Two Fraudulent Telephone Service Wholesalers Sentenced to Prison for $4.4 Million VoIP Fraud Scheme

Pair Ordered to Pay Millions in Restitution to Victims

TRENTON—Two men who pretended to be Internet telephone service wholesalers were sentenced today for their roles in a scheme to steal more than $4.4 million from multiple voice over Internet protocol service providers, U.S. Attorney Paul J. Fishman announced.

Vinod Tonangi, 33, of Guttenberg, New Jersey, and Harjeet Bhambhani, 40, of East Stroudsberg, Pennsylvania, were sentenced to a year and a day and 37 months in prison, respectively. Each previously pleaded guilty to one count of conspiracy to commit wire fraud. The pair entered their guilty pleas before U.S. District Judge Peter G. Sheridan, who also imposed today’s sentences in Trenton federal court.

According to documents filed in this case and statements made in court:

Voice over Internet protocol (VoIP) services transmit telephone calls over high-speed Internet connections rather than over traditional land-based telephone lines. They do not usually travel directly from a caller to a recipient’s computer but rather through computers belonging to several layers of intermediary VoIP service providers, or wholesalers. VoIP wholesalers charge different rates, typically by the minute, to transmit VoIP calls.

Tonangi, Bhambhani, and others held themselves out as the owners and operators of Paradise Communications (Paradise), Reach Communications (Reach), and Airtel Holdings (Airtel)—companies that purported to be established VoIP wholesalers. The companies were shell companies with no operations, the sole purpose of which was to induce companies that sold VoIP services—including AT&T, Cordial Communications, Digerati Networks, France Telecom, Iristel, Keywest Communications, Maxcom Telecomunicaciones, Pipeline Telecom, Primus Communications, Surfcreek Communications, and Verizon—into providing those services to Tonangi, Bhambhani, and their co-conspirators on credit.

Tonangi, Bhambhani, and their co-conspirators ultimately sold the VoIP services that they stole to legitimate VoIP wholesalers and shared the profits.

To make it appear as if the shell companies were legitimate VoIP wholesalers and to induce the victim providers to extend credit to the companies on favorable terms, Tonangi, Bhambhani, and their co-conspirators took several fraudulent steps, including establishing fake business addresses for the shell companies at prominent New York locations, including the Empire State Building.

The conspirators also used Internet-based answering services that purported to connect callers to the shell companies’ various departments, such as accounts receivable and marketing, but really connected to cell phones they controlled.

Tonangi, Bhambhani, and others also created shell company e-mail accounts in the names of non-existent employees for communicating with victim providers; websites that contained false information, such as the names of non-existent employees and the companies’ fabricated qualifications to serve as VoIP wholesalers; and aliases to negotiate the purchase of VoIP services.

They also fabricated year-end financial reports that bore the logo of a national accounting firm in order to give the appearance that the shell companies’ financial reports had been reviewed by that firm.

When the victim providers sold VoIP services to the shell companies on credit, the conspirators would “bust out” the accounts by causing the companies to use substantially more VoIP services than the companies had been approved to buy in such a short period of time. They would do this over weekends and holidays so that the providers would not notice. When the invoices for the services came due, the conspirators would send fake wire transfer confirmations via e-mail or submit small payments to keep the victim providers from cutting off service.

If victim providers sued or threatened to sue the shell companies, Tonangi, Bhambhani, and others would respond in legal pleadings or letters that they prepared in the name of a non-existent attorney, Frank Soss. Tonangi and Bhambhani created and used a fraudulent U.S. passport in the name Frank Soss by downloading and altering a exemplar passport image and photograph from the Internet.

As a result of their conspiracy, Tonangi and his co-conspirators defrauded the victim providers of more than $4.4 million in VoIP services.

In addition to the prison terms, Judge Sheridan sentenced Tonangi and Bhambhani each to serve three years of supervised release. Tonangi was also ordered to pay $1,746,722.13 in restitution. Bhambhani will be required to pay at least $4.4 million, subject to a final order of restitution.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward in Newark, with the investigation.

The government is represented by Assistant U.S. Attorney Seth Kosto of the Computer Hacking and Intellectual Property Section of the U.S. Attorney’s Office Economic Crimes Unit in Newark.