Friday, December 10, 2010

How Sprint loses millions monthly (Part 2)

Details were left out last time, partly because I didn’t know if I would bore the audience with technical details and also because I didn’t know that the article would become as popular as it is.

As I said before, there were a number of groups who stood to gain from the con job and Sprint’s response to it was anemic, woeful and blundering. That could be said for Sprint’s overall decision making, highlighted by the disastrous merger with Nextel in 2005. This situation was no exception to the rule. Sprint’s fraud/corporate security department did try valiantly to stem the flood of fake businesses and manipulated accounts but the problem was more complex and far reaching than they could handle. They also had very limited knowledge of how the billing system worked, especially when it came to which plan codes went with what plan. This was the major way in which the fraudsters were making their money, because they knew every loophole thanks to the employees who helped them.

So many times when legal closed down one account, it would be either reinstated by customer service or account services (also known as retention), or it would simply re-emerge under a new name and tax id, often within a matter of a few hours or a couple days. It’s almost funny how a communications company lacked the very thing it sold, communication. No department knew the policies and procedures of others and most of the time; they were working against each other to achieve different goals. If you’ve ever called the company and got 4 different answers from 4 different representatives on the same question, that is the reason why.

Many of these accounts were set up by dealers in the greater New York area and targeted the large Orthodox Jewish community. Places like Big Time Cellular, Big Man Cellular, Big Time Wireless and others weren’t even authorized Sprint dealers but they advertised themselves as such and used a group of “master dealers” to place their orders for them. One of these “master dealers” was believed to be a group called “Cellular Networks” which was terminated by Sprint’s fraud department in November of 2007 for creating fictitious accounts and commission fraud among other things. One of their known players was a man named Mendel Mendelovits, who also operates two other businesses, Sellnet LLC and which touts itself as a cellphone recycling group which donates a portion of proceeds to charities. Some of these charities listed have the same business listing as the fake accounts used in their scheme.

Dealers would also use other ways to boost their commissions, such as collecting personal info from across the country, and then use that to create new accounts with bare minimum plans which would eventually be turned off by Sprint’s collections department, but not before the time period had passed to where the dealers could collect their activation fees from Sprint. One victim of their method was a mentally disabled man who could not even use the phone and sometimes, the person whose information was used was recently deceased. It was never determined if these dealers were loosely affiliated or if they were part of a well organized group but their methods of operation were nearly identical. It is also believed that information collected from their legitimate customers was also used sometimes for identity theft. When attempts were made to find and contact the account holder, they were often unaware that they even had Sprint service. The users usually didn’t even know what name their phones were listed on, a dead giveaway for the fraud department that resale fraud was going on. 

 People like Mendel and other dealers had no qualms about scamming members of their own community and when Sprint would terminate an account or force them to correct the price plan, the customer, not the dealer would be left holding the bag so to speak. In fact, they even involved Chabad Lubavitch and other Jewish charities, community centers and businesses in their scheme. Whether Chabad Lubavitch and others were victims or a coconspirators was never fully determined but either way this was a major “Chillul Hashem”

They even advertised their “special rates” in synagogues, community centers and local flyers or websites even though the storefronts were not authorized by Sprint to sell their services. Here is one example of an unauthorized dealer advertising one of their “deals” on a community board. While not one of the biggest money drains to Sprint, this was the plan often sold to individual accounts that did not need the unlimited plans were setup more for the fake businesses.

Some of the accounts were setup for individuals in their own names but they would have to pay the dealers a bribe of sorts to set up these super cheap plans.  It was estimated that most of the accounts with ten lines or less belonged to actual individuals but most of the larger accounts were connected to businesses that only existed on paper. Customers were also setup with large corporate discounts for which they were not entitled. It was a running joke at Sprint that every Jewish person in the New York area with Sprint service worked for JP Morgan, Waste Management or UPS, three companies that got the highest discount percentage from Sprint. These accounts were also not confined to the NY area. Research found that linked accounts were also present in Los Angeles, Chicago, Miami and anywhere else there were large Jewish communities. Often phones would be used to resell service to people who thought they were “renting phones”. (Reference removed)

One of the single most costly loopholes was a $15 feature that was originally designed just for specific plans and only for major corporate customers. It allowed for minutes to be used calling to or from Canada. Many fake accounts used this feature to create rental phone lines with unlimited Canada calling. There was a separate scheme where this abuse and improper setup of a plan ended up costing Sprint $1.2 million monthly on just two accounts which turned out to be used to resell service to truckers who made frequent runs from Northeast US into Canada. Fortunately, a quick decision (a matter of months versus years) was made to terminate these accounts once evidence of what was happening came to light. This was because the VP (Jim Curran) overseeing the problem was not concerned with keeping such a damaging client on the books at whatever cost it took. Then again, when credits amounting to the hundreds of thousands have to be applied monthly, eventually someone high up enough on the food chain will take notice, maybe even start demanding answers or investigation.  If this had been the account services department, it is likely that it would still be active today.

Sprint’s account services department made their commission by “saving” accounts that would potentially cancel and in the turmoil surrounding the aftermath of the Nextel merger; they did serve to keep the flood of customers leaving from becoming a full scale tsunami that would have probably decimated the company. However, supervisors and employees were also engaged in fake “saves” which padded their commission checks and they were often found to be helping these same dealers maintain and expand the very accounts that cost Sprint millions of dollars a month. One supervisor in Sprint’s Orlando callcenter who was later promoted to management, Charles H. was found on a number of occasions to be manually adjusting the credit class of these accounts to allow them to add even more lines. His group of employees, no matter how many times he added or lost members of his team, continually ranked highest in their callcenter on “saves” and when this evidence was brought to the attention of management by the fraud department, they would simply refuse to terminate the parties involved. Dozens of employees made many thousands of dollars for basically screwing their own company over and this was known all the way up the chain of command, including their own VP, John Battaglia. In fact, it was rumored that the both the person in charge of overseeing fraud investigations at the Orlando center April L, as well as their assistant site director Andrew had both been previously caught stealing from the company and allowed to remain, even promoted after the fact.

Orlando was not the only site involved in this but since they were the center that handled business and corporate accounts, they were the prime group involved with assisting the Brooklyn dealers. With their knowledge of corporate accounts and discount structures, they were the perfect people to assist these dealers not only with manipulating services but also add massive volume discounts to these same phone accounts which were already paying mere pennies on the dollar for services they were reselling at huge profits. Employees who found and reported instances of fraud or refused to cooperate with the fraud ring’s scheme were harassed into resigning, turned down for promotions and even written up for giving information to or cooperating with the fraud and legal division in Kansas City on these accounts.
In 2008, a serious attempt was made to identify and terminate almost a thousand of the largest accounts but the effort was hampered by protests from John Battaglia and other managers in the retention department who were afraid that removing these accounts would hurt the “Churn” numbers that they had put up. When Sprint began sending out certified letters informing people that the phone lines would be terminated or corrected, very few people actually called to correct the issue. Most just ignored the letters and accounts that were terminated would be turned back on almost immediately by the retention department and marked as “saved”. Every attempt that was made to stop the problem would be meet with resistance from account services, often from the VP level. Eventually the effort was basically abandoned due to lack of support and the stonewalled resistance from account services.

It is not known outside of Sprint and the ring of dealers how many accounts are still active and if this problem continues today. It is reasonable to assume due to much of the same management team and commission incentives still being in place that they are.

*DISCLAIMER* This is a blog and the personal experiences of the author thereof. The author is no longer employed by Sprint or any of it's contractors, vendors or shady dealers.


  1. Fascinating reading to a long-time Sprint sub.

  2. I do think that this kind of thing is rampant throughout the corporate world and that share holders don't realize that the careless corruption of the corporate executives is depriving them of honest share income that is otherwise going to corporate thieves and probably corrupt, complicit management. There's got to be losses that are lining the pockets of tnieving corporate personnel. esl

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  4. Thanks for the explanation Dan. I apologize for lumping your account in with them. Most of the information I have came from Sprint sources and the piece about your site came from what you wrote which would would lead one to believe, at first impression, to be the same method of operation. The fact that you managed to work such a deal with Sprint at such a young age is outstanding and I regret tarnishing that accomplishment in any way.

    If you do have any information on the Boro Park group, please let me know. Remember, most of the information I have comes from Sprint and I'd like the perspective of someone in the community.

  5. No problem, but in the future, try to verify facts before making the accusations...

    I personally have never has anything to do with the Boro Park plans folks so I don't have any information in that regard. I live 500 miles away from them and frankly just try to do my own thing. What they do is Sprint's problem to fix (as it seems they are doing) and not my own. Negotiating my own 100% kosher discounts with corporate offices of companies (be it airlines or cell phone companies) never phased me. Even if I only have 10% off and not 27%, better for it be kosher than not...just my 2 cents.

  6. I did notice in some of your other forum topics discussions of whether not it was right to take advantage of company errors or not. I hate the people like those from Boro Park that make the rest of us look bad.

  7. I've advised people on the site countless times to stay away from the Sprint Boro Park and other scam plans as they are fraud.

    More than that I can't do.