[arin-ppml] Fwd: [ARIN-20140107-F1419] Fraud Report on CloudRadium LLC

[Adam Thompson]

Disclaimer: I am not a lawyer.  The following represents my personal opinions only at this time.


>From a Canadian standpoint, ARIN is extremely (ridiculously!) afraid of being sued in civil court.
They do have to operate in the USA, however, and that country is well-known for being very litigious, so perhaps this aspect of ARIN's behavior is justified.

In any case, the end result is that what they need as "proof" of fraud is MUCH more stringent than what you might expect.  They cannot assume you are being truthful in reporting this fraud, whether you are or not.  They also cannot assume you fully understand what constitutes fraud, whether you do or not.

ARIN must not only investigate for themselves, they must do so from a position inside a foreign country (i.e. USA), where they (may) lack the cultural, legal, and business contexts to easily assess, or even investigate, the case.  False reports of fraud or other, typically criminal, activity is unfortunately a common occurrence in North American business.

It is normal for complex criminal cases to take many years to resolve, here, and commercial civil cases can easily last for *decades* in court and take many millions of dollars to defend or prosecute.

ARIN's financial structure does not permit the organization to expose itself to unwarranted liability or cost, and the board and staff would probably be delinquent in their duties if they permitted such an event to occur.

(My recent comments about this being a serious impediment to RPKI deployments notwithstanding... This is an excellent example of why a US-based organization is increasingly at a disadvantage globally.)

We all just heard at the ARIN 34 meeting, and in at least some recent ARIN-on-the-road meetings, that the (American) staff find situations like this very difficult to deal with quickly or efficiently.
Bottom line: in a multi-country case like this, it will probably take a very long time (more than just one year) to determine - with sufficient accuracy and certainty - whether or not to take any action.

Righteousness is not relevant in the US legal system.  Whether it should be or not is left as an exercise for the American reader of voting age...

Having said that, this case appears to be a good example of the problem faced by out-of-region use as recently discussed at ARIN 34 in draft policy ARIN-2014-1.

It now occurs to me that ppml@ therefore isn't an entirely bad place to continue discussing this, since it is relevant to current policy discussions.

John, or Leslie, or any other board or staff:
Has ARIN considered - and possibly rejected - any of these options:
1. Developing a dedicated Fraud investigation department or team, or
2. Hiring translators and/or bilingual or "bicultural" (spell check OK'd that so I guess it's a word!) staff to mitigate the difficulty in doing these investigations, or
3. Outsourcing foreign fraud investigations, possibly with the assistance (direct or otherwise) of the relevant RIR?

-Adam Thompson
 athompso at athompso.net


N.B. I can't believe I had nothing better to do right now than type all that on my smartphone screen...

On October 13, 2014 8:12:21 PM CDT, xiaofan yang <nikiyangxf at gmail.com> wrote:
>Hi Ted,
>
>Thanks for your care and advise.
>I have provided enough evidences and ARIN just ignores them and keeps
>saying further instigation ( sort of thing). It has been one year since
>I
>report this.  maybe the system is corrupted or someone corrupted
>inside.
>Who knows!   ARIN will not rectify thing which embarrass themselves. So
>this case has been suspended forever till the deletion of ARIN pool and
>everyone in community forget about IPv4.......
>
>So rather than asking help from ARIN. It may be helpful to resolve this
>problem by attracting as much attention as possible from the righteous
>community.
>
>
>On Thu, Oct 9, 2014 at 10:33 PM, Ted Mittelstaedt <tedm at ipinc.net>
>wrote:
>
>> Hi Xiaofan,
>>
>>   I believe you get quicker action on these fraud reports if you
>> send them to hostmaster at arin.net, I have CCed that address.
>>
>>   I would like John to respond to this, but in my opinion the
>> organization that is committing fraud can potentially lose all
>> addresses assigned to it, if it is shown they were obtained
>> fraudulently as that would have been a violation of the registration
>> services contract that they signed.
>>
>>   And if ARIN were to pull the IPs then everyone who had "purchased"
>> the IPs from this organization would likely sue this organization. 
>If
>> that is, they could find them.
>>
>>   So, in summary, I believe that the principle of Caveat Emptor
>> applies in these transactions, and that anyone "buying" the IP's
>> would be looking up the provenance of them before putting any real
>> money down.  Thus, I cannot believe that any of these fraud schemes
>> are really going to work in the long run - my guess is that what
>> is actually happening here is that CloudRadium LLC has laid out a lot
>> of money, attempted to sell a pig in a poke to a group of buyers
>> who are educated enough to see it for what it is - and as a result
>> have been uninterested in buying anything from them with the
>consequence
>> that CloudRadium LLC has no cash flow and will disappear within a
>year.
>>
>> Ted
>>
>> On 10/9/2014 8:13 PM, xiaofan yang wrote:
>>
>>> Hello the Community,
>>>
>>> As the Baltimore meeting is under way, i would like to report one
>fraud
>>> case which has never been resolved by ARIN and i think  ARIN just
>does
>>> not admit such a fraud exist (in case of embarrassment of itself if
>the
>>> evidences to be exposed into the public). However, I am thinking  it
>>> will be my duty as a member to expose such a fraud case in PPML to
>>> (assist  policy discussion) fix the loop hole in some policy under
>the
>>> discussion.
>>>
>>>
>>>
>>> ---------- Forwarded message ----------
>>> From: *xiaofan yang* <nikiyangxf at gmail.com
><mailto:nikiyangxf at gmail.com>>
>>> Date: Thu, Jan 9, 2014 at 9:22 AM
>>> Subject: Re: [ARIN-20140107-F1419] Fraud Report on CloudRadium LLC
>>> To: hostmaster at arin.net <mailto:hostmaster at arin.net>
>>> Cc: John Curran <jcurran at arin.net <mailto:jcurran at arin.net>>
>>>
>>>
>>> Fraud Report on one of your current member
>>>
>>>
>>> Some basic info about the company who has deceived its IPv4
>application.
>>>
>>> Name of the Comnapy:  CloudRadium LLC.
>>>
>>> Registry address:  1603 Capitol Ave St3 310, Cheyenne, WY.
>>>
>>> Owner’s name:  Li Xuan (李轩） & Deng Xiu Ping (邓秀平)
>>>
>>>
>>> As the IPv4 has been depleted in the AP regions,   some so-called
>clever
>>> guys from China registered a LLC  named CloudRadium LLC in WY in
>>> 2012-10-01, meanwhile they registered a domain named
>>> http://www.cloudradium.com  on 2012-09-26.   From then, they’v
>started
>>> their journey of deceiving the Cherish IPv4 resources which should
>>> belong to the Arin Internet Community from ARIN.   They have
>carefully
>>> studied and researched all Arin’s Policy on IPv4 management and has
>>> abused the policy to apply for  more IPv4 steps by steps by using
>the
>>> fraud information.  See details  below.
>>>
>>>
>>> They do not have or own any IDC infrastructure Either in the USA or
>in
>>> China.  What they do is to rent other IDC racks and resell its
>so-called
>>> IDC services to end-users, Which can be proved by its  own Chinese
>>> Website and its upstreams who announced their applied IPs after
>>> CloudRadium has paid those upstreams money for doing this.
>>>
>>>
>>> They are ineligible for receiving any ongoing IPv4 large blocks.
>>> However, they have planned this long time ago and they started from
>>> applying for smaller blocks initially and requesting subsequent IPs
>for
>>> every 3-months (they were planning to keep request IPv4 blocks for
>more
>>> than 12 months).  One year later after being a member of ARIN, they
>can
>>> request a 12-month needs of IPv4 and they have kept requesting IPv4
>>> blocks for 12 months or even more.   As a result, they gradually
>>> “steals” quite a lot IPs from ARIN.  Normally, the larger of their
>>> previous allocation, it will be quite easier for them to have even
>more
>>> or another larger block from ARIN ( this is kind of abusing ARIN’s
>>> policy by their well-designed sophisticated justification
>information).
>>>
>>>
>>> They submitted falsified utilisation or organisation information
>during
>>> the resource request process.
>>>
>>> Detailed explanations plus evidence in the attachment:
>>>
>>>
>>> 1.They have used little of their allocated IPs and they just pay its
>>> upstreams to announce their IPs to make IPs look like being used.
>>>
>>> 2.Actually, they has fewer customers who used their so-called
>services
>>> and they fake their customer base by making fake contracts with
>unexists
>>> or imaginable customers and making up the equipment list and
>purchase
>>> invoices, which make their business looks like the same as the real
>one.
>>>
>>> 3.One of their core business is to help other Chinese company to
>apply
>>> for Arin IPs by execution a  ARIN IPv4 application Contract ( I have
>>> this contract and can be used as the evidence to show they are not
>only
>>> applying for Arin IPs for themselves by using fraud info but also
>help
>>> others to apply for Arin IPs by using the fraud info too.   They
>will
>>> sign this Arin IPv4 application Contract with those Chinese and
>produce
>>> fake IDC and bandwidth service contract which is to be provided to
>ARIN
>>> HM for justifying those Chinese’s initial /20 IPv4 application (For
>any
>>> ongoing IPv4 request, they will charge more money from those Chinese
>for
>>> doing this). XeVPS L.L.C  also registered in WY (23.226.176.0/20
>>> <http://23.226.176.0/20>) and XIAOZHIYUN L.L.C registered in CA
>>> (23.226.48.0/20 <http://23.226.48.0/20>) are this kinds of customer
>of
>>> CloudRadium who help them to apply for ARIN IPv4 by using fraud
>>> information.   Please pay an attention to those newly registered LLC
>in
>>> WY, Normally, CloudRadium will help its cust to register LLC in WY.
>>>
>>>   4.Another strategy or core business is  to “steal” enough IPs from
>>> ARIN and (when the one year restriction of transfer defined by ARIN
>>> policy has expired) transfer those IPv4 back to AP region or China,
>>> where the IPv4 has already been depleted in 2011-04-15   and they
>are
>>> planning to make quite lots of profits for selling those IPv4 back
>to
>>> Asia Market.
>>>
>>> 5.In a word, their main purpose is to have as many IPv4 as they can.
>>> Their company is not founded for the purpose of doing business in
>USA,
>>> but for accumulating IPv4 addresses, all of which can be verified 
>by
>>> the attached Company Registry Search and shows that  CloudRadium LLC
>has
>>> not paid any tax and has been inactive administratively Dissolved；
>>> which also means it is illegal for doing any kinds of business
>>> (including but without limited to apply for IPv4 from ARIN; to
>provide
>>> its “so-called” IDC rack Rental Services etc).
>>>
>>>
>>> 6. Furthermore, CloudRadium was administratively dissolved at 12
>Sep,
>>> 2013. Which means 60 days before that, around July they should’ve
>>> received a notice from the secretary of state about the dissolution.
>A
>>> administratively dissolved company can not carry on any business
>except
>>> that are necessary to wind up and liquidate the company under
>MBCA(Model
>>> Business Cooperation Act Chapter14  Section05). Knowing this,
>>> CloudRadium still applied for the 23.224.0.0/15
><http://23.224.0.0/15>
>>> around Sep 2013. Why do a dissolved company need any IP resources?
>It’s
>>> not like they can carry on any business which needs IP resources
>>> anymore. I couldn’t help but wonder how did their application
>materials
>>> justify this? If they were saying that need the /15 for expanding
>their
>>> business, then their application is nothing but a fraud.
>>>
>>>
>>> I think ARIN must be knowing that CloudRadium is applying for an
>ongoing
>>> /14 IPv4 now.  Considering its current company status, how can they
>>> continue to apply for subsequent IPv4 from ARIN?  Will ARIN continue
>to
>>> allocate another /14 to CloudRadium?
>>>
>>>
>>>
>>> All in all,  CloudRadium does not deserve any IPv4 ( including but
>>> without limit to its currently allocated ARIN IPv4  and any ongoing
>>> allocation from ARIN), Considering its company status is inactive
>>> administratively dissolved.  According to the above explanation and
>the
>>> evidence in the attachment and ARIN Policy,   ARIN has to
>>> *reclaim/revoke* all its ARIN’s IPv4 upon the completion of your
>>> internal investigation.
>>>
>>>
>>> As a respponsible member of the community, I would strongly suggest
>ARIN
>>> to look into this matter ( Fraudulent behaviour) seriously.
>>>
>>>
>>>
>>>
>>>
>>> Below is a list of IPv4 ARIN has already allocated to this Fraud
>called
>>> CloudRadium LLC.
>>>
>>>
>>> 23.224.0.0/15 <http://23.224.0.0/15>
>>>
>>> 2013-09-04
>>>
>>>
>>> 172.247.0.0/16 <http://172.247.0.0/16>
>>>
>>> 2013-06-06
>>>
>>>
>>> 162.209.128.0/17 <http://162.209.128.0/17>
>>>
>>> 2013-04-01
>>>
>>>
>>> 192.151.192.0/18 <http://192.151.192.0/18>
>>>
>>> 2013-01-03
>>>
>>>
>>> 192.161.80.0/20 <http://192.161.80.0/20>
>>>
>>> 2012-11-01
>>>
>>>
>>>
>>>
>>> Address assigned by its upstream.
>>>
>>> 64.120.67.0/24 <http://64.120.67.0/24>
>>>
>>> 2012-10-22
>>>
>>>
>>> 108.62.122.0/24 <http://108.62.122.0/24>
>>>
>>> 108.62.123.0/24 <http://108.62.123.0/24>
>>>
>>> 108.62.124.0/24 <http://108.62.124.0/24>
>>>
>>> 2012-10-23
>>>
>>>
>>> 147.255.49.0/24 <http://147.255.49.0/24>
>>>
>>> 2012-10-23
>>>
>>>
>>>
>>> 173.208.13.0/24 <http://173.208.13.0/24>
>>>
>>> 2012-10-23
>>>
>>>
>>> 172.208.14.0/24 <http://172.208.14.0/24>
>>>
>>> 2012-10-23
>>>
>>>
>>> 173.208.24.0/24 <http://173.208.24.0/24>
>>>
>>> 2012-10-23
>>>
>>>
>>> 173.208.71.0/24 <http://173.208.71.0/24>
>>>
>>> 2012-10-23
>>>
>>>
>>>
>>> Attachment:
>>>
>>> 1st. "IP地址申请合同"  evidence for above paragraph 3
>>>
>>> 2nd. :Chat with the owner of CloudRadium" evidence for above
>paragraph
>>> 1,2,3 and      4, Pay attention to the red coloured info. I think
>you
>>> may have someone who can read Chinese in Arin or you may ask help
>from
>>> trusted third party to translate those words, which can be used as
>the
>>> evidence (even ) on the court.
>>>
>>> 3rd. "CloudRadium LLC" evidence for above paragraph6; you can also
>>> search its company status via link
>>> https://wyobiz.wy.gov/Business/FilingSearch.aspx
>>>
>>> 4th. Please also see  the complains from one Chinese customer via
>>> http://www.sc315.gov.cn/WenZ_3J_3_3.aspx?id=55971&menuid=78
>>> <http://www.sc315.gov.cn/WenZ_3J_3_3.aspx?id=55971&menuid=78>
>>>
>>>
>>>
>>>
>>> Regards,
>>>
>>> Niki
>>>
>>>
>>> On Wed, Jan 8, 2014 at 10:57 PM, <hostmaster at arin.net
>>> <mailto:hostmaster at arin.net>> wrote:
>>>
>>>     Hello,
>>>
>>>     Thanks for your report.  We'll investigate.  Any additional
>>>     documentation you have would be helpful.
>>>
>>>     If you have any further questions, comments, or concerns please
>>>     respond to
>>>     this message or contact me directly.
>>>
>>>     Regards,
>>>
>>>     Jon Worley
>>>     Senior Resource Analyst
>>>     ARIN Registration Services
>>>     https://www.arin.net/
>>>     hostmaster at arin.net <mailto:hostmaster at arin.net>
>>>     703.227.0660 <tel:703.227.0660>
>>>
>>>     For an up to date look at ARIN's current IPv4 inventory, please
>>>     check here:
>>>
>>>     https://www.arin.net/__resources/request/ipv4___depletion.html
>>>     <https://www.arin.net/resources/request/ipv4_depletion.html>
>>>
>>>
>>>
>>>
>>>
>>> _______________________________________________
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>>>
>> _______________________________________________
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>
>
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-- 
Sent from my Android device with K-9 Mail. Please excuse my brevity.
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