The Boston FBI office contacted the local U.S. attorney to see if the students could be prosecuted for making free phone calls. The answer was no. The U.S. attorney in Boston said that the facts did not constitute a violation of the Fraud by Wire section of federal law and that was the only statute he could see being relevant. But why were these kids so interested in defense facilities? On May 1, the Boston office asked FBI headquarters for permission to interview the students “to determine . . . any possible violation of the Espionage Statute.” In Washington, the FBI polled each of its divisions—Domestic Intelligence, Special Investigative, Laboratory, and General Investigative—to coordinate their investigation.
A week went by. The phone company was getting antsy; according to an urgent FBI teletype message, “[Telephone] company is most anxious to learn today if Bureau desires to interview subjects before telephone company conducts own interview. States [Telephone] Company losing revenue and practice of fraudulent calls is spreading.”
On May 7, the Domestic Intelligence Division decided it was time to interview Pyne and company. The memo from an FBI national security official was remarkably evenhanded, allowing that the students’ interests might be perfectly innocent: “It is possible that this is an instance of two brilliant mathematicians [Pyne and Ross] embarking on an unusual research problem, finding initial success and now endeavoring to ascertain just how far they can go with this work.” Still, the memo continued, “Their interest in defense establishments, however, does indicate [a] potential security problem. They or others, if full access to defense establishment lines is obtained, could cause the lines to be jammed or could use them to transmit false messages or tie up the circuits. In view of this possible harm to our national security, it is felt we should take steps to ascertain definitely why the subjects are engaged in their telephonic endeavors and, specifically, to determine what is their interest in the military installations involved.”
The FBI agents came and went in one day. “I think they were maybe a little bit pissed that they were dragged into something that was a college prank,” Pyne says.
Now it was AT&T’s turn.
“We had to go see this guy by the name of Desmond,” Lauck says. “He was some person in charge of AT&T security in Boston. . . . He was going to really nail our ass for stealing phone calls and all the rest of this. We were going to be prosecuted.” This seemed ridiculous to Lauck. Stealing phone calls? Really? “We never actually made any phone calls that anyone in their right minds would ever pay two cents for,” Lauck says. Ed Ross agrees: “None of us had anyone else in the world to speak to.” The students soon invented a nickname for their telephone company tormenter. “We came to call him the Evil Desmond,” Pyne says.
Tony Lauck had an uncle who was a lawyer and a banker in Philadelphia and who used to play golf with the head of Bell of Pennsylvania; a call was placed asking if he might be able to somehow smooth matters over. Similarly, there was an old friend of Charlie Pyne’s parents who was the chairman of the New England Electric Company; perhaps he could help? The old friend said he knew the president of New England Telephone and Telegraph and would make a phone call and report back. Pyne remembers getting a phone call about ten minutes later, in which the chairman of New England Electric said, “Would you please call me back from a pay phone?” Pyne did so. “He told me that his friend the president of New England Telephone knew all about this,” Pyne says, “and it was a big deal and in all likelihood our telephones were being monitored”—hence the request to use a pay phone.
Maybe it was the string pulling or maybe the telephone company had simply thought better of prosecuting Harvard students, something that might end up blowing up in its face. What the phone company didn’t need, after all, was for the details of this to get out in the news so that more people would know about how easy it was to make free calls. Either way, Lauck recalls their next visit to the Evil Desmond. “He looked really pissed,” Lauck says. “He was just seething with rage that these so-called rich kids or whatever were going to be able to get away with this and he was not going to be able to nail our asses for anything.”
That did not stop Desmond from grilling the students. They were to write a detailed report for the telephone company, setting forth exactly what they had done, the details of the vulnerabilities in the system they had found, even giving suggestions for how to combat fraud in the future. And they had to get rid of their blue boxes. The transistorized unit that Heckel built wound up in the Charles River. As for the one that Pyne and Lauck had built using tubes from Lauck’s stereo, Desmond and a sidekick showed up in person at Lauck’s dorm room in order to watch it being dismantled.
In the end, the only serious result of the entire episode was that Pyne was told he needed to take a year off from Harvard. This was a pretty common occurrence, Pyne says: “You didn’t have to do much to have them ask you to take a year off.” An unexpected plus was that it stood him in good stead with his girlfriend Betsy—the girl he had taught to impersonate an operator to call him at boarding school—who says now, “I thought it was great. I thought, ‘Oh my God, this is the most wonderful person in the world, he’s so brilliant!’” Betsy’s mother thought likewise. Pyne’s mother was somewhat less enthused.
The Harvard students solved many mysteries during their research. But their discovery by the telephone company and the FBI solved one final mystery for Pyne’s freshman adviser, Robert Watson, who wrote the following when he filled out the form for Pyne’s year-end review.
Pyne has been an enigma to me all year. I’ve spent more time with him trying to understand his problems than the combined time I’ve devoted to all my other freshmen advisees. In an attempt to arouse his motivation I’ve used my entire bag of tricks to little avail. Then suddenly two weeks ago all was made clear when we learned from the FBI and Telephone Company of his tampering with the whole telephone system. Instead of studying, night after night all year long he and three other Harvard students with the cooperation of an MIT student have been discovering ways to beat the Telephone Company and how the whole system works. No wonder his studies have suffered. From what I now know he has been pursuing this interest for years. If he once settles down and really applies himself, there’s no question in my mind that he can do the work. In fact, he possesses a vast knowledge of electronics in general and the telephone operation in particular. Surely this should stand him in good stead.
The evaluation form included a query about Pyne’s probable academic concentration. “Engineering Sciences,” Watson wrote.
The form went on to inquire, “Do you consider this to be a wise choice?”
Watson filled in the form honestly, if dryly. “I’m inclined to think so now,” he wrote.
Seven
Headache
IT WAS THE early 1960s and AT&T was starting to get a headache.
Actually, that should read headaches, plural.
First there was the growth-in-electronic-toll-fraud headache. It wouldn’t have been so bad if whiz kids like Barclay and Pyne were the only ones who had figured out blue and black boxes. But they weren’t. Other people were starting to discover the holes in AT&T’s network. And no one, even within AT&T, could say with any certainty exactly how widespread the problem was or how fast it was growing.
Then there was the how-are-we-gonna-fix-our-network headache. In the past twenty years AT&T had already spent more than $1.4 billion in building out its long-distance network, with its 2,600 Hz and in-band multifrequency signaling. This signaling system was fundamental to the network in the same way that a concrete foundation is fundamental to your house. For AT&T, finding out that its network was vulnerable to teenagers with tone generators was a bit like discovering that you’ve poured the foundation of your house on top of a nest of some new kind of concrete-eating termites. How much would it cost and how long would it take to reengineer the long-distance network to be immune to blu
e and black boxes?
Third was the how-do-we-deal-with-the-phone-phreaks headache. Should we have them arrested? Sue them? But it seems like every time we do something, the newspapers pick it up and carry a story about it. That means more people know about it. And that probably means more phone phreaks. Maybe it’s better just to keep things quiet for now.
The icing on the cake was the oh-crap-what-if-it’s-not-really-illegal headache. AT&T attorneys had studied the matter and were worried there was no federal law that clearly made these telephone shenanigans illegal. Most states had laws that were probably applicable, but these varied from state to state. This was a new kind of crime and the laws just hadn’t caught up with it yet.
Where’s that bottle of Tylenol again?
People were starting to discover Ma Bell’s secret. Most were high school or college students, but it wasn’t just Barclay and Pyne and the others at Harvard and MIT. In 1963 newspapers covered the story of a “brilliant but disturbed teenager” from Ohio who invented a device to “bypass operators” and had called all over the world. In 1964 there was a small epidemic of electronic toll fraud cases. Hoyt Stearns and friends at Cornell University, John Treichler at Rice University, a former engineering student who had attended Stanford and Columbia: all had figured out Ma Bell’s secret. The stories were virtually identical: clever high school or college kids figure out the hole in AT&T’s switching system, explore the network, are caught, and get slapped on the wrist.
Unfortunately for AT&T, college and high school students had no monopoly on clever. Another pioneer in the field was a Los Angeles–area businessman, electrical engineer, and former army communications officer named Louis MacKenzie. Perhaps you’ve been to the Los Angeles International Airport and heard the repeating tape recordings made famous by the 1980 movie Airplane!—the ones that droned on and on: “The white zone is for the immediate loading and unloading of passengers only . . .”? If so, you have MacKenzie and his company, MacKenzie Laboratories, to thank for the invention of the machine that allowed those recordings to play, twenty-four hours a day, seven days a week, fifty-two weeks a year.
MacKenzie was no stranger to the idea of using tones for signaling. His firm had been hired by Walt Disney in the 1950s to build tone-based equipment to remotely control animated special effects at Disneyland. Perhaps that was what gave him and a colleague of his the insight needed to spot the vulnerability revealed in the 1960 Bell System Technical Journal article. Sensing a business opportunity, he approached the phone company about it, offering his firm’s services to fix AT&T’s problem—for a price. AT&T declined. Soon thereafter, in 1963, MacKenzie’s attorney appeared on the CBS evening news, waving around a blue box and talking about the giant flaw in the telephone system. MacKenzie, meanwhile, started a side business manufacturing and selling blue boxes, something that he would later note was legal in California at that time.
And then there were the people who built the mysterious “suitcase blue box,” a thing of beauty that befuddled the boffins at Bell Laboratories. A small attaché case that looked like it came straight out of a James Bond movie, it was crammed full of cool telephone gear, all lovingly mounted: a rotary dial, a keypad, an audio level meter, switches, an auto dialer—a plug board that allowed you to program one frequently called number using a rat’s nest of jumper wires—and, of course, a built-in blue box too. The workmanship was exquisite, as if it had rolled off the assembly line of a professional manufacturing facility—which perhaps it had. Bell Labs was certain that a number of these had been produced, possibly a large number, but was not sure how many or who was making them or where they came from. Investigators had leads suggesting that they originated in California, perhaps manufactured on a navy base somewhere. As to who was buying them, that they were convinced of: the mob. Who else could it be? What else could explain the cartoon—set smack in the center of the rotary dial on one of the boxes—of a laughing mobster chomping on his cigar?
If it were just a handful of clever people figuring this stuff out, that might be one thing. But the contagion was threatening to spread more widely via ads, like one that appeared in 1963.
Slash Communication Costs with TELA-TONE
You’ve been reading about it. Now you can build it yourself. No license required to operate. 5,000 mile range. Complete details, $5 or money back. Tela-tone, Box 4304, Pasadena, Calif.
Or the following gem from the January 1964 hobbyist magazine Popular Electronics:
TOLL Free Distance Dialing. By-passes operators and billing equipment. Build for $15.00. Ideal for Telephone Company Executives. Plans $4.75. Seaway Electronics, 6311 Yucca St., Hollywood 28, California.
“Ideal for Telephone Company Executives.” Whoever got mail at 6311 Yucca Street in Hollywood seemed to have a sense of humor. Formerly the offices of Variety, Hollywood’s leading newspaper, 6311 Yucca by the early sixties had become the mail-order headquarters of dozens and dozens of questionable enterprises, such as Seaway Electronics (blue box plans), Preview Records (vanity recording studio), Man International (false beards and mustaches), C. Carrier Co. (spy equipment), Holley Co. (old scripts from movies and TV shows), Vanguard Galleries (artwork); the list went on and on. AT&T had a chat with the owner of Seaway Electronics. “The advertiser has admitted that about 149 copies of these plans were mailed out,” read a subsequent AT&T memo. “He increased the price of the plans to $7.50 and bulk-mailed at least 8,950 copies of [a one-page ad for blue box plans], mostly to amateur radio operators in New York, New Hampshire, Vermont, New Jersey, Massachusetts, Connecticut, and California.”
Swell. So now that’s almost nine thousand more people who know the network is vulnerable. Great, just great.
You would think that making a free call using a blue box or a black box would have to be illegal, right? I mean, how could it not? Oddly enough, however, no single law really nailed it. Individual states had a variety of laws that were—or might be—applicable. But that meant AT&T had to become expert in the laws of fifty different states and, besides, it was crazy that it might be legal in one state and not in another. What AT&T needed was a single federal law that was broadly and clearly applicable and that made the whole enterprise illegal, end of story.
The law that came closest was Title 18, Section 1343, of the United States Code: “Fraud by Wire.” Section 1343 made it illegal to transmit over a wire and across state lines any “writings, signs, signals, pictures or sounds” for the purpose of fraud. Now, what does a blue box do? It sends tones—that is, sounds or signals—over a telephone line—that is, wires. Usually these tones are sent across state lines—it’s a long-distance phone call, after all—and usually the telephone company is getting defrauded of revenue in the process. Seems like an open-and-shut case.
Alas, when AT&T attorneys met with Justice Department representatives in February 1964, one of the Justice lawyers who actually helped write the Fraud by Wire law said he didn’t think it was intended to apply to blue and black boxes. Section 1343, he said, was designed to protect people from being swindled over the telephone—something like a bad guy calling up your grandma and selling her bogus life insurance; that’s what was meant by “fraud by wire.” It was never intended to protect the phone company itself from being defrauded. In fact, there was a law similar to 1343 (Section 1341, as it happens) that covered mail fraud, and that law did not cover fraud against the United States Postal Service itself. Separate laws had to be written and enacted to deal with that problem.
Then there was the black box problem. Unlike blue boxes, black boxes didn’t send signals or sounds down the wire. In fact, they actually prevented the sending of a signal that the phone had answered. Moreover, this signal usually didn’t cross state lines as the signal was between a telephone and its local central office. So using 1343 to go after black box fraud seemed like tough legal sledding.
The Justice Department lawyers said the government was general
ly unwilling to prosecute toll fraud cases under Section 1343. Indeed, the most the boys at Justice would agree to was using 1343 to prosecute organized crime, if organized crime could ever be shown to be using blue or black boxes, and even that was only because the Organized Crime and Racketeering section wanted it done.
None of this was helping AT&T’s headache. AT&T attorneys met with both the Federal Communications Commission—the FCC, the people who regulated the telephone system—and the Justice Department the next year. Their goal: get a federal law passed specifically prohibiting fraud due to blue boxes, black boxes, or any other colored boxes the bad guys might think up in the future. They even came with proposed legislation in hand: a two-hundred-word run-on sentence that made illegal just about any conceivable fraud perpetrated against a telephone company. While the lawyers were at it, their proposed new legislation also outlawed making, possessing, selling, giving, transferring, or offering for sale a blue or black box or any other “instrument or apparatus” that could be used for telephone fraud. AT&T argued that “a criminal sanction is needed which gets at the source of this fraud, namely, the clandestine manufacture and sale of these devices, which are now carried on with impunity.”
AT&T’s proposal was met with a cool reception. “The proposed legislation has too broad a sweep,” wrote the FCC attorneys in an internal memo. “It would attempt to outlaw not only such physical devices but would purport to outlaw all other actions by ordinary users of the service that might conceivably be construed as a trick, scheme or false or fraudulent representation, pretense or credit device to avoid payment.” The Justice Department was no more sympathetic: the chief of the Fraud Section of the Criminal Division expressed “lack of enthusiasm for the proposal on the ground that it would tend to make the [Justice] Department a collection agency for selected instances brought to them by the phone company.” Who could blame Justice for not wanting to be AT&T’s revenue rottweiler? The telephone company screws up and builds a network that’s wide open and now somehow the Justice Department and the FBI are supposed to clean up the mess and go after the fraudsters?
Exploding the Phone : The Untold Story of the Teenagers and Outlaws Who Hacked Ma Bell (9780802193759) Page 10