Almost Three Years After FBI Raided Downtown ISP, Its CEO Is Found Guilty of Conspiracy
But in January 2010, a federal grand jury indicted Simpson and 18 others who the feds said were involved in a "massive cybercrime conspiracy." Their crime, per the indictment: creating shell companies and using phony identities to defraud, among others, AT&T, XO Communications and Verizon -- not to mention myriad other "power companies, insurance companies, air-conditioning companies, web site developers and others" -- out of goods and services totaling more than $15 million. Two of the indicted fled to Mexico to avoid prosecution; one, a Southlake man named Michael Faulkner, even had authorities believing he'd been killed somewhere along the border. Not so much.
Since then, 12 of the indicted have pleaded guilty, among them Michael Faulkner and his wife Chastity. Two more remain on the lam -- prosecutors believe they're living outside the country -- and there's still a case pending against Jennifer Jo Gilleland of Phoenix. But as it happens, for the last two months federal prosecutors have been trying this case in front of Chief U.S. District Judge Sidney A. Fitzwater at the Earle Cabell, and the verdict is in: According to a release just dispatched by the U.S. Attorney's Office, the 26-year-old Simpson has been convicted on one count of conspiracy to commit wire fraud and mail fraud, one count of fraud and related activity in connection with electronic mail, one count of obstruction-destruction of evidence, and one count of false registration of a domain name. He faces up to 50 years in prison.
Also convicted was a 32-year-old irving man named Nathan Todd Shafer, who's been found guilty of conspiracy to commit wire fraud and mail fraud, who's looking a 20 years. The release, which follows, also notes that two of the defendants were acquitted during the trial. They're not named in the release, but Kathy Colvin at the U.S. Attorney's Office says Arya Neal Behgooy of Plano and Casimir A. Wojciechowski of Illinois are free to go.
DEFENDANTS CONVICTED IN MASSIVE CYBERCRIME CONSPIRACY
DALLAS -- Following a more than two-month-long trial before Chief U.S. District Judge Sidney A. Fitzwater, a federal jury has convicted two defendants for their respective roles in a conspiracy to defraud telecommunications companies. Nathan Todd Shafer, 32, of Irving, Texas, and Matthew Norman Simpson, 26, of Red Oak, Texas, were each convicted on one count of conspiracy to commit wire fraud and mail fraud. In addition, Simpson was convicted on one count of fraud and related activity in connection with electronic mail, one count of obstruction-destruction of evidence and one count of false registration of a domain name. The announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Twelve other defendants charged in the case have pleaded guilty to their various roles, including Michael Blaine Faulkner, and his wife, Chasity Lynn Faulkner, of Southlake, Texas. During this trial, two other defendants who were charged in the conspiracy were acquitted. Two defendants charged in the case remain fugitives and are believed to be residing outside of the U.S.
In March and April 2009, the FBI executed numerous search and seizure warrants at Michael and Chasity Faulkner's residence in Southlake, at Faulkner's business known as Crydon located at 1950 Stemmons Freeway in Dallas, at Matthew Simpson's residence, at a business operated by Simpson known as Core IP located at 2323 Bryant Street in Dallas and at other related businesses.
During trial the government presented evidence that Shafer, Simpson, and their coconspirators conspired to defraud various telecommunications companies including AT&T, Verizon, XO Communications, Excel Communications, Waymark Communications, Bandwidth.com, and CommPartners; the lessors of properties at 2020 Live Oak, 2323 Bryan Street and 1950 Stemmons Freeway, in Dallas; leasing companies and creditors, including Wells Fargo and AT&T Capital Services; credit reporting agencies; and various other service providers, such as power companies, insurance companies, air-conditioning companies, web site developers and others for goods and services amounting to more than $20 million.
In addition, the government presented evidence that as part of the conspiracy, the conspirators made false representations to obtain goods, such as computers and telecommunications equipment and infrastructure, to include racks to hold computer equipment, generators to provide power for the equipment, and office space to install the equipment, as well as services related to the operation and use of computers and telecommunications. The conspirators created, purchased and used shell companies to hide the true identity of the owners or operators of the companies, or the relationships between the companies. The conspirators paid persons including homeless persons for the use of their identities to "act" as the officers, directors or managers of the shell companies. They also used P.O. Boxes, commercial remailer services, shell offices, apartments or other physical locations to hide owners' or operators' identities or the relationships between the companies. They assumed other identities to hide true ownership of the shell companies and made materially false representations to their victims, by mail, fax, telephone, email or other communications, to obtain goods and services from them.
The maximum statutory penalties are: conspiracy -- 20 years in prison; fraud in connection with electronic mail -- three years in prison; obstruction -- destruction of evidence -- 20 years in prison; and false registration of a domain name -- seven years in prison. Each of the counts also carries a maximum fine of $250,000. Restitution could be ordered.
Following the guilty verdicts, the government presented evidence to the jury regarding the forfeiture of specific property relating to Simpson and Shafer. The jury found that the property associated with Simpson, primarily, was forfeitable and that it constituted the proceeds obtained, directly or indirectly, from the offenses of conviction. The property to be forfeited, pursuant to the jury's verdict, is valued at approximately $4.5 million.
A sentencing date of March 23, 2012, has been set for Shafer and Simpson; Simpson remains in custody.
The case was investigated by the FBI, with assistance provided by the Texas Workforce Commission, the Texas Secretary of State, the Dallas Police Department, the Southlake Police Department, Dallas Sheriff's Office, Ellis County Sheriff's Office, the Duncanville Police Department, the Longview Police Department, the New Orleans Police Department, the American Registry for Internet Numbers (ARIN), the Federal Trade Commission, the Federal Communication Commission and various state public utility commissions.