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How Stolen Smartphones End Up In The Hands Of Colombian Cartels

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Alleged stolen smartphone traffickers and their merchandise | Colombian Police
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This article is part of a Huffington Post series exploring the global underground trade in stolen smartphones. Previous stories in the series can be found here.

BOGOTA, Colombia -- In the capital of a country notorious for drug trafficking, here was a familiar scene. Colombian police, acting on a tip from an informant, stopped a Chevy minivan leaving Bogota’s El Dorado Airport. They found what they were seeking in the back of the vehicle: dozens of boxes packed with precious contraband.

But this seizure in the early hours of Sept. 26, 2012, did not involve cocaine or other illegal narcotics. The boxes held more than 400 Samsung, LG and BlackBerry smartphones, complete with instruction manuals and power chargers. When police turned on the phones, the screens displayed the names and logos of two American wireless companies, AT&T and Verizon.

Though a search of their serial numbers in an American police database did not link any of the devices to reported robberies, Luis Guate, an investigator with the Colombian National Police, said the phones had clearly been stolen in the United States: Wiretapped conversations between Colombian traffickers revealed that the phones had been acquired from a bulk dealer of stolen electronics in Miami, and then flown to Bogota.

“Our informant told us they were buying stolen phones from over there, fixing them up, and putting them in boxes with manuals to make them look new,” Guate told The Huffington Post, adding that traffickers often alter serial numbers to avoid being linked to crime reports. “Then they would import them into Colombia.”

South American cartels are applying skills honed through decades of distributing cocaine to a new pursuit offering outsized profits at a fraction of the risk: They are moving into stolen smartphones. A Huffington Post investigation drawing on interviews with Colombian law enforcement officials and a local police informant and transcripts of wiretapped conversations between traffickers reveals that Colombia serves as a primary hub of this increasingly lucrative trade.

“Drug trafficking is more dangerous, because all the countries are fighting drugs,” Jeanet Pelaez, a prosecutor with Colombia’s attorney general, told HuffPost. “But with stolen phones, not every country is attacking this problem. There is no control. The risk is minimal.”

The potential rewards are enormous. The worldwide market for stolen smartphones is worth an estimated $30 billion a year, according to Lookout, a San Francisco-based mobile security firm.

While the cocaine trade has traditionally flowed from south to north, linking coca-producing areas of Latin America to buyers in North America, the smartphone trade generally traces a reverse path. Many of the wares are collected on the streets of American cities -- now suffering an epidemic of sometimes-lethal street crime targeting iPhones and other devices -- and then shipped to Bogota and other cities in South America.

The influx of traffickers to the stolen smartphone trade was confirmed by an active Colombian police informant who spoke to HuffPost on condition he not be named, citing threats to his life. He said cartels favor high-end devices like the iPhone and the Samsung Galaxy. Many of the phones arriving here in bulk and destined for retail distribution are stolen in the United States, the informant said.

“When you turn on the phone,” he said, “it says AT&T or T-Mobile.”

According to the informant, the traffickers take stolen phones from the United States to an electronics market at a shopping center in downtown Bogota, where the devices are refurbished and then smuggled across borders, mostly by ground.

Colombia has become so central to the global distribution network that stolen smartphones are arriving by air and sea from points as distant as Spain and Singapore. A sophisticated stealth courier industry then delivers the devices across the continent, from Brazil to Argentina. On the way, the phones are disguised inside milk and fruit containers and loaded onto trucks and buses, ferried via secret compartments sewn into suitcases and jacket linings, or hidden in the backpacks of smugglers who ford shallow rivers along the Venezuelan border, according to law enforcement and a police informant.

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Traffickers often smuggle the motherboards of stolen phones to reduce bulk.

Some traffickers smuggle both drugs and phones. Last year, Colombian police sought to arrest William Eliezer Lozano Salas, a businessman who owned cell phone stores in Colombia, for allegedly transporting stolen phones into Ecuador, Peru, Argentina and Brazil. But they were too late: Brazilian police had already arrested him on drug trafficking charges, according to Pelaez, the Colombian prosecutor.

The stolen phone trade has become so profitable that it has provoked a surge of deadly street crime here beyond anything seen in the United States. Over the last two years, robbers have killed at least 20 people in Colombia for their phones, according to police figures. In an editorial last year, the Colombian newspaper El Tiempo declared that holding a cell phone in public had become “a death trap.”

That smartphones have become objects worth killing for reflects the sharp divergence in their retail price from place to place. The same iPhone that can cost an American customer just $200 with a two-year service contract can fetch as much as $2,000 in Hong Kong or Brazil, where huge import taxes have driven up the price of Apple products.

In the United States, law enforcement officials have demanded that smartphone makers -- including Apple and Samsung -- add a so-called “kill switch” that can disable the phones once they are stolen, undercutting the incentive to seize them.

Apple and Samsung this summer unveiled new security features they said would allow consumers to render their devices useless once stolen. But San Francisco District Attorney George Gascon last month accused wireless carriers of blocking the rollout of Samsung’s anti-theft feature to preserve their profits from selling phone insurance.

In addition, Apple's new anti-theft feature, "Activation Lock," requires iPhone owners to turn it on, which some officials say could discourage widespread adoption.

“The seriousness of this issue demands a more robust response” from manufacturers and carriers, New York Attorney General Eric Schneiderman said in a statement last month.

Apple did not respond to repeated requests for comment. In a statement, Samsung said it "takes the issue of smartphone theft very seriously, and we are continuing to enhance our solutions." CTIA, the industry group that represents wireless carriers, said phone companies have “worked hard over the last year to help law enforcement with its stolen phone problem."

Here in Bogota, Col. Fredy Bautista Garcia, the head of a cybercrime unit at the Colombian National Police, accused the electronics giants of indifference in the face of deadly violence plaguing his country. In an interview, Garcia praised new legislation in South Korea that requires phone makers to embed a kill switch in every new device. He questioned why smartphone companies have not done likewise everywhere.

“I don’t think they understand the magnitude of the problem,” Garcia said.

‘GIVING PAPAYA’

Emilia Ospina understands the magnitude of the problem.

One day in June 2012, she received a text message from her 25-year-old son, Juan Guillermo Gomez, sent from his BlackBerry: "Did you know that I love you Mom?"

Those words would be the last she would ever hear from her son.

Several nights later, as Gomez was walking home from a local bar, four men stopped him and demanded his BlackBerry, according to police. One flashed a knife and stabbed Gomez once in the chest, leaving him to die on the sidewalk. The men took his smartphone and fled into the night, police say.

“There are no words to describe the pain,” his mother said, shaking her head and holding both of her hands to her chest. “It’s like your heart has been torn up.”

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Juan Guillermo Gomez was killed by phone thieves in Bogota.

According to figures from Colombian police and Consumer Reports, Colombians and Americans reported about the same number of stolen phones last year -- 1.6 million -- despite the fact that the United States has a population seven times larger.

In Bogota, a bustling metropolis of about 7 million people at the foot of the Andes mountains, robberies have become so frequent that the mayor has warned residents not to display phones in the street. Colombians have coined an expression for carrying phones in public -- “giving papaya,” which loosely means “tempting fate.”

According to local police, Bogota’s phone thieves are mostly drug addicts from impoverished neighborhoods who sell stolen devices to traffickers for between $25 and $100 each, depending on the model and condition. Most of the thieves are men, but a surprising number are women. The Colombian newspaper El Tiempo last year published photos of 10 women who have been arrested for stealing phones in Bogota under the headline: “The 10 Queens of Stolen Phones in the Capital.”

The thefts have become increasingly brazen, occurring day and night in almost every neighborhood of the city.

Jose Mendez, 33, lives in Bogota and works for Tigo, one of Colombia’s wireless providers. He has had his phone stolen twice. Once, he was walking down the street and talking on the phone when a man on a motorcycle grabbed it from his hand and sped away. A few months later, Mendez was eating at a restaurant in Bogota when a thief at the table behind him swiped his phone from his jacket that was draped across his chair.

Now, when he needs to check his phone on the street, he ducks inside a nearby shop.

“If you have a phone here, it is a risk,” Mendez said in an interview. “You don’t feel safe anywhere, except maybe inside your house.”

For Gomez, a lawyer, his deadly encounter with phone thieves was not his first. A year earlier, robbers beat him up and made off with his phone. After that, his mother warned him not to carry his phone in the street.

“He was my life,” his mother said. “When he died, the color of my life changed. Everything became black and white. Life and true happiness are not here anymore.”

Gomez grew up in Bucaramanga, a Colombian city about 200 miles north of Bogota. His parents, who lovingly called him “Juangui,” said he was a curious child who read voraciously, took apart radios to understand how they worked, and taught himself to speak English and play guitar.

As he got older, he chose a career in law to “change all that corruption in the government,” said his mother. Colombian newspapers said he was widely seen as a "brilliant" lawyer with a bright future. Shortly before his death, he applied to a graduate program at Harvard University, a longtime dream, his family said.

Today, more than a year after Gomez’s death, Nicolas Gomez, 20, still wears his brother’s favorite Tissot watch, even though the band is too tight.

“He was wearing this the night he was killed,” Nicolas said, staring down at his wrist while sitting in his Bogota apartment. “The thieves didn’t take it. I don’t know why. It’s worth more than a cell phone.”

His murder sent shockwaves across the country. Colombian businessmen, politicians, professors and students filled the pews of Sacred Heart of Jesus church in Bucaramanga for his funeral. Colombian police launched “an emergency plan” targeting areas of the country with high numbers of phone robberies. Colombian journalists created a social media campaign to raise awareness about the violence associated with phone theft.

Two men were eventually convicted of Gomez’s murder and sentenced to prison -- one for 44 years, and the other for 39. A 17-year-old accomplice was charged as a minor and sentenced to five years. Police continue to search for a fourth suspect.

Gomez's mother said she is no longer angry at her son's killers. Rather, she said, she feels "sorry for them" because they place more value on a phone than a human life.

“Those kids,” she said, “are more dead than my son.”

‘LIKE CARRYING A DEAD PERSON’

Colombian police blame the rising street crime on strong consumer demand for black market smartphones, particularly the iPhone. Like Americans, Colombians are so enamored of iPhones that they line up outside retail stores hours before the release of a new model. But in a country where about one-third of people live in poverty, many Colombians can only afford stolen models.

“If people didn’t buy stolen phones, the robberies wouldn’t exist,” said Carlos Felagán Cabrera, a cybercrime investigator with the Colombian National Police.

To discourage people from buying stolen phones, the Colombian government last year produced a series of shocking, sometimes gruesome, television commercials. In one, smiling people are talking on their phones while buying flowers, reading books, and going shopping. Moments later, blood begins oozing out of the devices, and a message in Spanish scrawls across the screen suggesting that people who buy stolen phones may be indirectly responsible for the violence: “Buying a stolen phone is like carrying a dead person. Don’t do it.”

The Colombian government produced this commercial to discourage people from buying stolen phones.

In another, the camera pans across a cemetery as a mourner lays flowers at a gravestone. A voice says: “The trafficking of stolen phones is burying the dreams of many Colombians. Don’t buy or sell stolen phones. It’s your responsibility, too.”

Pablo Marquez, who leads the agency that regulates Colombian wireless companies, said the public awareness campaign was “very effective.”

“It made people realize that if you buy a stolen handset, you may have bought it from someone who was killed,” he said in an interview.

But on a recent afternoon at a downtown Bogota shopping center known as Las Avenidas -- where police say most stolen phones in Colombia are sold -- crowds of shoppers attested to the persistent demand for discounted, used phones with potentially violent histories.

Inside a chaotic bazaar, 20-something salesmen with gelled hair displayed the latest iPhone, Samsung and BlackBerry models beneath rows of glass counters, as reggaeton thumped from speakers in the ceiling. The commerce spilled onto the sidewalk outside, where more salesmen laid out phones on blue and red blankets just steps away from speeding motorcycles and buses belching black exhaust into the smog-choked sky.

“This is the biggest market for stolen phones in Colombia,” said Fernando Orosco, an undercover officer with the Colombian National Police.

By Orosco’s reckoning, some 80 percent of phones displayed here had been stolen, some in Colombia and some abroad. To avoid police raids, salesmen keep legal phones beneath the glass counters and stash stolen phones in a back room, he said.

At one counter, a woman asked a salesman for an iPhone. He nodded and disappeared. Moments later, he returned holding a white iPhone 5 that looked almost new but for a few small scratches. He showed her how to use the iPhone’s camera and said it would cost 850,000 Colombian pesos, or about $400.

“How do I know the phone isn’t stolen?” she asked.

“It’s not stolen,” he assured her. “I’ll give you a receipt and my shop name, and if you have any problems with police you come back and tell them who I am.”

The salesman cut the price by about $50 and threw in a three-month warranty. But the woman said she did not have the money and left.

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About 80 percent of phones sold at this Bogota shopping center are stolen, police say.

HACKERS AND MULES

Until police scuttled an operation two years ago, an upscale hotel three miles from the shopping center functioned as a key processing point for the refining of stolen smartphones into marketable commodities, according to police. Every few months, a notorious computer hacker named Pedro Eduardo Chasco would fly from his home in Argentina to Bogota, check in to the Ibis hotel and rarely leave his room, Colombian law enforcement said.

Thieves would drop off suitcases full of stolen smartphones at Chasco’s room, police allege. Using a computer installed with sophisticated phone-hacking software, he conducted marathon sessions unlocking the devices so they could be used on other networks, processing as many as 500 phones per visit and charging traffickers between $20 and $50 each, according to police. Law enforcement said Chasco conducted such work on eight occasions between 2008 and late 2011.

“He is a hacker,” said Cabrera, the Colombian police officer. “He is very good at manipulating phones. He is a key piece of this structure that allows them to send the devices out of the country.”

Chasco, who holds Argentine and Spanish citizenship, is known among police as “El Liberador,” or the man who liberates the smartphones. Traffickers know him as “the Spanish guy.” In one wiretapped phone call captured by Colombian police, a trafficker named Luis Eduardo Bernal Castillo, known as “Lucho,” told an associate that he needed to unlock a shipment of iPhones before he could smuggle them into Peru.

“There’s only one guy who knows how to do this,” Castillo said in the call, according to court documents. “And that is the Spanish guy.” In 2011, police arrested Castillo, alleging that he led a crime ring that trafficked 14,000 stolen phones across South America in three months.

In late 2011, Colombian police thought they had caught Chasco. But as officers made their way to his hotel room, an employee at the hotel reception desk tipped him off, according to Pelaez, the prosecutor. When police arrived, Chasco stood alone in his room, but they found no evidence -- no computer or stolen phones -- and were forced to let him go.

A spokesperson for the Ibis hotel did not return a request for comment.

Interpol, the global police organization, has issued a warrant for Chasco’s arrest, but police have lost track of him, Pelaez said.

His attorney could not be reached for comment.

“We think he may be somewhere in Argentina,” Pelaez said.

Once freed from the constraints of their former networks, stolen phones travel the final leg of their journey in the hands of experienced smugglers, or “mules,” who take them to cities across South America. There, the phones are resold in shopping centers.

Often, smugglers pack the devices in cardboard boxes labeled as “cell phone accessories,” police said. To reduce bulk, they take some apart and ship only their motherboards -- the thin, green computer chips inside -- and reassemble them at their destination.

But traffickers can’t smuggle stolen phones without help. They ensure their merchandise crosses borders safely by bribing a network of people, including bus drivers and customs agents, according to Pelaez.

Police have arrested several Peruvian bus drivers after finding stolen phones stored in secret compartments of buses en route to Argentina.

In 2011, police arrested a Colombian customs official and charged him with helping smugglers bypass airport security at Bogota’s El Dorado Airport while carrying stolen devices in their luggage. The official has pleaded not guilty and is awaiting trial.

“Somebody would tell him what the person with the phones was wearing, and he would pretend to search him,” Pelaez said. “Then he would let him go.”

Police say salesmen at this Bogota shopping center stash stolen phones in a back room. (Mike Ceaser)

A DOUBLE LIFE

Faced with a proliferation of stolen phone trafficking, Colombian police have been mounting a crackdown. Two years ago, police arrested 17 people for smuggling stolen phones between Colombia, Peru, Ecuador and Argentina and seized 1,150 stolen phones, 2,800 cell phone motherboards, five laptops, two cars and about $26,000, according to Colombian police. This past summer, they arrested another 16 people and seized 850 stolen phones, 125 cell phone motherboards and 60 SIM cards destined for Peru, Venezuela and Argentina.

At a press conference announcing a recent bust, police displayed on a table dozens of smartphones, stacks of Colombian pesos and six revolvers belonging to the traffickers. Four people who had been arrested stood behind the table, facing away from the flashing cameras, their jackets pulled over their heads.

Colombian police announce a recent bust. (Colombian Police)

Police have infiltrated Colombia’s phone cartels through classic crime-fighting techniques. Guate, a police investigator with broad shoulders and close-cropped silver hair, has listened to hundreds of hours of wiretapped phone calls between traffickers and begun to decipher their code language.

For example, they never utter the word “phone,” he said. Instead, they refer to older models as “perritos” (“doggies”) and newer smartphones as “buenitas” (“beauties”). When they recite serial numbers, they substitute numbers with letters, he said.

Many phone traffickers try to avoid attention by driving Mazda sedans instead of flashy sports cars and laundering their profits through shopping centers they own in Bogota, said Pelaez, the prosecutor. They dodge police wiretaps by discarding their personal cell phones every four days and conducting sensitive business on Skype because the online service can’t be monitored by police, Guate said.

Police have also used another old-fashioned method to penetrate the cartels -- cultivating informants. On a recent morning, one police informant met with HuffPost to describe how Colombia’s phone traffickers organize and operate.

The informant asked that his name and physical characteristics be withheld to disguise his identity. Then he sat down at a table, glanced around the empty food court, and explained why he needed to remain anonymous.

"If they find out I'm an informant,” he said softly, “they will kill me.”

The informant said he started trafficking stolen phones when he was 25, buying them from street thieves and selling them behind the glass counters in a Bogota shopping center. Now 30, he was arrested earlier this year while carrying a box of stolen phones. To avoid jail, he agreed to become an informant.

“They told me if I cooperate, they will drop the charges,” he said. “So I made a deal with police.”

He lives a double life. As part of the cartel, he transports stolen phones between the people who buy them from thieves and the people who smuggle them across borders. “I am the middleman,” he said. As an informant, he meets monthly with an undercover officer and reveals the location of the traffickers’ merchandise and their latest phone numbers so police can wiretap their conversations.

He makes about $200 a week as trafficker, he said. As an informant, police pay him as much as $2,000 for information leading to an arrest. So far, his work has led to the arrests of more than a dozen traffickers, police said.

Sometimes, he gets free meals. As he spoke, an undercover officer brought him a plate of steaming empanadas from the shopping center food court. The informant smiled.

“They feed me well,” he said. “They keep me fat.”

Yet the stress of life as an informant has taken its toll. He worries about providing information to police that could put his associates in jail.

“I tell them they shouldn’t arrest the middlemen, because they are my friends,” he said. “They should only arrest the smugglers.”

He also worries about blowing his cover. As he stood up to leave, he looked over his shoulder once more, nervously scanning the dimly-lit food court.

“I’m always on alert,” he said. “I’m always looking to see if someone is following me.”

Julieta Aponte Tovar contributed reporting and translation for this story.

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