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DEATH OF THE BLUE BOX

This article is reprinted from Full Disclosure. Copyright (c) 1991 Full 
Disclosure. Permission granted by publisher to reprint when subscription 
nformation provided: Full Disclosure, Box 903-R, Libertyville, Illinois
free: (800) 786-6184. Subscriptions: $18 for 12 issues.

This article will provide an historical review of the problem of ``Blue Box'' 
telecommunications fraud. A blue box being the street name of one, of several 
electronic devices designed to allow the user to place free, long distance 
telephone calls. The information presented here consists of excerpts from the 
clarifying questions interspersed have been merged together without the 
extraneous questions for clarity and space reasons.

The excerpts from the following witnesses are used here: Neil Beller, 
Division Attorney, Central Telephone Company of Nevada; Michael Simon, 
Special Agent, Federal Bureau of Investigation, Las Vegas; and Karl 
Berolzheimer, Central Telephone Utilities and Utilities Corporation Counsel; 
William Caming, Attorney, American Telephone and Telegraph. Other individuals 
are members of the Commission.

Mr. Feldman: Mr. Beller, would you tell us how many investigations you were 
nvolved in and the approximate period of time?

Mr. Beller: From April 22, 1973, to October 15 of 1973, we gave approximately 

Mr. Feldman: . . . What does that indicate?

Mr. Beller: We had reason to believe individuals were using some sort of 

Mr. Feldman: Would you state on what basis you had that belief?

Mr. Beller: We have a computer print out, a copy of which I have here, which 
these numbers and ascertaining where the called number was, we had reason to 
believe that the person was using a foreign device.

The reason for that is that some of the numbers that were called were 
numbers, for example, to New York information, or the information office at 
TWA. And it is not logical for a person to talk to TWA for 20 minutes or a 

Based upon that, we would put either a brush recorder or at a later date we 
from that we were able to ascertain that the person was, in fact, using a 
foreign device on the telephone line.

Mr. Feldman: Agent Simon, how many cases ultimately resulted from the 
nformation provided you?

Mr. Simon: The resulting investigative cases? We had five cases that were 
brought to indictment and subsequent prosecution. We had seven other cases 
that, because of the United States Attorney's position, prosecution was 
a blue box which was very unsophisticated in comparison to what Mr. Caming 

This man made it at home from various electronic parts, and his wife used the 

You have to understand, of course, that we did conduct extensive 
nvestigation to obtain all the facts we could before we presented them to
the United States Attorney.

There were other telephone numbers referred to us by Mr. Beller where we 

As we progressed with these investigations we became more sophisticated. We 
learn with each one.

Mr. Feldman: If we could concentrate on the successful investigations, I 
believe that information came to you as to the FBI from a number of different 
nformation came to your attention.

Mr. Simon: There were three different ways. Mr. Beller would furnish us with 
a computer tape printout, and after the issuance of a federal grand jury 
name and address of the individual.

We would then conduct a physical surveillance to determine if that person 
actually existed. It is always possible to have aliases. We did run into a 
number of instances where an individual who was subscribing to the telephone 
company service was not, in fact, the name that was on that card.

So once we established this, and after obtaining a search warrant, we would 
notify Mr. Beller.

Mr Beller, in turn, would notify one of the technicians who would tell us 
that were was, in fact, a device being utilized on that telephone.

Mr. Simon: The second thing we had was confidential sources of information. 
[these were FBI informants who would provide information that electronic toll 
fraud was occurring just the same as they'd advise of a gambling offense]. 
And Mr. Moore was first brought to our attention by a confidential source who 
furnished the information to an agent of the FBI, Mr. J. Lawrence Sullivan. 
Mr. Moore did not have any of these devices even though he was selling them 
n Las Vegas. We were able to pick up Michael Raymond Tullis who was

Mr. Feldman: So you have computer printout information and informant 
nformation. Was there any other?

Mr. Simon: Yes. On Frank Joseph Masterana -- he had been the subject of a 
number of legal Title III wire interceptions by not only the Law Vegas 
Division, but other Divisions of the FBI. He was at one time in Macon, 
Georgia, for sentencing on one of the gambling cases, at which time 
confidential source information was received that he was using in Macon, 
Georgia, at that time, a blue box to call Las Vegas.

So bearing in mind and having additional information, two of our Las Vegas 
FBI agents, in August of '73, observed Masterana in an open pay telephone 
booth making a telephone call with what appeared to be a blue box. But they 
couldn't get close enough because he was quite surveillance conscious.

Based up on that and subsequent investigations, we were able to assume that 

s assigned to the Las Vegas & California, Strike Force Office, we together
come up with the various telephones that Masterana was using to make these 
alleged calls, Mr. Duff would give us authority to make an immediate arrest, 
using an electronic device or a blue box.

Mr. Simon: These were pay telephone booths. What was required was to send 
agents out in the field and survey Masterana on a continuous basis to find 
out what telephone exchanges he was using.

After several days' work we were able to determine he was using three or four 
view the exterior entrances into the drug store, watching for agents. And 
because of the size of the city of Las Vegas, it didn't take him very long to 
find out who we were. So it was difficult to surveil him.

[Description of methods by phone company to verify use of toll fraud devices 
ommitted]

Mr. Feldman: Mr. Beller, once you had verified to your own satisfaction, 
using the electronic equipment, that, in fact, electronic toll fraud was 
committed on the lines, what did you do?

Mr. Beller: Concurrent with the subpoena from the FBI, we'd typically put on 
the recorder that particular individual's line. At that point in time, Mr. 
Simon would hand carry over a subpoena for any and all information that we 
nformation card which denotes the name of the particular person who has the
line, any other information that we might have, which would then be the paper 
tape.

Mr Feldman: Agent Simon, I wonder if you could indicate what your next step 

Mr. Simon: Once we received the information, again our investigative process 
that we had everything correct and based upon that information, I would take 
the information furnished by Mr. Beller on the 800 number, the toll free 
number, and I would call it that day or the next day to verify the fact that 
t was a toll free number to a particular place. In some instances that
number was no longer actually working, but the person utilizing the blue box 
nto it.

Then I would take that information and prepare an affidavit in support of a 

Then I would return to my office and contact Mr. Beller and tell him we had a 

The next step was that whomever Mr. Beller would designate -- one of their 
electronic experts -- would call me and say they had information that this 

Mr. Feldman: Was that information gathered by continued use of the TTS-176 
(pen register)?

Mr. Beller: Yes.

Mr. Simon: This may have taken two days to prepare. Then there would be 
agents in the field and I'd notify them by radio. They had the search 

Mr. Feldman: And this was the same general procedure used in each of the 
cases?

Mr. Simon: With the exception of the Masterana case. In the Masterana case 
the Central Telephone Company was able to put on the device after we had 
using, the telephone company would put on their TTS-176 and be able within 
ten minutes to tell us whether he was using an electronic device, the 
And as a result, we arrested Masterana in a telephone booth specifically on 
October 15, 1973, in a public pay telephone booth, at which time he had two 
blue boxes in his possession, the one he was using, together with voluminous 

Mr. Feldman: In the other four cases, when you executed the search warrant, 

Mr. Simon: Yes, in each case. In the Judith Dinah Douglas case, two blue 
boxes were found when the search warrant was executed. As a result of this, 
United States on July 2, 1974, provided she'd submit to psychiatric 
examination, and come back within 90 days for resentencing.

Subsequently, her case was appealed to the Ninth Circuit on two separate 
occasions. The Ninth Circuit upheld the conviction. She has not to my 
knowledge begun serving her sentence, nor is she though with her legal 

On the Michael Raymond Tullis case, upon execution of the search warrants 
based upon confidential source information, we did find one device in his 
apartment, and this case when to jury trial.

He subsequently appeared on March 15, 1974, with counsel in Las Vegas and was 
first 90 days to be served in custody, and the balance of the sentence was 

a blue box and went to trial. He was found guilty on March 28, 1974, by the 

At this time, he also ordered that Moore make restitution to the Central 
Telephone Company.

He filed a notice of appeal to the Ninth Circuit and the Ninth Circuit upheld 
the conviction.

The last matter was David Louis Goldberg and H. Jordan Rabstein. In this 
nterception on Mr. Goldberg's residence phones. During that period of time,
Rabstein would attempt to use the blue box or the electronic device to 
circumvent the telephone toll call recording equipment. It was a 

We heard him on numerous occasions make mistakes and because of the slowness 
elated. Mr. Goldberg, on the other hand, was much more efficient.

Subsequently, Mr. Beller came to us with computer tape printouts, and we went 
through our normal process of obtaining an affidavit in support of a search 
time we found the blue box in his residence, next to his night stand, which 
t. Also also we were able to seize three illegal, unregistered firearms that

Mr. Goldberg, subsequently, together with Mr. Rabstein and with counsel, were 
charged with violation of the Title 18 Sections 1084 and 1343 of the United 
States Code. And they appeared and entered a plea of guilty.

They were subsequently sentenced on August 18, 1974, at which time Goldberg 
States for violation of Section 1343, and Goldberg was placed on one year 
consecutively.

Mr. Feldman: Agent Simon, you have already indicated that Section 1343 does 
not specifically prohibit the possession of blue boxes.

Mr. Simon: To my knowledge, the manufacture or possession.

Mr. Feldman: And in all cases, expect the Masterana case, I assume, you 
arrived there sometime after the call had been concluded?

Mr. Simon: It was circumstantial.

Mr Feldman: That is my point. The evidence on which convictions were 

Mr. Simon: That is right.

Mr. Feldman: I wonder if you can describe the type of circumstantial evidence 
that was used in these cases?

Mr. Simon: We had the computer print out and the TTS-176 tapes -- not only 
that was previously given to us but that day, of the time, the Central 
Telephone Company had the TTS-176 installed on that phone or particular 
these people were the only ones in the apartment when the search warrant was 
executed helped us, of course.

Scaramuzzo said. He said, ``They caught me with one of them things,'' or 
``They caught me with one of them boxes and I was using it.''

What he was saying is he had just set it down when the agents entered the 
We were able to introduce this and it was very strong

Mr Feldman: And that was the basis on which convictions were obtained?

Mr. Simon: That is correct.

Mr. Berolzheimer: I want to make clear that Central Telephone Company, 
although it operates in nine states, has only had experience with this 
from the material we have submitted to the Commission it all occurred during 
a relatively short period of time in 1973. It deals with one community, Las 
Vegas, which has relatively compact and flat geography with wide streets and 
low buildings.

certain amount of illegal gambling and transmission of gambling information.

So we have in Las Vegas a combination of unique circumstances, in including 
ts geography, its size, the interest of both the FBI and the prosecuting
agency; I think also the existence of a grand jury and the ability of the FBI 
to obtain search warrants.

We also had cooperation between the telephone company and the FBI, as has 
been described by the witnesses, with surveillance and radio control, so that 
they could swoop in and get the blue box.

conceive it would be most difficult to obtain that kind of evidence in a 
major metropolitan area. I just don't think you could coordinate it that 

And I'm not convinced, although we were successful -- that is the United 
States Attorney was successful -- in securing convictions in these six cases, 
cases tried in Las Vegas, but I can conceive of a court taking the position 
that without voice identification of the user a conviction could not be 
obtained.

Mr. Westin: . . . Do you believe these techniques would not be feasible in a 
large metropolitan center or under conditions that vary from the Las Vegas 
one?

Mr. Simon: I think all of the comments were very valid. Because of the fact 
that I spent ten years in Chicago, I can only express an opinion, but I can't 
conceive of this working in an apartment complex, a high rise, third floor 
available we might be able to proceed, but I do not think we could enter the 
``The electronic device is being used right know by an unknown party in 
Apartment no. so and so.''

because of the largeness of the metropolitan area. I think it would be almost 
mpossible to surmount. I just don't know how it could be done.

Mr Hodson: . . . does Bell also use the system we have just heard about?

Mr. Caming: First, I might like to say, Mr. Hudson, I am in general agreement 
thousand or so cases we have been involved in in the last decade, if we could 
catch them using it or in circumstances very close to that, as Mr. Simon so 
ably described in one or two of the cases, then we either would obtain a plea 
of guilty or they would be found guilty.

But we have found in the majority of our cases, and those that are the 
three cases just as an example of what we have been through.

fraud, the cooperation of the Bureau has been consistently outstanding. And I 
think it is worthy to express what is a personal feeling but a tribute to 
their industry and dedication. As far as one case, it is a case that might be 
architects. Since time is of the essence, I will quickly synopsis it. It 
nvolved the general cooperation of 14 Bell Telephone companies and two
General Telephone companies between December 1971 and September 1972.

Cleveland, Houston, Dallas, Los Angeles, Santa Monica, Atlanta, Washington, 
DC, Chicago, Detroit, Des Monies, Memphis, St Paul, Miami, New York, Denver, 
Knoxville, New Orleans, Milwaukee -- among others.

We finally resulted in gathering evidence -- as you can see, this was a very 
manufacture and distribute blue boxes, but to use them in an extensive number 
of businesses where you might have offices populated by a large number of 
ntimate character.

Also, these people used them at homes scattered throughout a large area.

a number of investigations are still going on.

Kornfeld was involved. He apparently had a home with I understand was huge, 
of people, both male and female, constantly in and out of there. There were 
ndications from various sources of some use by somebody of blue boxes in

Finally, it resulted in apprehension by chance of one of the secretaries 
using the blue box, and she was arrested on January 28 of 1975. The question 
of identification could not have been made except for the very limited voice 

t took six months more to develop the case, to indict Mr. Kornfled on June
making 344 calls to Europe over a period of time. 

The witnesses at offered a solution to the problem. The following is the 

``Fraudulent Communication Devices. ``(a) Whoever willfully ``(1) sends 
through the mail, or sends or carries in interstate or foreign commerce, 
or ``(2) imports or otherwise brings into the United States or any 
territory or possession under its control or jurisdiction, or ``(3) makes, 
assembles or possesses, or ``(4) sells, gives or otherwise transfers to 
another, or ``(5) offers, or places in any newspaper, magazine, handbill 
or other publication any advertisement, to sell, give or otherwise transfer 
to another, or ``(6) purchases or in any other manner obtains, receives or 
conceals, ``any electronic, mechanical or other device, instrument, 
apparatus or equipment or plans, specifications, instructions or other 
nformation for making, assembling or using any such device, instrument,
apparatus or other equipment, or publishing any such plans, specifications, 
nstructions or other information, ``with intent to use it, or knowing or
communication common carrier, ``by rearranging, tampering with, or making 
any unauthorized connection, whether physically, electronically, 
acoustically, inductively, or otherwise to, any telephone instrument, 
equipment or facility of any such communication common carrier, to avoid the 
authority the existence or place of origin or termination of any 
communication, ``or by using any communication service knowing or having 
the time of use, ``shall be fined not more than $1,000 or imprisoned not 
more than five years or both.

The first amendment aspects of this statute were brought up, but due to a 
lack of time were not addressed in any detail. The whole problem of this type 
of fraud and statutes to deal with it became moot when industry step in and 
MANAGEMENT in discussing the problem, aptly noted that ``[i]t took a series 
of innovative technological developments by the Bell System to defeat them.''

Today, the attempts to solve the unauthorized access of computers and current 
equally ineffective.

Even a statutory change to reduce the burden on law enforcement agencies 
ncarceration program sufficient to deal with many thousands of individuals
using toll fraud devices. Nonetheless, there still exists today a periodical 
based in blue box technology and mentality. It is called 2600.

The above is reprinted from Full Disclosure Newspaper. Subscribe today and 
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