[Congressional Record Volume 143, Number 158 (Monday, November 10, 1997)]
[Senate]
[Pages S12484-S12487]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   WIRELESS TELEPHONE PROTECTION ACT

  Mr. LOTT. Mr. President, I ask unanimous consent that the Senate now 
proceed to the consideration of Calendar No. 167, which is S. 493.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 493) to amend section 1029 of title 18, United 
     States Code, with respect to cellular telephone cloning 
     paraphernalia.


[[Page S12485]]


  The PRESIDING OFFICER. Is there objection to the immediate 
consideration of the bill?
  There being no objection, the Senate proceeded to consider the 
bill, which had been reported from the Committee on the Judiciary, with 
an amendment to strike all after the enacting clause and inserting in 
lieu thereof the following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Wireless Telephone 
     Protection Act''.

     SEC. 2. FRAUD AND RELATED ACTIVITY IN CONNECTION WITH 
                   COUNTERFEIT ACCESS DEVICES.

       (a) Unlawful Acts.--Section 1029(a) of title 18, United 
     States Code, is amended--
       (1) by redesignating paragraph (9) as paragraph (10); and
       (2) by striking paragraph (8) and inserting the following:
       ``(8) knowingly and with intent to defraud uses, produces, 
     traffics in, has control or custody of, or possesses a 
     scanning receiver;
       ``(9) knowingly uses, produces, traffics in, has control or 
     custody of, or possesses hardware or software, knowing it has 
     been configured for altering or modifying a 
     telecommunications instrument so that such instrument may be 
     used to obtain unauthorized access to telecommunications 
     services; or''.
       (b) Penalties.--
       (1) Generally.--Section 1029(c) of title 18, United States 
     Code, is amended to read as follows:
       ``(c) Penalties.--The punishment for an offense under 
     subsection (a) section is--
       ``(1) in the case of an offense that does not occur after a 
     conviction for another offense under this section that has 
     become final and that was committed on a separate prior 
     occasion.
       ``(A) if the offense is under paragraph (2), (3), (6), (7), 
     or (10) of subsection (a), a fine under this title or 
     imprisonment for not more than 10 years, or both; and
       ``(B) if the offense is under paragraph (1), (4), (5), (8), 
     or (9), of subsection (a), a fine under this title or 
     imprisonment for not more than 15 years, or both; and
       ``(2) in the case of an offense that occurs after a 
     conviction for another offense under this section, that has 
     become final and that was committed on a separate prior 
     occasion, that has a fine under this title or imprisonment 
     for not more than 20 years, or both.''.
       (2) Attempts.--Section 1029(b)(1) of title 18, United 
     States Code, is amended by striking ``punished as provided in 
     subsection (c) of this section'' and inserting ``subject to 
     the same penalties as those prescribed for the offense 
     attempted''.
       (c) Definition of Scanning Receiver.--Section 1029(e) of 
     title 18, United States Code, is amended--
       (1) in paragraph (6), by striking ``and'' at the end;
       (2) in paragraph (7)--
       (A) by striking ``The'' and inserting ``the''; and
       (B) by striking the period at the end and inserting a 
     semicolon; and
       (3) in paragraph (8), by striking the period at the end and 
     inserting ``or to intercept an electronic serial number, 
     mobile identification number, or other identifier of any 
     telecommunications service, equipment, or instrument; and''.
       (d) Applicability of New Section 1029(a)(9).--
       (1) In general.--Section 1029 of title 18, United States 
     Code, is amended by adding at the end the following:
       ``(g) It is not a violation of subsection (a)(9) for an 
     officer, employee, or agent of, or a person under contract 
     with, a facilities-based carrier, for the purpose of 
     protecting the property or legal rights of that carrier, to 
     use, produce, have custody or control of, or possess hardware 
     or software configured as described in that subsection 
     (a)(9).''.
       (2) Definition of facilities-based carrier.--Section 
     1029(e) of title 18, United States Code, as amended by 
     subsection (c) of this section, is amended by adding at the 
     end the following:
       ``(9) the term `facilities-based carrier' means an entity 
     that owns communications transmission facilities, is 
     responsible for the operation and maintenance of those 
     facilities, and holds an operating license issued by the 
     Federal Communications Commission under the authority of 
     title III of the Communications Act of 1934.''.
       (e) Amendment of Federal Sentencing Guidelines for Wireless 
     Telephone Cloning.--
       (1) In general.--Pursuant to its authority under section 
     994 of title 28, United States Code, the United States 
     Sentencing Commission shall review and amend the Federal 
     sentencing guidelines and the policy statements of the 
     Commission, if appropriate, to provide an appropriate penalty 
     for offenses involving the cloning of wireless telephones 
     (including offenses involving an attempt or conspiracy to 
     clone a wireless telephone).
       (2) Factors for consideration.--In carrying out this 
     section, the Commission shall consider, with respect to the 
     offenses described in paragraph (1)--
       (A) the range of conduct covered by the offenses;
       (B) the existing sentence for the offenses;
       (C) the extent to which the value of the loss caused by the 
     offenses (as defined in the Federal sentencing guidelines) is 
     an adequate measure for establishing penalties under the 
     Federal sentencing guidelines;
       (D) the extent to which sentencing enhancements within the 
     Federal sentencing guidelines and the court's authority to 
     impose a sentence in excess of the applicable guideline range 
     are adequate to ensure punishment at or near the maximum 
     penalty for the most egregious conduct covered by the 
     offenses;
       (E) the extent to which the Federal sentencing guideline 
     sentences for the offenses have been constrained by statutory 
     maximum penalties;
       (F) the extent to which Federal sentencing guildlines for 
     the offenses adequately achieve the purposes of sentencing 
     set forth in section 3553(a)(2) of title 18, United States 
     Code;
       (G) the relationship of Federal sentencing guidelines for 
     the offenses to the Federal sentencing guidelines for other 
     offenses of comparable seriousness; and
       (H) any other factor that the Commission considereds to be 
     appropriate.


                           Amendment No. 1634

  (Purpose: To make an amendment relating to forfeiture to the United 
States of any real or personal property used or intended to be used to 
   commit, facilitate, or promote the commission of certain offense.)

  Mr. LOTT. Senator Hatch has an amendment at the desk. I ask for its 
consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Mississippi [Mr. Lott], for Mr. Hatch, 
     proposes an amendment numbered 1634.

  The amendment is as follows:

       On page 6, line 1, strike ``The punishment'' and insert the 
     following:
       ``(1) In general.--The punishment''.
       On page 6, line 2, strike ``section''.
       On page 6, line 3, strike ``(1)'' and insert ``(A)'' and 
     indent accordingly.
       On page 6, line 7, strike ``(A)'' and insert ``(i)'' and 
     indent accordingly.
       On page 6, line 11, strike ``(B)'' and insert ``(ii)'' and 
     indent accordingly.
       On page 6, line 14, strike ``and''.
       On page 6, line 15, strike ``(2)'' and insert ``(B)'' and 
     indent accordingly.
       On page 6, line 19, strike the punctuation at the end and 
     insert ``; and''.
       On page 6, between lines 19 and 20, insert the following:
       ``(C) in any case, in addition to any other punishment 
     imposed or any other forfeiture required by law, forfeiture 
     to the United States of any personal property used or 
     intended to be used to commit, facilitate, or promote the 
     commission of the offense.
       ``(2) Applicable Procedure.--The criminal forfeiture of 
     personal property subject to forfeiture under paragraph 
     (1)(C), any seizure and disposition thereof, and any 
     administrative or judicial proceeding in relation thereto, 
     shall be governed by subsections (c) and (e) through (p) of 
     section 413 of the Controlled Substances Act (21 U.S.C. 
     853).''.

  Mr. HATCH. Mr. President, I rise to urge my colleagues to support S. 
493, the Wireless Telephone Protection Act. This important bill will 
close a glaring gap in the protection afforded by federal law to 
cellular telephone communications.
  Law enforcement is alarmed by the increasingly prevalent practice of 
``cloning'' cellular phones. Essentially, criminals operating scanners 
from the roadside or from buildings near urban freeways, copy 
identifying numbers for cellular phones. Using the data they obtain, 
these criminals alter other phones to access the accounts tied to the 
phone whose data was scanned, thus creating so-called ``clone phones''. 
They then either sell these phones, or use the clone phones themselves 
for criminal purposes. These phones are used for several weeks or 
months, until the legitimate customer notices the fraud when he or she 
gets the bill for phone service accessed by the clone phone.
  The effects of these criminal schemes are twofold. First, this crime 
steals cellular service from the phone companies, which typically 
credit legitimate customers' accounts when alerted to the fraud. 
Second, the use of clone phones masks other criminal conduct by making 
criminal's calls difficult, if not impossible, to trace. S. 493, 
sponsored by Senator Kyl, helps close this gap in the law by making it 
a federal crime to own or use the software or hardware needed to clone 
cell phones.
  I also urge my colleagues to support an amendment to this bill, to 
ensure the confiscation of the equipment used to violate this law, and 
commit other frauds related to access devices. Presently, persons 
convicted of committing access device fraud under section 1029 of title 
18 forfeit to the government the proceeds of their crime. However, 
there is no provision ensuring that the computers, hardware, software, 
and other equipment used to commit the crime is forfeited, as well. My 
amendment to this bill corrects this.
  My amendment includes in the penalties for a violation of 18 U.S.C. 
1029, the forfeiture of any personal property

[[Page S12486]]

used to commit, facilitate, or promote the commission of the violation. 
I note for my colleagues that my amendment only addresses criminal 
forfeiture, so there must be a conviction for the assets to be seized. 
Second, my amendment only permits the forfeiture of personal property 
used to commit the offense--mainly, equipment. Houses, other buildings, 
or land could not be subject to forfeiture under this provision.
  Mr. President, it is important that we close the gaps in the law that 
permit criminals to brazenly sell and use equipment to steal cellular 
phone service and evade law enforcement. It is equally important to get 
this equipment off the streets. I urge my colleagues to support my 
amendment and the underlying bill.
  Mr. LOTT. I ask consent that the amendment be considered as read and 
agreed to.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 1634) was agreed to.


                           Amendment No. 1635

                (Purpose: To make technical amendments)

  Mr. LOTT. I understand Senator Kyl has an amendment at the desk. I 
ask for its consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Mississippi [Mr. Lott], for Mr. Kyl, 
     proposes an amendment numbered 1635.

  The amendment is as follows:

       On page 6, line 5, strike ``that has become final and that 
     was committed on a separate prior occasion,'' and inert ``, 
     which conviction has become final--''.
       On page 6, line 7, strike ``(2),''.
       On page 6, line 11, strike ``(1),'' and insert ``(1), 
     (2),''.
       On page 6, beginning on line 16, strike ``that has become 
     final and that was committed on a separate prior occasion, 
     that has'' and insert ``which conviction has become final,''.
       On page 7, line 24, after ``subsection (a)(9)'' insert ``, 
     provided that if such hardware or software is used to obtain 
     access to telecommunications service provided by another 
     facilities-based carrier, such access is authorized''.

  Mr. LOTT. I ask unanimous consent the amendment be considered as read 
and agreed to.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 1635) was agreed to.
  Mr. LOTT. I ask unanimous consent the committee amendment, as 
amended, be agreed to, the bill be considered read a third time and 
passed as amended, the motion to reconsider be laid upon the table, and 
that any statements relating to the bill be printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The committee amendment, as amended, was agreed to.
  The bill (S. 493), as amended, was considered read the third time and 
passed, as follows:
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

                                 S. 493

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Wireless Telephone 
     Protection Act''.

     SEC. 2. FRAUD AND RELATED ACTIVITY IN CONNECTION WITH 
                   COUNTERFEIT ACCESS DEVICES.

       (a) Unlawful Acts.--Section 1029(a) of title 18, United 
     States Code, is amended--
       (1) by redesignating paragraph (9) as paragraph (10); and
       (2) by striking paragraph (8) and inserting the following:
       ``(8) knowingly and with intent to defraud uses, produces, 
     traffics in, has control or custody of, or possesses a 
     scanning receiver;
       ``(9) knowingly uses, produces, traffics in, has control or 
     custody of, or possesses hardware or software, knowing it has 
     been configured for altering or modifying a 
     telecommunications instrument so that such instrument may be 
     used to obtain unauthorized access to telecommunications 
     services; or''.
       (b) Penalties.--
       (1) Generally.--Section 1029(c) of title 18, United States 
     Code, is amended to read as follows:
       ``(c) Penalties.--(1) In general.--The punishment for an 
     offense under subsection (a) is--
       ``(A) in the case of an offense that does not occur after a 
     conviction for another offense under this section, which 
     conviction has become final--
       ``(i) if the offense is under paragraph (3), (6), (7), or 
     (10) of subsection (a), a fine under this title or 
     imprisonment for not more than 10 years, or both; and
       ``(ii) if the offense is under paragraph (1), (2), (4), 
     (5), (8), or (9), of subsection (a), a fine under this title 
     or imprisonment for not more than 15 years, or both;
       ``(B) in the case of an offense that occurs after a 
     conviction for another offense under this section, which 
     conviction has become final, a fine under this title or 
     imprisonment for not more than 20 years, or both; and
       ``(C) in any case, in addition to any other punishment 
     imposed or any other forfeiture required by law, forfeiture 
     to the United States of any personal property used or 
     intended to be used to commit, facilitate, or promote the 
     commission of the offense.
       ``(2) Applicable Procedure.--The criminal forfeiture of 
     personal property subject to forfeiture under paragraph 
     (1)(C), any seizure and disposition thereof, and any 
     administrative or judicial proceeding in relation thereto, 
     shall be governed by subsections (c) and (e) through (p) of 
     section 413 of the Controlled Substances Act (21 U.S.C. 
     853).''.
       (2) Attempts.--Section 1029(b)(1) of title 18, United 
     States Code, is amended by striking ``punished as provided in 
     subsection (c) of this section'' and inserting ``subject to 
     the same penalties as those prescribed for the offense 
     attempted''.
       (c) Definition of Scanning Receiver.--Section 1029(e) of 
     title 18, United States Code, is amended--
       (1) in paragraph (6), by striking ``and'' at the end;
       (2) in paragraph (7)--
       (A) by striking ``The'' and inserting ``the''; and
       (B) by striking the period at the end and inserting a 
     semicolon; and
       (3) in paragraph (8), by striking the period at the end and 
     inserting ``or to intercept an electronic serial number, 
     mobile identification number, or other identifier of any 
     telecommunications service, equipment, or instrument; and''.
       (d) Applicability of New Section 1029(a)(9).--
       (1) In general.--Section 1029 of title 18, United States 
     Code, is amended by adding at the end the following:
       ``(g) It is not a violation of subsection (a)(9) for an 
     officer, employee, or agent of, or a person under contract 
     with, a facilities-based carrier, for the purpose of 
     protecting the property or legal rights of that carrier, to 
     use, produce, have custody or control of, or possess hardware 
     or software configured as described in that subsection 
     (a)(9): Provided, That if such hardware or software is used 
     to obtain access to telecommunications service provided by 
     another facilities-based carrier, such access is 
     authorized.''.
       (2) Definition of facilities-based carrier.--Section 
     1029(e) of title 18, United States Code, as amended by 
     subsection (c) of this section, is amended by adding at the 
     end the following:
       ``(9) the term `facilities-based carrier' means an entity 
     that owns communications transmission facilities, is 
     responsible for the operation and maintenance of those 
     facilities, and holds an operating license issued by the 
     Federal Communications Commission under the authority of 
     title III of the Communications Act of 1934.''.
       (e) Amendment of Federal Sentencing Guidelines for Wireless 
     Telephone Cloning.--
       (1) In general.--Pursuant to its authority under section 
     994 of title 28, United States Code, the United States 
     Sentencing Commission shall review and amend the Federal 
     sentencing guidelines and the policy statements of the 
     Commission, if appropriate, to provide an appropriate penalty 
     for offenses involving the cloning of wireless telephones 
     (including offenses involving an attempt or conspiracy to 
     clone a wireless telephone).
       (2) Factors for consideration.--In carrying out this 
     subsection, the Commission shall consider, with respect to 
     the offenses described in paragraph (1)--
       (A) the range of conduct covered by the offenses;
       (B) the existing sentences for the offenses;
       (C) the extent to which the value of the loss caused by the 
     offenses (as defined in the Federal sentencing guidelines) is 
     an adequate measure for establishing penalties under the 
     Federal sentencing guidelines;
       (D) the extent to which sentencing enhancements within the 
     Federal sentencing guidelines and the court's authority to 
     impose a sentence in excess of the applicable guideline range 
     are adequate to ensure punishment at or near the maximum 
     penalty for the most egregious conduct covered by the 
     offenses;
       (E) the extent to which the Federal sentencing guideline 
     sentences for the offenses have been constrained by statutory 
     maximum penalties;
       (F) the extent to which Federal sentencing guidelines for 
     the offenses adequately achieve the purposes of sentencing 
     set forth in section 3553(a)(2) of title 18, United States 
     Code;
       (G) the relationship of Federal sentencing guidelines for 
     the offenses to the Federal sentencing guidelines for other 
     offenses of comparable seriousness; and
       (H) any other factors that the Commission considers to be 
     appropriate.

  Mr. KYL. Mr. President, I am gratified that S. 493, the Cellular 
Telephone Protection Act, which would make it easier for Federal law 
enforcement to stop cell phone cloning, has unanimously been approved 
by the Senate. I expect that the bill will soon pass the House of 
Representatives, and be

[[Page S12487]]

signed into law by the President. S. 493 is the first in a series of 
anticrime initiatives I introduced that are aimed at modernizing U.S. 
law to reflect changes in technology.
  It is estimated that the cellular telecommunications industry lost 
$650 million due to fraud in 1995, much of it as a result of cloning. 
Cloned phones are popular among the most vicious criminal element. The 
feature story from the July/August edition of Time Digital, ``Lethal 
Weapon: How Your Cell Phone Became Gangland's Favorite Gadget'' quotes 
James Kallstrom, head of the FBI's New York office as describing 
cloners as ``hard-core criminals, child pornographers and pedophiles * 
* * violent criminals who use technology to avoid the law.''
  On September 11, Representative Bill McCollum, chairman of the House 
Judiciary Crime Subcommittee, held a very useful hearing on cellular 
phone cloning. The hearing discussed legislative proposals to combat 
cellular phone fraud. Representatives of the Secret Service, FBI, and 
DEA all testified that legislation resembling S. 493 would be helpful 
in thwarting cell phone cloning.
  The hearing revealed that cloned phones have become a staple of the 
major drug trafficking organizations. Anthony R. Bocchichio, of the DEA 
stated that, ``[International drug trafficking organizations] utilize 
their virtually unlimited wealth to purchase the most sophisticated 
electronic equipment available on the market to facilitate their 
illegal activities. We have begun to see that this includes widespread 
use of cloned cellular telephones.''
  The Secret Service--the Federal agency charged with investigating 
cloning offenses--has doubled the number of arrests in the area of 
wireless telecommunications fraud every year since 1991, with 800 
individuals charged for their part in the cloning of cellular phones 
last year. While the cell phone law (18 U.S.C. 1029) has been useful in 
prosecuting some cloners, the statute has not functioned well in 
stopping those who manufacture and distribute cloning devices.
  In testimony before Mr. McCollum's Crime Subcommittee, Michael C. 
Stenger of the U.S. Secret Service stressed the need to revise our 
current cell phone statute:

       Due to the fact that the statute presently requires the 
     proof of ``intent to defraud'' to charge the violation, the 
     distributors of the cloning equipment have become elusive 
     targets. These distributors utilize disclaimers in their 
     advertising mechanisms aimed at avoiding a finding of 
     fraudulent intent. This allows for the continued distribution 
     of the equipment permitting all elements of the criminal 
     arena to equip themselves with free, anonymous phone service.

  Consistent with Mr. Stenger's recommendation, the Cellular Telephone 
Protection Act provides that--except for law enforcement and 
telecommunications carriers--there is no lawful purpose for which to 
possess, produce, or sell the ``copycat boxes'' for cloning a wireless 
telephone or its electronic serial number.
  For S. 493 to apply, a prosecutor would need to prove that an 
individual ``knowingly uses, produces, traffics in, has control or 
custody of, or possesses hardware or software, knowing it has been 
configured for altering or modifying a telecommunications instrument so 
that such instrument may be used to obtain unauthorized access to 
telecommunications services.'' Someone who does not know that a 
telecommunications device has been altered to modify a 
telecommunications instrument would not be criminally liable under this 
section.
  To be clear, except for law enforcement and telecommunication 
carriers, there is no legitimate purpose for which to possess equipment 
used to modify cellular phones. Representatives from the Secret 
Service, DEA, and FBI testified to this point at the cellular fraud 
hearing. As Special Agent Stenger put it, ``There is no legitimate use 
for the equipment such as that designed to alter the electronic serial 
numbers in wireless telephones.''
  The removal of the ``intent to defraud'' language in 18 U.S.C. 1029 
only applies to the possession and use of the hardware and software 
configured to alter telecommunications instruments. This narrowly 
targeted proposal does not apply to those who are in the possession of 
cloned phones. Nor does it apply to those in the possession of scanning 
receivers, which do have some legitimate uses.
  The Senate bill enjoys broad bipartisan support. Senators Cleland, 
DeWine, Dorgan, Durbin, Gorton, Helms, Lott, Mikulski, and Thurmond 
have cosponsored S. 493. And a bipartisan House companion bill (H.R. 
2460) has been introduced by Representatives Sam Johnson, Bill 
McCollum, and Charles Schumer.
  I am hopeful that my colleagues will join in supporting this 
important piece of legislation.

                          ____________________