The men, all from the Dallas area, were being held on charges of soliciting or providing material support for terrorism and obtaining information of a vulnerable target for the purposes of terrorism, police Sgt. Dale Stevenson said. They told investigators they planned to resell the phones to a wholesaler for profit, police said.
Stevenson declined to elaborate on how the case relates to terrorism. Telephone messages were left Friday with the Tuscola County prosecutor's office and the FBI, which assisted with the investigation.
The men, ages 18, 22 and 23, were being held in Tuscola County Jail and scheduled to be arraigned Saturday.
Stevenson said the men went to a 24-hour Wal-Mart store in Caro early Friday and bought the cell phones despite a store policy limiting customers to three phones per purchase. A Wal-Mart clerk who thought the purchases were suspicious alerted police.
"They target these stores late, in the morning, hoping to get an inexperienced clerk," Stevenson said.
Police stopped the men's van about 1:30 a.m. and found nearly 1,000 phones, most of which were prepaid TracFones, along with a laptop computer and a bag of receipts, Stevenson said.
"The cell phones can be used as detonators. Batteries can be disassembled and used to make methamphetamine. Obviously there's something wrong here," Caro Police Chief Ben Page said.
The men told police they were buying the phones, which cost about $20 and come with a charger, taking them out of their packaging and selling them to a wholesaler in Texas for about $38 without the charger.
The arrests in Caro, about 90 miles north of Detroit, come three days after two men were arrested in Marietta, Ohio, where police said they piqued suspicions when they acknowledged buying about 600 phones in recent months at stores in southeast Ohio.
Investigators found information about airline flights and airports in their car.
The men, Ali Houssaiky and Osama Abulhassan, both 20 and from Dearborn, have been charged with two felonies, money laundering in support of terrorism and soliciting or providing support for acts of terrorism, and misdemeanor falsification. A preliminary hearing on the felony counts was set for Tuesday.
Defense lawyers said Houssaiky and Abulhassan planned to resell the phones simply to make money and the flight information consisted of old papers left in the car by a relative who worked at an airport.
"The only illusory connection advanced by the prosecution to date is based on race and national origin," Abulhassan's family said in a statement. "This appears to be a typical case of racial profiling and we are confident Osama and Ali will be exonerated."
Prosecutors in Ohio have said the prepaid phones can be used to make hard-to-track international calls and have been linked to use by terrorists.
Wal-Mart has an agreement with cell phone manufactures to enforce a limit of three cell phones per purchase, said John Simley, a spokesman for Wal-Mart Stores Inc. in Bentonville, Ark.
"We're providing law enforcement officials with all the information we can to help with the ongoing investigating," Simley said. "We are not discussing the purchases or other details pertinent to the incidents."