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Operations and Task Forces to Combat Fraud

Telemarketing Fraud Task Forces generally utilize a police/prosecutor team approach to attack multi-offender, multi-offense, multi-jurisdictional criminal organizations. The goal of the teams is to dismantle these organizations through effective prosecution and civil, administrative, and regulatory sanctions where appropriate. This requires coordination with a number of law enforcement agencies and other executive branch agencies.

Each case involves detailed investigative planning using a "task force" approach, producing complex charging documents followed by intensive pre-trial motion activity, which may result in parallel litigation for civil remedies, all of which must be coordinated by the handling prosecutor.


Bi-National Database and Tape Library

Consumer Sentinel

A joint project with the National Association of Attorneys General, in cooperation with CanShare and PhoneBusters of Canada, Consumer Sentinel was launched in December 1997. Consumer Sentinel is a bi-national, multi-state computerized consumer fraud database that uses the Internet to provide secure access to over 150,000 consumer complaints for almost 150 law enforcement organizations across the United States and Canada.

The Commission and other law enforcement agencies have taken advantage of the fact that many older consumers are eager to help combat fraud. In an effort that began several years ago with the Federal Bureau of Investigation and several state Attorneys General, many older consumers, whose names had found their way onto lists used by fraudulent telemarketers, have agreed to tape record telemarketing calls they receive or to turn over their old telephone numbers so that undercover investigators can tape the telemarketers’ pitches.

When a law enforcement agency receives a tape of a telemarketer, the agency notes that a tape of the encounter is available and shares that information with other law enforcers through a program known as the National Tape Library. Through the Commission’s Consumer Sentinel database, the index of the National Tape Library is now accessible by means of the Internet to authorized law enforcement agencies, making it significantly easier for consumer protection agencies to learn of and share this incredibly valuable evidence. The tapes prove invaluable in court, where the accused can easily challenge the memories of duped consumers, many of whom are senior citizens.

Australia's version of the FTC - the Australian Competition and Consumer Commission - has had access to Consumer Sentinel data for some time, but now other Australian law enforcement agencies have been given broader access to verify fraud reports in their own jurisdictions, find corroborating reports and witnesses, and prioritize their investigative efforts based on the extent of a fraud operation.


Undercover Operations

Operation Disconnect

Operation Disconnect, announced on March 4, 1993, was the first nationwide undercover operation that the FBI conducted against telemarketing fraud.

In Operation Disconnect, FBI undercover agents pretended to sell a machine that would enable fraudulent telemarketers to dial as many as 12,000 calls per hour. Such a machine would have vastly increased the ability of telemarketing schemes to contact large numbers of prospective victims.

By persuading the fraudulent telemarketers that in order to best help them they needed to know exactly how they conducted their telemarketing businesses, including specific information about their most successful telemarketing techniques, the undercover agents were able to obtain many damaging and revealing admissions from the telemarketers about the fraudulent and criminal nature of their business activities. As a result of Operation Disconnect, several hundred fraudulent telemarketers were successfully prosecuted, in some cases receiving prison sentences as high as ten years.

Operation Senior Sentinel

Operation Senior Sentinel, announced on December 7, 1995, was the second —and to date, the largest —nationwide undercover operation directed at telemarketing fraud by the U.S. Department of Justice.

In Operation Senior Sentinel, federal agents and investigators, who had taken over the telephone numbers of people who had been repeatedly victimized by telemarketing schemes (or established undercover identities as victims), tape-recorded thousands of fraudulent and deceptive solicitations.

Phone calls from telemarketers were transferred to specially trained volunteers from the AARP, or, in some cases, to law enforcement agents or retired FBI agents, who played the role of the intended recipient.

Thousands of fraudulent sales pitches were recorded and eventually placed in the national tape library for use in telemarketing fraud investigations. These were of incalculable value in determining which schemes most warranted criminal investigation and in providing evidence for search warrants and criminal indictments.

To date, Operation Senior Sentinel has resulted in approximately 1,000 fraudulent telemarketers being charged with a variety of federal crimes.


Operation Busy Signal

Guilty pleas to racketeering and conspiracy charges were accepted from John A. Field III, who was the U.S. Attorney for the Southern District of West Virginia between 1972 and 1977 and former Director of Enforcement for the Commodities Futures Trading Commission (CFTC).

Co-accused Marcus K. Dalton of Colts Neck, N.J., was one of the nation’s most prolific creators and marketers of securities fraud schemes. He admitted responsibility for selling or promoting at least $80 million in fraudulent securities, including shares in phony wireless cable operations, bridge loans to finance a wireless venture in America Samoa and fraudulent shares in Treasure Chest television, a children’s television programming investment, all of which he knew were not viable.

The charges capped a carefully planned operation in which the Government’s cooperating witnesses, including Dalton, convinced telemarketers with whom they had worked previously to sell investments in a fictitious foreign currency fund.

The fund, with an accompanying prospectus, earnings history and slick marketing folder, was created by agents of the FBI and inspectors of the U.S. Postal Inspection Service in coordination with assistant U.S. attorneys in Newark.

In the undercover operation, the Government employed retired agents of the FBI and Postal Service, as well as volunteers from the American Association of Retired Persons (AARP), to pose as willing investors.

The cooperating witnesses fed the names, addresses and phone numbers of these "investors" to the boiler room operators with the explanation that they had obtained the names from a government list of people who had recently cashed-in U.S. Treasury bills.

The fund was made to appear as though it were created and managed by the United Currency Exchange, a fictitious company based in Princeton that was actually run by federal agents. Nine telemarketers and one boiler room "wholesaler" agreed to sell the fraudulent fund for an undisclosed sales commission of at least 40%.

UNEX 2100 would also supposedly engage in riskier trading practices than that disclosed in its brochure. The principals of United ( Feds ) told the telemarketers they would divide any additional, undisclosed profits that the fund earned as a result of this riskier trading. The fund - and ultimately its investors - would absorb any losses resulting from the riskier trading.

Regardless of how UNEX 2100 "performed", United would send each investor an account statement that falsely represented that the fund had returned approximately 7 % in the first month.

The cons were told that UNEX 2100 would cease operations after six months, in an attempt to prevent scrutiny by securities regulators, and that United would maintain all documents offshore in an attempt to rule out possible future investigations by securities regulators.

Some of the telemarketers even agreed to have their undisclosed sales commissions wired to money-market accounts that they believed were maintained offshore at a major international investment firm. The Feds provided these telemarketers with debit cards with which they could access the money in their accounts, at least until their arrest.


Task Force Sweeps and Events

International Consumer Protection and Enforcement Network - Provides information on consumer protection laws in thirteen countries and offer consumers a way to file complaints online at www.econsumer.gov .

Ontario Strategic Partnership

The FTC, the Toronto Police Service, the Ontario Ministry of Consumer and Business Services, the U.S. Postal Inspection Service, the Ontario Provincial Police and the Competition Bureau of Industry Canada formed the Ontario Strategic Partnership to work together and combat cross-border fraud.

Each agency pledged to provide resources to this common enterprise and to work together supporting each other’s cases.

Participants in Task Force Operations

Palm Beach Sheriffs

Broward County Telemarketing Task Force
Central Florida Bank Fraud Workgroup
Central Florida Criminal Justice Council
Central Florida Fraud and Forgery Task Force
Duval Area Telemarketing Task Force
Hillsborough State Attorney Telemarketing Task Force
International Association of Law Enforcement Intelligence Analysts
National Association of Attorneys General Pyramid Scheme Workgroup
Orange County Telemarketing Fraud Prevention Task Force
STOP Telemarketing Fraud
Society of Certified Criminal Analysts
Strike Force Against Fraudulent Enterprises (S.A.F.E.)
National Association of Bunco Investigators
Florida Prosecuting Attorneys Association

"Victims’ Voices"

(national forum on telemarketing fraud) Baltimore

"Junk E-mail Harvest"

(junk e-mailers made aware)

"Stamping Out Job Fraud"

(job offer fraud)

"Operation Net Op"

(get-rich-quick schemes)

"Project Risky Business"

(entertainment and media-related investment scams)

"Project House Call"

(medical billing business opportunities)

"Operation Money Pit"

(fraudulent business opportunities)

"Operation Missed Giving"

(fraudulent solicitation of charitable donations)

"Operation Cure All"

(unsubstantiated health claims)

"Operation Auction Guides"

(deceptive marketing of "how to" guides)

"Credit Identity"

(new credit identity)

"Operation Cold Call"

(boiler room sweep)

"Operation Trip-Up"

(travel "scams")

"Operation False Alarm"

(fraudulent fund raising)

"Operation MagaScheme"

(phoney prize promotions/ prepaid subscriptions)

"Project Mousetrap"

(phoney invention patents)

"Field of Schemes"

(investment-related telemarketing fraud)

"Op New ID ? Bad Idea"

(credit repair new ID scams)

"Project Trade Name Games"

(racks displaying licensed products)

"Project Mailbox"

(fraudulent direct mail schemes)

Operation Missed Fortune, a federal-state crackdown, resulted in more than 75 law enforcement actions against get-rich-quick self-employment schemes. A national consumer education campaign was launched in conjunction with the sweep, including an investor alert, a consumer alert, a tip sheet, and five brochures.

Invention related crackdowns included one firm that had sold over $90 million in fraudulent services and of the fraudulent direct mail schemes, one firm used over 200 different business names and bilked consumers out of $100 million a year.

09/02 - More than 30 consumer-credit consulting companies have been targeted in a nationwide Federal Trade Commission sweep against credit and telemarketing fraud. The FTC action, dubbed Operation No Credit, targeted a wide range of fraud allegations involving credit-repair services, payday-loan companies, debt- adjustment programs and advance-fee credit cards.

Surf Days

The FTC periodically surfs the internet for offenders. One morning in just three hours they found over 500 web sites or newsgroup messages promoting apparent pyramid schemes. The Commission’s staff e-mailed a warning message to the individuals or companies that had posted these solicitations, explaining that pyramid schemes violate federal and state law and providing a link back to them at  www.ftc.gov  for more information.

Reverse Boiler Rooms

To educate potential victims FTC staff have participated in "reverse boiler rooms" coordinated by the AARP and various Attorney Generals. The reverse boiler room is a means of providing consumer education to persons whose names appear on "lead" or "mooch" lists and therefore are particularly likely to be contacted by fraudulent telemarketers.

The volunteers in a reverse boiler-room call consumers on the lists, talk with them about the risks of telemarketing fraud, and inform them that their names and telephone numbers are circulating among boiler-room scam artists.

Over a four-hour period one evening, 40 volunteers placed a total of 1,859 calls to Vermonters 65 years of age and older to warn them of the dangers of telemarketing, mail, and door-to-door fraud.. Of that number, 1,043 involved a successful contact with the consumer; in the remainder of calls, there was no answer, the listing was incorrect, or the consumer declined to speak with the volunteer. In addition, over 500 packets of information on how to keep from becoming a victim of fraud were mailed. The calls were placed from the National Life Insurance Company and the University of Vermont.


Scammed By The SEC

01/30/02 - Seeking to warn speculators who are too quick to leap at questionable investment opportunities touted online, the SEC launched a series of Web sites promoting bogus companies.

The first of the SEC's fake stock scam sites, Mcwhortle.com, went live earlier this month and was accompanied by a bogus press release that went out over PR Newswire.

Mcwhortle.com purports to be the Web site for McWhortle Enterprises Inc. - a fake company claiming to have invented a miracle biohazard detector. The Web site promises massive stock gains and says that the SEC had "pre-approved" the company's initial public offering (IPO).

The bogus investment site got 150,000 hits in three days but when would-be investors attempted to pump money into the fake stock, they were directed to a page bearing the warning: "if you responded to an investment idea like this, you could get scammed."

The SEC does not pre-approve IPOs.


North Carolina Telemarketing Fraud Enforcement Project

North Carolina Department of Justice/Office of the Attorney General
David Kirkman
114 Edenton Street
Raleigh, NC 27602
Phone: 919-716-6000

The North Carolina Office of the Attorney General (NCOAG) Consumer Protection Section will hire an investigator to expand prosecution of fraudulent telemarketing companies. In addition, funds will be used to educate the public and key industries on how to identify and stop telemarketing fraud. The specific goals of the project are as follows: (1) increase investigation and dissemination of information obtained by the NCOAG to other law enforcement agencies, particularly agencies with criminal enforcement authority; (2) develop telephone lines to facilitate criminal prosecutions in state and federal courts; (3) increase availability of written materials and speakers for the business community and the public; (4) identify and educate key industries on methods to identify scams; and (5) train volunteers to continue these functions after the grant expires.


Operation Tough Call

California Department of Corporations
Mark Harman
320 West 4th Street Street, Suite 750
Los Angeles, CA 90013-1105
Phone: 213-576-7590

The CDC will establish a command post and clearinghouse including a task force of local, state, and federal law enforcement and regulatory agencies to coordinate and consolidate investigations and enforcement actions against illegal and fraudulent telemarketing activity.

Currently, the CDC does not have a central repository for information gathering and sharing with other agencies to address telemarketing fraud. The task force will establish a central office to coordinate the following activities: identify potential targets; maintain a database on the targets; identify and enlist the help of potential victims; conduct public education and training, infiltrate illegal telemarketing fraud operations; facilitate and coordinate investigation and enforcement actions; and provide training to law enforcement, prosecutors, and regulators.


Telemarketing Fraud Demonstration Site

Georgia Governor's Office of Consumer Affairs
Barry W. Reid
2 Martin Luther King, Jr. Drive
Atlanta, GA 30334
Phone: 404-656-1760

A Georgia Telemarketing Fraud Task Force will be created to increase state and local criminal law enforcement against fraudulent telemarketing practices in Georgia. The team members will include the Georgia Office of the Attorney General, the Governor’s Office of Consumer Affairs (OCA), and the Georgia Office of the Secretary of the State (SOS).

Each task force member is committed to some or all of the components of the demonstration site - investigation, prosecution, or prevention. The specific goals of the project are as follows: (1) reduce the number of fraudulent telemarketing operations in Georgia, (2) criminally prosecute subjects involved in illegal operations, (3) provide training at state wide police academies to instruct local law enforcement officers regarding identifying and investigating telemarketing operations, and (4) provide instruction and information to potential victims of fraudulent telemarketing scams to prevent citizens from becoming victims.


Telemarketing Fraud Taskforce

Hillsborough County State Attorney's Office
Craig Cleddinen
800 East Kennedy Boulevard, 3rd Floor
Tampa, FL 33602
Phone: 813-274-1638

The Hillsborough State Attorney’s Office will establish a Task Force comprised of the following state and local agencies: the Hillsborough County State Attorney’s Office, the Florida Department of Banking and Finance West Central Region, the Office of Statewide Prosecution, the Florida Office of the Attorney General, the Florida Department of Law Enforcement, the Florida Department of Insurance, the Florida Department of Agriculture and Consumer Services, and the Bay Area Legal Services. The Task Force will specifically target telemarketing fraud against the elderly and coordinate and integrate investigative and intelligence resources to increase overall expertise of the group and effectively manage telemarketing fraud cases.


National White Collar Crime Center (NWCCC)
Telemarketing Fraud Enforcement Task Force

West Virginia Office of the State Auditor
Dick Johnston
Building 1, Room W-100
Charleston, WV 25305
Phone: 804-323-3563

NWCCC will continue to work with the Telemarketing Fraud Task Force and will support the development of a high quality training program focusing on jointly training state and local investigators in the complex issues involving fraudulent telemarketing activities. NWCCC participated on the task force project advisory committee as a representative of state and local investigators, participated in the selection process of the demonstration sites, and developed a needs assessment to be used to assist in the identification of potential recipients of training.

In addition, APRI and NWCCC developed a needs assessment survey to ascertain the specific needs of local prosecutors surrounding telemarketing fraud. The information gained from the Telemarketing Task Force will be compiled into a comprehensive final report.

The National White Collar Crime Center provides a national support system for the prevention, investigation, and prosecution of economic crimes. These multi-jurisdictional white collar crimes include investment fraud, telemarketing fraud, boiler-room operations, securities fraud, commodities fraud, and advanced-fee loan schemes. The Center's mission also includes providing investigative support services to assist in the fight against economic crime, operating a national training and research institute focusing on economic crime, developing partnerships with public and private agencies to address economic crime issues, and developing the Center as a national resource in combating economic crime.


National Fraud Information Center

The National Fraud Information Center's purpose is to fight the growing menace of telemarketing fraud by improving prevention and enforcement.


National White Collar Crime Center Partnership
with the National Fraud Information Center

West Virginia Office of the State Auditor
Dick Johnston
Building 1, Room W-100
Charleston, WV 25305
Phone: 804-323-3563

NWCCC provides a national support system for the prevention, investigation, and prosecution of economic crimes. The National Fraud Information Center (NFIC), a project of the National Consumers League, has been providing valuable assistance to the public and to law enforcement agencies in the fight against telemarketing fraud since 1992. Consumers' fraud reports are transmitted daily by the NFIC to a database jointly maintained by the Federal Trade Commission and the National Association of Attorneys General. The database is accessible to law enforcement agencies seeking specific information.

NWCCC and NFIC will form a partnership to meet the following goals: (1) increase the number of agencies served by the NFIC by 25% by the end of the grant period, (2) design and conduct service needs assessment for agencies involved in the investigation and prosecution of telemarketing fraud, and (3) develop a training program in video format with related print materials.

NFIC and NWCCC will work together in the training of telemarketing fraud investigators and prosecutors in the Telemarketing Fraud Enforcement Task Force Targeting the Elderly Project. NFIC will serve as a consultant in developing training programs and materials. In addition, NFIC will provide insight about the most common types of telemarketing fraud reported by consumers, the tactics fraudulent operations use to lure their victims, and the methods of payment and means of transmitting payment.


Telemarketing Fraud Enforcement Project

National Association of Attorneys General
Sarah Reznek
750 S Street, NE, Suite 1100
Washington, DC 20002
Phone: 202-326-6016

NAAG convenes and coordinates the work of the Telemarketing Fraud Training Task Force, a multi-agency committee charged with coordinating the planning and provision of criminal law training to state attorneys general, district attorneys and investigators. The Task Force includes: the American Prosecutor’s Research Institute, NAAG, the National White Collar Crime Center, and the American Association of Retired Persons. NAAG works with the task force to train and assist the ongoing network of state and local investigators and prosecutors to continue to initiate telemarketing fraud and to bring criminal cases.

The project’s goals are to (1) continue to broaden criminal and civil enforcement efforts by increasing the numbers of state and local telemarketing prosecutions against both companies and individuals, (2) coordinate state wide and local investigations and prosecutions, and (3) enhance technical and case preparation assistance for state and local prosecutors. In addition, NAAG works on increasing cross-border cooperation between U.S. and Canadian law enforcement to reduce the cross-border flow of telemarketing fraud and to consolidate gains make in domestic enforcement of telemarketing laws.


Telemarketing Fraud Enforcement: A Prosecutor's Response Project

American Prosecutors Research Institute
Newman Flanagan
99 Canal Center Plaza, Suite 510
Alexandria, VA 22314
Phone: 703-549-9222

As part of the Telemarketing Fraud Training Task Force, a multi agency committee led by the National Association of Attorneys General, APRI assists in the development of a high quality training program focusing on jointly training state and local investigators and prosecutors in the complex issues involving fraudulent telemarketing activities. APRI has (1) revised the current training manual, including a section on Internet fraud; (2) conducted training courses on the topics of telemarketing fraud and Internet fraud; (3) assisted BJA in the selection of three demonstration sites; and (4) developed an interdisciplinary approach with AARP in promoting senior fraud prevention programs to prosecutors.


TRIAD Program

Under Public Law 106-534 Congress enacted the "Protecting Seniors From Fraud Act" which financially supports, to the tune of $1,000,000 per year from 2001-2005, the awareness and research efforts of the TRIAD Program which was initially sponsored by the National Sheriffs Association, International Association of Chiefs of Police, AARP and others to reduce the criminal victimization of the elderly.

The National Association of Triads, Inc (NATI) is a tax exempt affiliate of the National Sheriffs Association and acts as an umbrella organization offering support to the 775 Triads which have been established around the world.

Operation Fraudstop has produced a three part roll call training video for police officials which is available at the $6.95 cost price from NATI, 1450 Duke St., Alexandria, Virginia 22314 703-836-7827.


Telemarketing Fraud: Prevention and Education

American Association of Retired People Foundation
Jim Seith
PO Box 51040-RSG
Washington, DC 20091
Phone: 202-434-6090

As part of the Telemarketing Fraud Training Task Force, a multi-agency committee led by the National Association of Attorneys General (NAAG), the American Association of Retired Persons Foundation (AARP) works to provide education and training to state and local investigators and prosecutors and other related professionals on telemarketing fraud. The purpose of the training is to prevent and effectively combat telemarketing fraud, particularly schemes targeting the elderly - a disproportionately affected group - by expanding public and law enforcement professional education and broadening the number of enforcement efforts thereby increasing the number of prosecutions and reducing the amount of consumer injury.


Telemarketing Fraud Enforcement

Vermont Office of the Attorney General
William E. Griffin
109 State Street
Montpelier, VT 05609
Phone: 802-828-3171

The Vermont Office of the Attorney General (VOAG) will increase case referrals and decrease susceptibility to telemarketing fraud through community outreach and education. Volunteers and senior advocates will be trained and will train others to recognize possible telemarketing fraud activity and will screen and refer cases to the VOAG for investigation and possible prosecution.

The national and international strategy is to enhance United States and Canadian efforts to stem fraudulent telemarketing through criminal prosecutions of, or notices of possible civil violations to, list brokers who support the fraudulent activity and through serving as a liaison between Canadian prosecutors and Unites States Offices of the Attorney General. The specific goals of the project are as follows: (1) to increase the number of telemarketing fraud cases that are identified, investigated, and prosecuted; (2) to decrease the effectiveness of fraudulent telemarketers in the future; and (3) to enhance Canadian efforts to prosecute fraudulent telemarketers.

Vermont's Efforts to Coordinate Support

The Office of the Vermont Attorney General has developed a two-tier approach to combating telemarketing fraud and other scams directed at the elderly. One tier takes place on state and local levels and focuses on aggressive case identification, investigation, criminal prosecution and prevention.

The other is national/cross-border in nature and focuses on coordinating support for criminal prosecutions in Canada, and on decreasing the number of American companies that provide assistance to fraudulent Canadian telemarketers.

This Telemarketing Fraud Project will be part of the Consumer Protection Unit of the Public Protection Division of the Vermont Attorney General's Office.

The national and international strategy is to enhance United States and Canadian efforts to stem fraudulent telemarketing through criminal prosecutions of, or notices of possible civil violations to, list brokers who support the fraudulent activity, and hope to provide assistance to Canadian prosecutors of telemarketing fraud by serving as a liaison to victims, law enforcement and offices of State Attorneys General in the United States.

Such coordination is extremely important. Victim testimony must normally be presented in person in the Canadian courts, and many of the victims reside in the United States. Consequently state offices of the attorney general can play a crucial role in locating, interviewing, and helping to transport these witnesses to Canada.

Rather than requiring Canadian authorities on their own to navigate a largely unfamiliar network of fifty state offices, a coordinator in a single state can work with Canadian authorities to identify the appropriate contact people in each state, motivate colleagues in other states to devote resources to supporting Canadian prosecutions, and periodically share investigative protocols and experiences with all state offices of attorney general.

Such assistance often takes the form of gathering information from U.S.-based victims, and making those victims available to testify in Canada. At present, there is no person at the state or national level who is charged with this coordinating function, although Vermont, with very limited resources, is serving that function in one current Canadian prosecution.

An important factor in considering jurisdiction is the comparative ease of extradition from Canada by the U.S. Attorney’s Office. Should federal court be the more appropriate jurisdiction, the U.S. Attorney has cross-deputized an Assistant Attorney General to co-counsel the case in federal court.

The other cross-border responsibility of the attorney would be to work with Canadian and United States authorities to develop civil cases against companies based in the United States that provide substantial assistance to Canadian telemarketers.

The major source of consumer information for those who create ‘mooch lists’ for fraudulent telemarketers is mail and phone surveys and sweepstakes/contest entry forms received in the mail. The second major source of consumer information used by telemarketing criminals is the contest entry boxes that are found at many fairs, carnivals, craft shows, car and home shows, etc.

At a meeting in mid-1998 between members of "Project Colt" in Montreal (the Quebec telemarketing strike force) and representatives of state offices of the attorney general, the Project leadership expressed its belief that a major blow would be dealt to cross-border fraud through an effective campaign in the courts mounted against the United States list brokers that provide names of potential victims to Canadian telemarketers. There is already interest at the FTC staff level in pursuing such firms civilly in the United States.

Specifically, a grant-funded attorney would work on identifying list brokers that do business with Canadian telemarketers, utilizing industry, consumer group and law enforcement sources to develop this information. The attorney would organize other state offices of the attorney general, using the now well-established multi-state approach, to investigate the activities of known list brokers and to determine whether cases could be made out, on the basis of existing evidence, for violations of the federal Telemarketing Sales Rule and state consumer protection statutes.

If so, cases would be filed by those states willing to do so, on the model recently used by several offices of the attorney general, in concert with the FTC and one Canadian province, in taking action against fraudulent lottery companies.

If not, letters of warning would be sent to the list brokers, including a roster of fraudulent companies and business practices. This would serve to put each broker on formal notice of facts sufficient to allow a civil case to be brought on a "knew or consciously avoided knowing" theory under the Rule in the event that the broker continued to provide consumer names to any of the listed companies or types of business. List brokers would thus run the risk of substantial civil liability if they were to continue unabated their past support for fraudulent Canadian telemarketers.

They also plan to implement a taping system similar to that employed successfully by the Iowa Attorney General’s Office. Under that system subsequent telemarketing calls intended for past victims (so-called "reloads") can be routed to the Attorney General’s Office and taped. Specified staff in the Attorney General’s Office would take the calls for victims of his or her own gender. This method would generate additional, more easily provable, criminal cases for prosecution.

The undercover "mooch line" operation, being run in cooperation with the FBI’s San Diego Boiler Room Task Force will continue to run in the office. This provides investigative leads for both Vermont and other jurisdictions.

Many Canadian telemarketers come to Vermont to use mail drops, to open bank accounts, and to open fulfillment houses because we are very close to Montreal, Quebec and it is relatively easy for them to cross the border to establish a presence in the United States. Fulfillment houses typically send out premiums, or conduct billing services for the telemarketers.

Approximately 95% of Vermont's open investigations involve Canadian telemarketing criminals.

There have been a number of impediments to the success of trying to establish closer working ties with Project Colt, the telemarketing fraud task force in Montreal, and with Project Emptor, the telemarketing fraud task force in Vancouver, including lack of funds for travel to Canada, and a variety of cultural and other cross-border differences in the working styles of the Canadians and this office. Offices of Attorney’s General around the United States are the remaining crucial yet missing parties at these task forces.We continue to be greatly hampered in our ability to investigate these cases by several factors, including our lack of an investigator and the fact that all but four of these cases originate in Canada where, despite our best attempts, it is very difficult to conduct an investigation.We continue to investigate each case as fully as we can in the United States, and to provide full cooperation to Canadian authorities, with a request for the same, in the investigation of these cases. To date, though, we’ve had no positive response on our investigative requests to Canadian authorities.Locally, we continue to have a difficult time getting state and local law enforcement agencies and prosecutors to look at these crimes.We’ve had a senior citizen, who lost a considerable sum of money in an "Australian Lottery" telemarketing scam, transfer her home telephone number to our undercover line where an investigator will answer when telemarketing criminals continue to call. These calls will be tape-recorded, and the tapes will be sent to the National Tape Library. Both Iowa and Ohio have had success with transferring phone lines, and we hope to replicate their success.Our experience with recruiting and maintaining a volunteer force, both of senior citizens and of professional advocates, was frustrating and has not paid offAARP has three other videos on fraud topics, including charities fraud, investment fraud and home repair fraud. Our recommendation is to customize these videos with a state or county specific message about where to call locally for more information, and to have copies made for distribution to local community cable access television stations.

For an investment of a few hours time and several hundred dollars, we were able to send copies of all three videos to all of Vermont's community access stations. The stations aired each video repeatedly for months as fillers between regular shows, and as long public service announcements. We received excellent response from all of the channels, and most asked for more videos on related topics.


OREGON BANKER’S ASSOCIATION FRAUD PREVENTION KIT 

Every bank in the United States was mailed a copy of this kit, which includes several videos, cassettes, training materials, and public education materials. The kit was developed by the Oregon Banker’s Association and the Oregon Department of Human Services, Senior and Disabled Services Division.

You may order more copies, at a cost of $50 each, from: Roger Auerbach, c/o Aileen Kaye, Oregon Department of Human Resources, Senior and Disabled Services Division, Abuse Prevention Unit, P.O. Box 14750, Salem, OR 97309, telephone 503-378-2529.


National Association of Bunco Investigators

The Baltimore-based National Association of Bunco Investigators (NABI) is an association of law enforcement agents who pursue confidence swindlers which can be reached at (410) 752-8150, by fax at (410) 357-5191, or by e-mail at nabihq@juno.com.


False Web Registration Ban Targets Scam Artists

05/02 - Based on complaints from law enforcement that say they cannot protect people because they don't know the identities of the operators behind criminal Web sites, Rep. Howard Coble (R-N.C.) and Rep. Howard Berman (D-Calif.) introduced a bill which outlaws the intentional submission of false information to Internet domain name sellers.

Coble and Berman are the chairman and ranking Democrat, respectively, of the House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property.

Customer information maintained by Internet registrars in their "WHOIS" databases is often useless because scammers submit false names and contact numbers when registering Internet addresses.

The legislation would criminalize the submission of false information when registering Web addresses but is designed to target online criminals not ordinary, law-abiding Internet users who fail to include all of their information on automated domain-name registration forms.

Many ordinary domain name holders often have good reason to submit incomplete or incorrect information to Internet registrars as they simply want to avoid a deluge of unsolicited e-mail from e-mail marketers which mine WHOIS databases.

The Coble-Berman bill allows for fines and jail sentences up to five years for violators.


Hope Springs Eternal

06/17/03 WASHINGTON (Reuters) - The United States and 29 other countries Tuesday announced an effort to track down spammers, telemarketers and other scam artists who operate across international borders.

The agreement would make it easier for governments to investigate and apprehend fraudsters who operate on a global basis, officials with the U.S. Federal Trade Commission and several other countries said.

The Internet and plunging long-distance telephone rates have made it easier for scam artists to pitch miracle health cures, get-rich-quick schemes and other fraudulent products to a global audience.

Complaints about international fraud nearly doubled to 30,798 last year, according to FTC statistics, while Nigerian e-mail hucksters fleeced U.S. residents out of at least $100 million last year, according to the Customs Service.

Even spammers based in the United States commonly route their messages through overseas computers to cover their tracks, experts say.

The 30 mostly European and North American member countries of the Organization for Economic Cooperation and Development agreed to work together to fight cross-border fraud, beef up their own consumer-protection laws where necessary, and make it easier for consumers to recover damages.

"They can run but they can't hide, because our members will ensure there is no safe haven for fraudsters," said FTC Commissioner Mozelle Thompson, who helped draft the guidelines.

Thompson and other FTC commissioners asked Congress last week to give them more authority to live up to the agreement, while other countries may need to change their laws as well. The United Kingdom's Office of Fair Trading, for example, currently does not have the authority to recover damages from fraudsters.

Officials from the United Kingdom, France, Canada and Australia appeared in person and by videoconference to unveil the principles, while Japan and Finland sent statements of support.

The governments of Nigeria, Brazil and other developing-world hotspots did not sign on to the agreement as they are not OECD members. Nevertheless, Thompson said he thought the agreement would provide a model for those governments to follow.

"I'm hoping this will be the beginning of sort of a cascade effect," he said.


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Crimes of Persuasion ISBN 0968713300