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Complaints & Rumors

Hosting sector sees criminal intrigue

An American cyber-crime drama focused on the hosting industry has been unfolding this month with reports surfacing that the criminal parties have been arrested, bringing to a close a technological intrigue spanning two countries and a normally quiet sector of the technology industry.

The story began earlier this month when United States attorney James Jacks of the Northern District of Texas sought and obtained a grand jury indictment against 19 people involved in a major fraud case. That public move brought to light complaints by telecom companies such as AT&T that suggested a major conspiracy to commit wire and mail fraud over a six-year period from March 2003 to July 2009.

The details of the indictments show that a group of businessmen lead by husband and wife team Michael and Chastity Faulkner used fake identites and shell companies to procure technical services such as web hosting, domain registration and VOIP with the intention to commit fraud. Using a trail of created, purchased and sold shell companies and a slew of fake identities, the accused managed to obtain office space, server racks, generators and other networking equipment while completely hiding their identities and lack of valid payment.

The story took a dramatic turn following the announcement of the indictments as federal authorities revealed that the Faulkners and several of their co-conspirators had fled the U.S. to Mexico in an attempt to avoid prosecution. Amid reports surfacing online that Michael Faulkner had been killed while trying to re-enter the United States, the Dallas Morning News confirmed late last week that both Michael and Chastity Faulkner, along with accomplices Jason and William Watts, were arrested in Cancun, Mexico with immediate plans to extradite all parties to face American prosecution.

The attempt to flee and apparent subsequent activities commited by Michael Faulkner upon learning of his indictment have lead authorities to add charges of obstruction of justice for threatening a witness or informant, hiding assets, false registration of a domain name and destruction of evidence to the original accusations of wire and mail fraud.

If convicted all of crimes, both Michael Faulkner and his accomplices will be facing long prison sentences; a conviction for the conspiracy and fraud charges, in conjunction with the latest charges involving obstruction of justice, could carry a maximum term of up to 50 years in prison and $1 million in fines.

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