Bluefield Daily Telegraph, Bluefield, WV

Sister Newspapers' News

July 9, 2012

AT&T drops case against fraud victim

— IPSWICH, Mass. -- It must feel like Christmas in July for Michael Smith, owner of Todd Tool and Abrasive Systems.

AT&T has dropped a $1.15 million suit against Smith's business over a disputed long-distance phone bill.

In 2009 hackers racked up $891,470 in unauthorized international calls during a four-day period.

Apparently, they were able to take control of his company's PBX system, which featured eight lines that were shared by his 14 employees.

Many of the calls were placed to Somalia, where rates were $22 per minute.

Smith feared he may have to shut down if the court system ruled against him. The dispute had been referred to a mediator by a federal magistrate.

Many companies all over the country have reported becoming victims of similar fraud, though rarely on such a scale.

The telecom giant had hinged its case, filed last year in U.S. District Court, on two legal theories: that Smith’s firm should have taken more precautions to prevent unauthorized access to its phone system, and that under Federal Communications Commission regulations, it’s entitled to collect from the owner of the phone line that was used to make the call, regardless of who actually made the call.

Smith, who had already run up a legal bill in excess of $30,000, feared his business wouldn't survive.

"It could all be over if there’s a judgment against us,” Smith said, before AT&T announced its decision to drop the suit. “It’s my life. It’s 14 families that I love dearly. We’re all vulnerable.”

---

Details for this story were provided by The Salem, Mass., News.

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