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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of Michigan

FOR IMMEDIATE RELEASE
Friday, April 17, 2015

West Bloomfield Man Sentenced In Multi-Million Dollar Cellphone Trafficking Scheme

A West Bloomfield man was sentenced to twelve months in federal prison and ordered to forfeit $600,000, for his role in a scheme to traffic in cellular telephones, announced United States Attorney Barbara L. McQuade. Joining McQuade in the announcement was Marlon Miller, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). The sentencing caps a more than three-year probe by special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). U.S. District Judge Nancy G. Edmunds imposed sentence on Jason Floarea, 29, of West Bloomfield, the former president of ACE Wholesale in Troy and Taylor, Michigan. As part of the sentencing, Floarea forfeited his interest in approximately $1,000,000 in seized funds and assets and was ordered to pay a $120,000 forfeiture money judgment. In addition, Floarea will be under the supervision of the court for a period of 24 months following his release. According to court documents, Floarea used ACE Wholesale to sell stolen and fraudulently obtained cellphones. The phones were modified to function on any mobile network through a process known as “jailbreaking.” Floarea then shipped to phones overseas buyers at costs far exceeding their retail price, sometimes up to $3,000 each. The investigation showed that Floarea obtained phones from straw purchasers who entered into cellular service contracts that provided buyers with cellular phones at either no cost or low promotional costs, a practice called “credit muling.” Credit muling occurs when recruiters solicit individuals to purchase cellphones in bulk by entering into contracts that they have no intention of fulfilling. During one 2012 outbound inspection, special agents discovered ten boxes containing 300 cellphones, which were later determined to be obtained by fraud. In 2012, HSI special agents searched businesses, homes and warehouses belonging to Floarea in Troy, Taylor, West Bloomfield and Atlanta, Georgia. Floarea’s offices were equipped with armed guards and bulletproof glass. “This sentence will no doubt send shock waves throughout the illegal, underground cell phone trafficking network which continues to be a source for robberies and other violent crimes in metro areas throughout the country,” said Marlon Miller, Special Agent in Charge of HSI Detroit. “The individuals and groups operating these schemes should be warned that HSI has the unique authorities and expertise to bring down these networks wherever they operate.” The Taylor and Romulus Police Departments and the Wayne County Airport Authority assisted with the investigation. According to Mr. Miller, the latest industry studies estimate credit muling contributes to approximately $50 million in annual losses to the telecommunications industry. Analysts say stolen and lost cellphones cost American consumers up to $30 billion each year.
Updated April 17, 2015