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In Brazil, they prove that the internet can be the mafia, according to the police

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By Gram Slattery

RIO DE JANEIRO, March 28 (Reuters) – Last year, as Rio de Janeiro residents sheltered in their homes during the deadliest phase of Brazil’s COVID-19 outbreak, police detective Gabriel Ferrando said he received a notice that something suspicious was affecting the local internet service.

Access had disappeared in large sections of Morro da Formiga, in a neighborhood in the north of the city. When Ferrando questioned a technician from the broadband provider TIM SA in charge of fixing the outage, the worker, whose name he did not want to reveal, said that some armed men had thrown him out with a warning not to come back.

It turns out that a new internet tester had claimed this territory: a company among our investors found a drug and arms trafficking defendant with alleged ties to Brazil’s notorious Red Command criminal syndicate, according to Ferrando, court documents filed by authorities and Company records seen by Reuters.

Using stolen equipment, some of it stolen from TIM, the newcomers soon had their own internet service up and running, Ferrando said. Residents could hire the new company.

TIM, a subsidiary of Telecom Italia SpA, declined to comment and referred all questions to Brazilian telecoms industry association Conexis. In a statement, the group called on the country’s law enforcement agencies to act to protect legitimate operators.

Ferrando, a veteran of Rio’s largest organized crime affiliate, is attempting to do just that. In a sealed article documenting months of analysis, he asked state prosecutors in February to bring charges against the alleged hackers.

The prosecution did not respond to a request for comment. No charges have been filed.

Morro da Formiga is not the only community reporting problems. Reuters interviewed nearly two dozen telecommunications industry executives, law enforcement representatives, technicians, academics and internet customers in Brazil, reviewing thousands of pages of court files produced by police.

The people and documents described an audacious takeover of internet service in dozens of neighborhoods in Brazil’s major cities by companies associated with suspected criminals who are unafraid to use force and intimidation to drive out their competitors.

The result, according to these sources, is that tens of thousands of Brazilians are now reliant on second-rate, unreliable broadband networks that industry and law enforcement estimates generate millions of dollars annually for would-be criminals. .

Pirate testers can be callous when service crashes and impatient when a bill isn’t paid, some customers told Reuters. In the working-class neighborhood of Campo Grande, a resident describes himself as someone who knocks on his door monthly to collect 35 reais ($6.80), in cash.

There is “pressure to pay on the day they choose without delay,” said the client, who requested anonymity for fear of reprisals.

You have to be able to take action based on what you can if you are luckier due to the COVID-19 pandemic, you should go online for students, test and compare.

In 2020 alone, ownership for Brazilians with an internet connection grew more than 12 percentage points, to 83%, according to the most recent data available from Cetic.br, an information technology organization.

Hackers also include looting equipment and infrastructure, much of it repurposed for their makeshift networks, according to authorities and telecommunications executives.

Theft and destruction of telecommunications equipment will increase 34% in 2020 compared to the previous year, representing some 1 billion reais ($194 million) in direct annual losses, according to Feninfra, an industry group that will highlight that that figure increased another 16% in the first half of 2021.

THE SUPPOSED PLOT

The Brazilian telecommunications industry is not alone in its struggle. Criminal groups have for years controlled the distribution of cooking gas, jerrycans of drinking water and other basic products in many low-income urban neighborhoods.

However, by building their own broadband networks, criminals are increasing their sophistication, according to more than 20 technicians, industry and law enforcement representatives interviewed by Reuters.

The scheme usually works like this: the thieves steal or vandalize the equipment of traditional broadband operators and when the repair teams arrive, they are threatened by armed men who advance them not to return.

Last year, in Rio alone, the no-go zones increased to 105 places for Oi SA, one of the largest internet providers in Brazil. That figure has quadrupled since 2019, according to data provided by the company.

Shortly after the service interruption, telecommunications companies associated with the crime groups organized their own networks, taking advantage of the existing infrastructure.

In some cases, these groups are directed directly by members of drug gangs, including the Red Command or the Third Pure Command, one of their main competitors. Aside from being run by militias, a criminal group made up of retired and off-duty police officers or businessmen who pay bribes to eliminate competition.

Intruders are often aided by corrupt employees of major testers who sell them stolen knowledge and equipment, according to Rio state prosecutor Antonio Pessanha, who told Reuters he is investigating criminal activity in the telecommunications sector in the city of Rio and its surroundings.

In a recent case, an employee of Claro, the local subsidiary of Mexico’s América Móvil SAB de CV, offered to sell company equipment to associates of organized crime, according to a recorded call that Pessanha said his office obtained through a court-approved wiretap.

It did not specify which criminal organization the callers were allegedly affiliated with, nor did it identify the Claro employee or the other participants. The analysis is ongoing and Reuters did not have access to the recording.

Claro declined to comment on the alleged incident.

NEW ACTOR

In Morro da Formiga, Detective Ferrando, who began receiving anonymous tips, said of some of his roughly 5,000 residents in the first half of 2021 that broadband services provided by major operators had stopped working.

The company that dominates the sector now, Ferrando said, is called JPConnect Servicos de Telecomunicacoes. It is established in 2019, according to corporate registration documents filed with the Rio government and seen by Reuters.

Those records show that late last year JPConnect was partly owned by an individual named Paulo Cesar Souza dos Santos Jr, who authorities say is a member of the Comando Vermelho, or Red Command, Rio’s largest organized criminal group.

In 2011, Rio state prosecutors charged dos Santos with drug and arms trafficking, according to court records reviewed by Reuters. He was subsequently acquitted.

In January, police officers searched the JPConnect headquarters in Morro da Formiga, according to Ferrando, who said they found equipment belonging to TIM, Oi, Claro and Telefónica Brasil SA, the local subsidiary of Spain’s Telefónica SA. All of these companies declined to comment.

Authorities have not filed charges in the case. Reuters was unable to contact JPConnect representatives and the company’s registered phone number is broken.

Dos Santos and Almeida declined to comment through their lawyer, Eberthe Vieira de Souza Gomes, who said JPConnect operates legally and has gained market share by offering a quality product.

He added that Dos Santos has no connection to any criminal organization, noting that his client was acquitted of all charges related to his 2011 indictment. Reuters obtained the acquittal through documents from the Rio state court. Those documents do not specify the year of his acquittal.

TIM, Oi, Claro and Telefónica Brasil referred the questions to Conexis, the telecommunications trade association.

In an interview, Marcos Ferrari, president of the group, described a litany of problems facing the industry, including vandalism, theft, threats to employees and the takeover of service areas by actors with suspected links to the underworld. .

In the city of Rio de Janeiro there are also other gang operators that are currently investigating the perspectives of the victims of the crimes that have been committed, according to the authorities.

Among them is Net&Com, which made headlines in March 2021 when Rio police raided its headquarters in the city center as part of an investigation into an alleged drug trafficking network.

The politician has publicly declared that she is investigating the company for having paid offers to criminals associated with the Comando Vermelho to help them take over the telecommunications market in the poor neighborhoods of the Rio metropolitan area.

More than three dozen people, including suspected members of the Comando Vermelho, were charged last year with drug and arms trafficking and conspiracy, according to court documents filed by the Rio prosecutor’s office and seen by Reuters. They are currently being tried and have maintained their innocence.

In the documents, authorities allege that the network also profits by accepting bribes from Net&Com to drive telecom competitors out of neighborhoods where the company now operates. Net&Com and its executives have not been charged.

Pedro Santiago, Net&Com’s lawyer, said that the company is an honest operator that has been “the victim of a witch hunt” and added that he had reviewed many hours of wiretapping by the police and that they had no link between the company and elements criminals.

The policy refutes that characterization in court documents seen by Reuters, citing as evidence allegedly stolen equipment and conversations between co-conspirators that mention Net&Com’s alleged role.

Pessanha, Rio’s state prosecutor, said the investigation is continuing. “The Internet is the new gold for the criminal underworld,” he said.

(Reports added to Rodrigo Viga Gaier; edited in Spanish by Javier Leira)

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