AT&T may drop $1.15 million suit against Ipswich business owner

A small business owner in Ipswich may soon be off the hook for $1.15 million in fraudulent international phone charges, after telecom giant AT&T Inc. said it wants to drop a lawsuit against the company. But Michael Smith, president of Todd Tool & Abrasive Systems Inc., said AT&T gave him until 5:00 p.m. Monday to say whether he will drop his countersuit — a deadline he said he will not meet.

Smith, who was traveling home from Arizona on Monday, said he is seeking an extension of the deadline so he can meet with his attorney on Tuesday before deciding whether to accept the AT&T offer. “What the AT&T media statement said and what they told our attorney is not the same,’’ Smith said. “They’re willing to drop the claim if we drop our lawsuit.’’

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In an e-mailed statement, Todd Tools attorney Donna Mandriota wrote, “This has been a long, expensive, and frightening process for my client, and he needs time to consider AT&T’s offer.’’

The legal actions arise from a hacking incident three years ago. Todd Tool actually buys its telephone service from Verizon Communications Inc., which notified the company in September 2009 that it had racked up $260,000 of suspicious international calls shortly after being hacked. Verizon shut down Todd Tool’s international calling service and cancelled the bill, but the criminals were able to use the company’s phones to reach AT&T’s international calling service through a domestic phone number. Over a six-day period, the criminals placed $892,000 worth of phone calls through AT&T to the east African nation of Somalia. Todd Tool’s typical monthly phone bill is $700, Smith said.

In March 2011, AT&T filed a lawsuit against Todd Tool demanding payment of the money, plus interest. Todd Tool filed a countersuit arguing that AT&T’s actions amounted to unfair trade practices. “It’s been three years of hell,’’ Smith said. “The reality is that if I lose this judgement, I’m susceptible. It’s my company.’’

But on Monday, after the story was reported by The Salem News and the Associated Press, AT&T announced it was dropping the case. “We’re sympathetic to the situation and under these circumstances we’ve decided to not pursue the claims,’’ the company said in a statement.

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’’The only reason they blinked is their brand is more important than this money,’’ said Smith.

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