" The then use that number as a display for the call. He also said that they can make any number appear to be making the call that they want to. "
This is true.
"It has nothing to do with the phone company, in fact the phone company don't know any thing about what number is being used."
This is not true. When you're setting the caller ID, you're sending the data to the phone system. The phone company has full visibility of it (they have to, because they have to move that data to the phone being called).