Terrorism or Arbitrage?

Three Palestinian men from Dallas were arrested over the weekend in Michigan after a Wal-Mart employee found their purchase of 80 prepaid TracFones suspicious and authorities found over 1,000 of the phones in their van, along with photos and video of the Mackinac Bridge:

If the hundreds of prepaid cellular telephones found in the minivan seemed odd, the pictures of the Mackinac Bridge were downright troubling to Tuscola County law enforcement officials who have charged three Texas men with terrorism-related crimes.

The phones plus photographs and videos of the 5-mile-long bridge led authorities to believe that the men — two brothers and a cousin, all of Middle Eastern heritage — were targeting the iconic structure linking the Upper and Lower peninsulas, according to a law enforcement official familiar with details of the case.

While the bridge pictures might have been vacation images taken by any tourists, they took on potentially sinister significance because of the men’s bulk purchase at a Caro Wal-Mart of 80 talk-and-toss cell phones that have been used by terrorists to detonate bombs, the official said Sunday, speaking on condition of anonymity because of the ongoing investigation.

However, the article also includes a rather plausible explanation for why the men would have so many of the phones… good old fashioned arbitrage:

The wife of one of three Texas men arraigned on terrorism-related charges in Michigan says her husband and his relatives are not terrorists, but are simply trying to make money by reselling cell phones.

”They’re locked up in jail for something that they didn’t do,” 20-year-old Lina Odeh said Saturday. …

Odeh said the men were buying the phones to sell to a man in Dallas for a profit of about $5 per phone. She said they were in Michigan because so many people in the Dallas area are doing the same thing that the phones are often sold out. Odeh said she thought her husband and relatives were targeted because of their Arab descent.

The sheer number of phones found in the van–and the apparent absence of any explosive devices–suggests that this explanation might be valid; not even the world’s least competent terrorist would need a dozen (let alone a thousand) cell phones to blow up a single bridge.

As for the possibility of racial profiling in this case, I have to say I’d find any purchase of 80 cell phones at a discount store at the same time suspicious, whether or not the buyer was of Middle Eastern descent, although I doubt their ethnicity is doing them any favors with the local law enforcement agency now.

What may be more amazing is that they amassed the other 900-odd phones without someone finding it odd that they were buying these things in bulk at retail.

Update: A similar situation in Ohio ends without charges against two Muslim men from Dearborn, Michigan.

FILED UNDER: Economics and Business, Terrorism, , , , , ,
Chris Lawrence
About Chris Lawrence
Chris teaches political science at Middle Georgia State University in Macon, Georgia. He has a Ph.D. in political science (with concentrations in American politics and political methodology) from the University of Mississippi. He began writing for OTB in June 2006. Follow him on Twitter @lordsutch.

Comments

  1. IN BRIEF…

    Three Texas men were arraigned Saturday on terrorism-related charges after police found about 1,000 …

  2. Michael says:

    I’ve heard many stories about people buying these pre-paid phones in one place, then selling them at another where they sell for more money. It’s also almost always been immigrant minorities doing this. It’s possible that the employees at the stores where they bought the other 900 phones are used to this.

  3. Amerika…

    I’m not seeing evidence of a single law broken here: If the hundreds of prepaid cellular telephones found in the minivan seemed odd, the pictures of the Mackinac Bridge were downright troubling to Tuscola County law enforcement officials who have……

  4. DC Loser says:

    This is a well known business practice. The buyers do a hack to the phones to “untie” them to their providers and then resell the phones at a profit overseas. This episode is just another law enforcement overreaction, and I’m certain in the end these guys will be exonerated.

  5. John Poleshek says:

    The authorities in Michigan are duty bound to
    investigate any perceived threat to our country.

    However our legal system also says people are Innocent until proven guilty. Many people are arrested in this country every days for a myriad of different crimes and and there appearance or
    race as you call it has nothing to do with the
    crime they are accused of.Consider if all the terrorist in the world were blue eyed blonde people would we not hesitate to watch suspiciously
    all blue eyed blonde people and call the authorities if we think they are a threat to this country.Most legal immigrants I know if they
    are accused of a disloyal act want to clear their
    name, OK but maybe not all.Also if all terrorist
    looks like me for example I would welcome the chance to prove that I am not a terrorist. Consequently if my behavior i.e buying throw away cell phones for profit was suspicious, my explanation and proof I could show would clear up the matter rather quickly. I would not play to the press with the race card.

  6. tblubrd says:

    But has anyone talked to the “..man in Dallas” who is theoretically buying these phones?

    Could be an interesting conversation with him.

  7. Herb says:

    By the looks of some comments, potential terrorist should be given the benefit of every doubt,

    Until they set off some bombs and kill a few hundred people.

    I keep thinking of “Neville Chamberlain” and his good deal with Hitler.

  8. ob1 says:

    The state trooper who stopped them has said that the suspects had removed and disposed of the chargers for the phones. If they were intent on re-selling the phones, then why would they remove such a necessary piece of equipment?

  9. cirby says:

    The “phone reseller” excuse has been pretty thoroughly debunked. As ob1 said, why were they taking the packaging apart and spearating out the phones and chargers?

    If you plan on reselling phones, you keep them all in their original packages and sell them as “new.”

    There’s also the huge problem of actual pricing. If you want to buy (and resell) cell phones cheaply, you buy them closer to where you’re going to sell them. You don’t pick them up in one of the most expensive countries in the world and ship them to a place where they usually sell of 1/3 of the US price (shipping alone would kill your profit margin). Wal-Mart’s cheap, but they’re not that cheap.

    You also want to go directly to the manufacturer and buy them in lots of 1000 for 1/2 the price, delivered to the door of the place you’re going to sell them.

  10. Old War Dogs says:

    Terrorism or Arbitrage?”…

    Chris Lawrence at OTB: Three Palestinian men from Dallas were arrested over the weekend in Michigan after a Wal-Mart employee found their purchase of 80 prepaid TracFones suspicious and authorities found over 1,000 of the phones in their van, along…

  11. Bill Faith says:

    ob1, the theory I saw expressed on another site was that they intended to export the phones to countries with a different electrical system than the U.S. (eg 220V vs 110V). Of course that does conflict with the notion of marketing them in the Dallas area.

  12. Bill Faith says:

    An exerpt from Old War Dogs >> Terrorism or Arbitrage?”:

    An aside on a common misconception that’s beginning to really annoy this ol’ Dog: TracFones are not “talk and toss,” they’re quality “pay as you go” telephones. You buy a predetermined amount of airtime and when you start getting low you buy more. No contracts. I’m on my fourth one; the first one wasn’t digital, the second one couldn’t be converted to an Illinois number when I relocated, and the third one quit working at the Texas state line when I went to visit my daughter and her family. I’d probably have upgraded to a new phone at least a couple of times by now just to keep up with technical improvements anyway, and they aren’t all that expensive.

  13. Stormy70 says:

    They can also be used to detonate explosive devices, and they are untracable if one was worried that the authorities might be listening on calls made to overseas. Thanks again, NYT.

  14. Monica says:

    I would think if they were reselling them they wouldn’t have taken them out of their packages. This explanation isn’t adding up for me.

  15. Leo says:

    When talking about “police overreaction” I think it’s useful to point out the levels of proof that they act on.

    In fact committed: This is proof beyond all doubt. It’s the level of proof required to make a citizen’s arrest in Mass. That means that unless you get a conviction, you can get in trouble.

    Proof beyond a reasonable doubt: what you need to convict someone of a crime. That is proof to where this is a moral certainty in the minds of jurors that the person did the crime.

    Preponderance of the evidence: There is more than a 51% likelihood that the person is responsible. This is the required level of proof in civil cases.

    Probable cause (or reasonable cause): facts and circumstances within the officer’s knowledge are sufficient to warrant a prudent person to believe a suspect has committed, is committing, or is about to commit a crime. The key here is that it is substantially less than preponderance. So, if you think it likely they are committing, there can be probable cause to arrest. We’re talking about a 40% likelihood, perhaps.

    Reasonable suspicion: articulable facts that lead the officer to believe that a crime might have been is being, or is about to be committed. It’s lower than probable cause, but allows you to detain people until you know one way of the other.

    So, a conviction? Not without some more facts or knowing what storied they had when stopped. Probable cause? I would say definitely.

  16. John Burgess says:

    Because I travel a lot, I’ve got a few different phones for different countries. They are, arguably, “disposable” as they only cost about $50 each. I buy time when I’m in a particular country. If my account has expired, I also end up with a new phone number.

    The countries I go to all have different phone systems such that the phones don’t work in other countries without a degree of fiddling that I’m not interested in doing. Each phone charger is somewhat different than the others in its output voltage.

    Each country also has separate types of electrical sockets requiring differently shaped prongs. So I may carry three or four phones and chargers if my travel schedule requires it. I generally have two in my carry one–one for the country I’m leaving, one for the country I’m entering; the others are in checked baggage.

    It makes perfect sense to me that these guys would throw away packaging and charging units as they’re useless wherever the phones are going. Why pay to ship the junk? I’m pretty certain nobody is going to be calling in for warranty service.

    In any event, the FBI doesn’t think they’re up to anything.

  17. Steve Verdon says:

    The state trooper who stopped them has said that the suspects had removed and disposed of the chargers for the phones. If they were intent on re-selling the phones, then why would they remove such a necessary piece of equipment?

    Be careful about this, cops tend to…ahhh…exaggerate. Look at drug busts, they’ll tell you they found x grams of a drug, but the reality is they found about a ketchup packs worth of the drug. For example, 10 grams of pot is .35 ounces. So when they said discard, it may not have meant “thrown in a trash bin” somewhere, but lying loose in the back of the vehicle for later re-packaging.

    If you plan on reselling phones, you keep them all in their original packages and sell them as “new.”

    Not if you are going to “hack” them so that they are seperated from their original provider for overseas use. A company in Florida was actually sued about this as they were taking the phones out of the package, removing the battery, hacking the phone, re-packaging them and then selling them as new.

    There’s also the huge problem of actual pricing. If you want to buy (and resell) cell phones cheaply, you buy them closer to where you’re going to sell them. You don’t pick them up in one of the most expensive countries in the world and ship them to a place where they usually sell of 1/3 of the US price (shipping alone would kill your profit margin). Wal-Mart’s cheap, but they’re not that cheap.

    Apparenlty you haven’t heard of Ebay. This allows you to reach a worldwide market pretty cheaply. Also, Ebayers have tended, in the past, to make lots of money off of high shipping costs. Ebay takes a percentage of your sale, but not the shipping costs. So you sell it for $1 but have a $24 shipping cost. Now maybe that has changed, but people do this all the time with all kinds of items.

    You also want to go directly to the manufacturer and buy them in lots of 1000 for 1/2 the price, delivered to the door of the place you’re going to sell them.

    Considering that Tracfone sued a company that did precisely this, I’d imagine this wouldn’t work either.

    So much for the debunking.

    And as John has noted, the two guys from Dearborn have been released. Looks like an over-reaction and more “fear of the other” from Debbie Schlussel and Michelle Malkin.