Long distance fraud can occur on the phone. Scammers that live far away from the people they are scamming will make a phone call to a victim, lie, then ask for money. "Phony" means fraudulent, but can also replace the suffix "-phone" which relates to sound. "Phone" is not only a suffix, but a communication device that allows for long distance communication. The joke is playing on the word phony, how it sounds close to 'phone' and long distance fraud.
Someone who attempts long distance fraud is known as a phony .