as a means of communication.

The phones in the Michigan case were purchased legally -- albeit suspiciously -- though the profits from the resale could have been funneled to militant groups overseas. In 2002, a Hezbollah cell operating in North Carolina ran nearly $500,000 worth of cigarettes and other contraband across interstate lines, funneling their profits overseas. The cell purchased the cigarettes at lower taxed or untaxed rates on Indian reservations in New York and North Carolina and then resold them at the taxed rate in Michigan.

Large purchases of items that are rarely bought in bulk should raise a suspicious flag in retail stores everywhere. In this latest case, it was not until alert store employees notified authorities that police were able to make the arrests. Had the men not called attention to themselves by buying so many phones at one time, they could be shipping the phones overseas for resale.

© Copyright 2006 Strategic Forecasting Inc.