This research was performed by Micah Sherr, Eric Cronin, Sandy Clark and Matt Blaze and is summed up in a paper entitled Signaling Vulnerabilities in Wiretapping Systems.
To illustrate their point, you can download the MP3 file of two monitored phone calls, one observed and the other unobserved.
The first illustrates a monitored conversation without a c-tone being played but with surveillance occuring. The second contains a section of the conversation with an audible c-tone playing while an unmonitored conversation takes place.
Such research is a vital means in determining the strengths and weaknesses of security technologies, and we applaud the authors for their work. We renamed our firm from Secure Design & Development, Inc. to Cee Tone Technology as we view such research and technologies critical to our day-to-day operations.