In crime, as in life generally, it seems that if you watch the pennies the dollars take care of themselves.
On Tuesday in federal court in Greenbelt, Nicolaos Kantartzis of Bethesda proved that there still is money to be made in those dated pay phone systems — although he admitted he cashed in illegally.
Kantartzis, 62, pleaded guilty to wire fraud for a scheme he devised that capitalized on the phones and 800-numbers. It netted him close to $4 million since 2005, authorities said.
Kantartzis, court records show, owned a company that owned at least 165 pay phones located at businesses and on streets in Kensington, Silver Spring, Rockville and other sites in Montgomery and Prince George’s counties and the District. (Pause: there were 165 pay phones in public places. Who would have thought?)
As the payphone owner, prosecutors said, Kantartzis was entitled by federal regulation to collect a fee of 49 1/2 cents from the owners of toll-free numbers for handling calls completed to their 800-lines. Program his payphones to place repeated robo-calls to the 800-lines and Kantartzis could collect a chunk of change, which is what prosecutors said he did.
Those pennies turned into a total of about $4 million between 2005 and 2011 as Kantartzis used a computer server maintained at his home-based business in Bethesda to direct his payphones to make repeated calls to the lines that netted him the fees, court records show. The sham calls went to more than 200 entities, including the Internal Revenue Service and departments of Labor and Education, a homeless shelter and private companies, including Dell Corporation, Fidelity Brokerage Services and assorted airlines.
The calls lasted mere seconds, court records show, but there were so many that the fees racked up for Kantartzis. During the month of January 2008, for example, his robo-call system placed 1,688 calls to toll-free numbers via a payphone he controlled at the Super Dollar in the 5900 block of Georgia Avenue, a formal statement of facts in the case shows. Records show the calls went through at times when the businesses were closed and dark and no one was spotted near the actual pay phones — as documented by video surveillance in a locked grocery store in Gaithersburg, and in a barbecue restaurant and in the Sportsplex, both in Rockville.
The scheme unwound when a sharp-eyed federal worker in charge of reviewing phone bills for the General Services Administration noticed a pattern of split-second calls to 800-lines in July and tipped GSA’s inspector general’s office, said U.S. Attorney for Maryland Rod J. Rosenstein.
“This demonstrates the federal government is capable of holding people accountable,” said Rosenstein.
In court Tuesday, Kantartzis pleaded guilty to one count of wire fraud for calls made through a phone in Wheaton. He also agreed to forfeit nearly $3 million he holds in investment accounts as well as payments generated by the fraud that still may come in to his company.
And he agreed to give up the payphones.
GSA Inspector General Brian Miller said in prepared statement, “By auto-dialing, this fraudster exploited a public service and essentially, ‘dialed for taxpayer dollars.’”
Kantartzis is scheduled to be sentenced in January and faces a maximum penalty of 20 years in prison and a $250,000 fine, although preliminary sentencing formulas contained in court filings suggest a term in the range of five to eight years.
Kantartzis’s case is interesting but not unique. A pair of Wisconsin men are accused of a similar plan and are scheduled to stand trial in February, online federal court dockets show.
The fee for 800-calls has been part of contentious litigation that — pared down — was meant to preserve the “free” 800-line habit for callers but compensate private companies as they began to compete with traditional local carriers in the payphone market.