The DSL Monster Scam
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Our case originated in Carlsbad, Calif. It started with a questionable business plan and a few bad checks. But by the time Detective Robert Shelton launched an official investigation into DSL Monster, he discovered thousands of dollars were missing and exposed a business that survived for several months delivering only empty promises of broadband Internet access until the principal suspect skipped town.
In December of last year a dubious website opened for business at www.dslmonster.com. The broadband service provider offered "DSL for life" for a one-time sign-up fee of $129, as long as subscribers agreed to receive two unsolicited e-mails a day.
The DSL Monster program seemed too good to be true. So naturally it caught the attention of business rivals and provoked Web-based banter on discussion forums. Participants in the DSL Reports discussion forums were particularly suspicious of the DSL Monster offer.
Members of the discussion group noted that parts of the DSL Monster website appeared to have been copied directly from EarthLink and that any address submitted through the site for verifying that DSL Monster access was available to the region received an affirmative response.
"According to them I'll have DSL service available as of Monday January 21st on my 555-555-5555 phone number at my house on 555 Possum street, Roadkill, AR 90210."
Another discussion group member noted that the whois data for dslmonster.com showed that the domain name was registered by MunchieMonster.Com located at 16776 Bernardo Center Drive San Diego, CA 92128. The discussion group member noticed that the domain had only been registered two weeks earlier, on Dec. 2, 2001.
Additionally, the administrative contact for the domain name was a Hotmail address, which is usually not a good sign for a legitimate online business. Sure, some unsolicited e-mail may be sent to the e-mail address that's listed, but this is the price online businesses pay when they are forthcoming, legitimate commercial ventures.
All the signals of a potential scam were there, including highly irregular pricing for other services outside of DSL access. One discussion group member of the forum discovered that DSL Monster was asking $500 for a second static IP address alone.
As suspicion mounted and vitriol began to flow, some members of the DSL Report discussion group felt that the forum of participants had gone too far and were attacking a legitimate ISP startup with real deployment problems. The thread died over the New Year's holiday break, until one disenchanted Pacific Bell subscriber wrote to the group:
"Give these guys a break, they are in my home town and I've been hearing lots of advertisements on the local radio stations and their Web page is coming together. I know I will get spammed to death for this but I just ordered service from them with a $129 activation fee (I already have a modem) and I have faith in them. I just now have seen all the negative press here on DSLR but locally they seem to have a good rep."
Naturally the issue of DSL Monster's legitimacy flared up again and heated arguments resumeduntil one day, when a former DSL Monster employee chimed in and abruptly ended the thread by apologizing to all and saying that the employees had just learned that the enterprise was, in fact, a scam.
Chuck Van Oosbree had been the Web master at DSL Monster. Van Oosbree revealed that DSL Monster had been tormented by bitter infighting since its inception. Van Oosbree said he was hired to fix the website in response to cricism from forum participants, among others.
"I was unaware that parts of the site had been copied from other ISPs. Cory said the site needed to look different and he said go ahead, do what you want, you've got a week," Van Oosbree told us, adding that he worked very hard every day for a week and received a check that was good and did not bounce when he deposited it at his bank.
"Until I came along, the IT department was Cory. He prided himself on being knowledgeable about networking and about being a good coder, but I could do it faster than he could," Van Oosbree explained. "I did the front end, and he did the back end. He did security, and scripts, and so on."
Dyer warned Van Oosbree that the site was under attack and this made Van Oosbree distrust the participants in the DSL Reports forums. He said that he was running a simple poll asking which was faster, ISDN, cable, or DSL. On the last day of his poll, he received 300 votes for ISDN in a single five minute period. Van Oosbree disabled the poll on the website and suspected that a member of the DSL Reports forum had initiated the attack.
Meanwhile, four executives that Dyer had just hired suspected that all was not well at DSL Monster. Van Oosbree said that the first clue came in the form of a bounced check for DSL Monster's lease, a check for $12,000. Dyer told staff that the company was growing and needed to move to a larger, less expensive location further out of town. He did not tell the staff that the lease payment for DSL Monster's current location had bounced. So DSL Monster moved to a new location in Rancho Bernardo.
When the lease payment defaulted, DSL Monster's Chief Financial Officer rescinded Dyer's check writing privileges. Dyer responded by rerouting cash assets of the business, so the CFO resigned. According to Van Oosbree, Dyer quickly promoted another employee into the CFO slotan individual who had been in charge of radio advertising for DSL Monster.
During this fracas, Customer Service Representatives (CSRs) began questioning why why customers DSL orders remained unfulfilled. Dyer blamed Covad for connection delays, but the remaining executives feared that Dyer was not filling orders correctly (they did not suspect that he was not filling orders at all), so they insisted that someone other than Dyer place the orders with Covad. At about this time, Dyer started paying DSL Monster employees with bad checks and the executives bailed out of the business.
Van Oosbree alleges that Dyer planned his getaway well. "Cory left us on a Monday morning," said Van Oosbree. "He had his car repaired on Sunday, and took a printer home to work from home, which he did a lot. On Monday, he told us he was going to get some venture capital, and he did not call in all day, which was unusual. On Tuesday morning, he did not come in. We were there in the office, and the phones were ringing, and suddenly we knew we'd been abandoned."
DSL Monster employees quickly filed a missing person complaint with the local police.
A conversation with Detective Shelton of the Carlsbad police department revealed that DSL Monster had used fraudulent checks to rent office space, buy radio ads, lease computers and furniture, and even to pay its own employees. About 250 subscribers had registered for DSL access and never received it, totaling at least $30,000 in missing cash.
Det. Shelton said, "The principal was Cory Dyer. At first we thought we knew who he was, but our first identification was wrong. We have a photocopy of a New Jersey drivers' license, but the State of New Jersey says the license is not real. We found evidence that he practiced immigration law in Los Angeles even though the California State Bar has no record of him," Shelton said. "At this point, we realized this would be a long investigation, and that it would involve more than one state, so we passed on the case to the Computer and Technology Crime High Tech Response Team [CATCH]."
CATCH informed us that the paperwork is still being processed from the local police to the state agency. Shelton said that a full investigation could take six months, but that the police are still looking for more leads.
But the damage has been done. DSL Monster registrants are still angry and suspicious of other legitimate ISP businesses in the area. Jared, a DSL Reports participant and DSL Monster registrant, wrote to us stating that the the DSL Monster setup fee was equal to about half of what a year of DSL access would normally cost, so it seemed plausible.
"I waited about a month and a half to get DSL installed and of course nothing was ever done. The help desk was completely incompetent. There was never a Tech Support representative available. There was a new rep every week," Jared said. "Since they were always new, and non-technical, it was understandable that they didn't know anything. I will probably never use DSL now, more because I can't afford it, and would not trust any providers."
Sheila Adkins, public affairs manager for the Council of Better Business Bureaus, said that most businesses require a license and a physical address, but that Internet businesses do not necessarily require either.
"When people are dealing with an online business, we advise them to make sure they have a real customer contact and a physical address, and to visit the address if they have any doubts," Adkins said.
Adkins said that a local Better Business Bureau can record customer complaints, but that they are not a law enforcement agency. If consumers suspect criminal activity, they must alert law enforcement officials or the Federal Trade Commission if they suspect fraud.
Legitimate business operate on simple assumptions, like good faith. A scam like Dyer's plays on people's trusting souls. When even good businesses lose the trust of the general public, the fundamentals of the economy itself are threatened. People need to be vigilant. Those who were suspicious questioned DSL Monster's business contacts and finances, but nobody thought to question the existence of Cory Dyer until it was too late.
If anyone has any leads that might help the case, they should contact the CATCH.
--Alex Goldman is the Associate Editor of ISP-Planet.