Hidden camera video shows black market of stolen smartphones

Mike Perlstein investigates the black market of stolen phone sales.

NEW ORLEANS -- You can dress down, forgo the fancy jewelry and carry no money, but even then you are probably carrying something valuable that criminals can turn into quick cash: Your smartphone.

Consumer Reports estimates that 2 to 3 million phones are stolen each year. And the New Orleans area is no exception to this national explosion of cell phone theft.

The New Orleans Police Department’s major offense logs for April show just how popular these devices are with criminals. Looking at robberies alone, phones were taken at gunpoint 18 times during the month.

“Mainly the people who are doing this are street hustlers,” said one former street-level hustler. “Committing the robberies or breaking in houses, they know one thing: This (phone) here is valuable. This is money.”

Factoring in crimes like theft, burglary and purse snatching, there are dozens of phones taken each month in New Orleans, police say.

“Yes, it's a big market,” said Lt. Chris Hart, commander of the NOPD’s elite anti-robbery squad, the TIGER Unit. “We get a lot of them taken in simple robberies and armed robberies, auto burglaries, home burglaries.”

To make the crime pay off, the bad guys must have buyers, and those buyers are not hard to find.

In recent years, the New Orleans area has seen a dramatic proliferation of cell phone repair shops. Most are legitimate, but there are also many independent shops that will buy phones with no questions asked, some of them operating out of gas stations, convenience stores, even clothing retailers.

WWL-TV outfitted a street source with a hidden camera and sent him into several stores with a handful of older phones to sell. The phones were quickly snapped up.

The first location, a gas station convenience store, offered $10 for one old iPhone, saying it was only good for parts. We declined.

Our source got a much better offer from the second operator, working out of a clothing store.

“The two ones together, thirty-five,” said the man behind the counter, offering $35 for an iPhone plus an Android. We accepted. The man even had a request.

“Can you bring some iPhone Sevens? Sixes as well. Some newer phones,” he asked.

At a neighborhood convenience store, even our oldest and most outdated models were purchased.

“Is this old? Am I lying or not?” the man behind the counter said, offering $13 for two phones. “Ten and three. You got $13.”

“As long as you have the right contacts, they can move 10, 20, 30 phones for you. There's nobody to stop them,” said Nick Wakileh, co-owner of iSupply, a phone repair shop with locations in Metairie and Slidell.

Wakileh said his stores used to be approached more than a dozen times a day by would-be sellers off the street, until he and his employees started asking them to fill out a form and provide identification.

“The minute we ask for a driver's license, they would jump and say, ‘Why?’ Then they just walk back out. They just grab their phone and walk out,” Wakileh said. “It used to be a minimum of 10 to 20 a day. Now it’s down to about two or three a day.”

Mike Melito owns two branches of the national repair shop UBreak-IFix. He continues to get solicitations, and he doesn't even buy phones off the street. Nevertheless, Melito says he gets several inquiries a week from people looking to unload phones.

How often does it appear the phones might be stolen?

“Ninety-nine percent of the time,” Melito said. “It's happening more than you think. And has been for years. And growing, unfortunately.”

Melito won't touch a suspicious phone, but as one of the local pioneers in the business, he sees where the phones are flowing.

“There are a lot of little mom-and-pop shops all over the city and all over the country that will buy and sell devices. They're not asking these folks where they came from. Where'd you find the device? No questions asked,” Melito said.

Some of the off-brand stores practically advertise how far they are willing to go, putting up signs that they will “unlock” and “jailbreak” a phone.

To jailbreak a phone basically means to unlock it, getting around any passwords or fingerprints that lock the phone. Some people may ask to unlock a phone legitimately, to get out of a phone contract or change carriers. But name brand shops ask for an ID or proof of ownership and turn away people who bring in more than one phone.

“If you find the right store that buys these blacklisted phones, you just made the best contact ever.” Wakileh said.

Are crimes being committed here?

The criminal statute that would apply is illegal possession of stolen things, but legal experts say it's something of a gray area. To prove the crime, authorities must show “intent,” meaning that the “offender knew or had good reason to believe that the thing” was stolen.

Specific guidelines – including requiring a seller to provide identification – have been adopted for other businesses that became hotbeds for stolen property, such as pawn shops and scrap metal yards.

No such laws exist for phone stores. 

Melito has no doubt that if a phone shop is willing to buy multiple phones without checking to see if they’re stolen, they are in on the scheme.

“It's a crime,” Melito said. “When you advertise that we jailbreak phones, it's an invitation to walk in with a device that was stolen. No questions asked. It's the wild, wild west.”

© 2017 WWL-TV


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