A Massachusetts business owner said he is fighting AT&T over a $891,470 phone bill racked up by hackers who got into his company's system.

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Michael Smith, owner of Todd Tool and Abrasive Systems in Ipswich, said his phone carrier, Verizon, noticed $260,000 worth of international calls being made on his company's system in September 2009 and the company wrote off the bill, the Salem News reported Monday.

However, Smith said the hackers used a "dial around" long distance code to make a further $891,470 worth of international calls to Somalia using AT&T, which charges $22 per minute for the calls.

Smith said AT&T admitted the calls were fraudulent, but still insisted he pay the bill and the company is now suing him for $1.15 million, including the call charges and interest on the bill.

AT&T is arguing Smith should have had better security on his company's phone system and says Federal Communications Commission regulations allow the telecom giant to collect the money from the owner of the phone line, regardless of whether the calls were fraudulent.

Smith said he has filed a countersuit accusing AT&T of abusing the legal process and violating state consumer protection laws.

Smith said he has already spent $30,000 in legal bills and he worries about the future of his company, his 14 employees and their families.

"It could all be over if there's a judgment against us," Smith said. "It's my life. It's 14 families that I love dearly. We're all vulnerable."

Lawyers for Smith and AT&T are scheduled to go into mediation next month.