If you or he is saying that shifting a sample up or down does anything but alter the volume then you or he are fundamentally miss understanding something.
The bit shifting is simply for converting the 10-bit ADC data to 8-bits.
I didn't dig-in too deeply but I didn't see any details about the actual encryption. And from what I read, it looks like they never got it working. It looks like they never got it working without encryption...
"Normal" digital encryption won't work with analog because the A/D and D/A conversion can't be done "perfectly". You'd get similar "complications" related to the lossy compression algorithms used in cell phone audio. For example, you can encrypt an MP3 file (lossy compression) but if you encrypt a WAV file and then make an MP3 you'd never be able to decrypt it.
I'm not saying it can't be done but you'd have to use "analog compatible" techniques for scrambling & unscrambling the voice.