Using unassigned public ip addresses on a private network

I recently came across a client who is using public ip addresses on their LAN and WAN. These ip addresses have not been assigned to them. I suppose they have been able to do this because they are NATed. My question is: isnt this illegal? and what are the real and implied technical implications of such a setup.
exaggerAsked:
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cluebeckCommented:
i would not say its illegal. the implication for this scenario would be, that your client will not be able to communicate with whoevers ip-adresses he is using. (since the router will send the packets within the own subnet)
Other then that i don't see any problems.
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Kieran_BurnsCommented:
We have a client doing the exact same thing.
We are also in the middle of undoing this allocation of IP addresses! As above - the REAL world IP address (range) will not be contactable as the internal routing will point all requests to the internal devices.
As long as these IP addresses do not appear on the 'net then there is no problem. If they start to do so then there are legal implications.
I'm really just enforcing what is said first - but having seen it in action (and it has been for some years) I can categorically state that there are no 'real' implications beyond stuffed routing if the IP addresses do become allocated. Our clients actually ARE! (but not for a domain that they would ever need to contact)
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exaggerAuthor Commented:
Well this actually block is actually already assigned. Its actually a whole /16.

I havent had a chance to meet the person who came up with this particular clients address scheme, but Im curious to know, from your experience, with all the flexibility of private ip address why would anyone want a setup like this?
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Kieran_BurnsCommented:
I'm not sure we're allowed to clearly express our opinion of individuals who do that on this forum ;-)
A 16-bit public allocation? Wow. In which case there are 65000 ip addresses he can't see on the 'tinterweb. That's going to hurt, and I expect that there will be odd 'issues' popping up when people browse.
One solution I suppose would be to use a proxy server that has an EXTERNAL DNS Server entry only (can't resolve internal IP addresses) and direct all web browsing traffic to it. Make sure it NATs all through traffic and at least that issue will be sorted.
In the meantime, cost up a project to reallocate IP addresses ;-)
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exaggerAuthor Commented:
Not an opinion of the individual but the situations in which anyone would choose to design their network in this way.
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