Riding the Phones to Jail
Nov 02/01 - Three Montreal-area residents accused of running a telemarketing scam which allegedly netted up to $1 million a week have become the first telemarketers in Quebec to be charged under the 1997 federal anti-gang law which was originally established for bikers.
Nayer Amhed, 55, Gary Gacionis, 41, and Vasilios Kolitsidas, 33, will appear in court three months from now on charges of participating in the activities of a criminal organization, along with fraud and conspiracy.
A total of 22 other people involved were also charged with fraud and conspiracy for bilking an average of $5,000 from senior citizens, mostly from the United States in a combination of Lottery Scams, Reloading and Recovery Scams.
Many of the victims' names were on a list of "repeat offenders" or "mooches" who routinely played bogus lotteries and were known by criminals to be vulnerable victims or easy prey.
The suspects, operating in a Laval boiler room, posed as lawyers, police officers and customs agents, asking people to provide money needed to pay taxes, court fees or insurance on their supposed winnings or, more insidiously, for a bogus recovery investigation into a lottery scam designed for past victims.
Mark Levine, a U.S. citizen who worked in the Laval boiler room, was deported last winter to face fraud charges in the Boston area.
The scheme was allegedly masterminded by Denis Baribeau, 39, of Brossard, Que. who is currently being held in Plymouth, Mass., awaiting trial on a fraud charge.
Update 03/03 - Denis Baribeau, 41, was sentenced to 10 years in a U.S. jail for running the Canadian telemarketing ring. He had pleaded guilty in U.S. District Court in Boston to two counts of telemarketing fraud and wire fraud after mostly senior victims in the U.S. were bilked of millions of dollars.
Judge Nathaniel Gorton of U.S. District Court handed down the maximum 10-year sentence under U.S. law. Baribeau won't be eligible for parole, and he'll have to serve three years' probation after his sentence expires.
Fighting con artists - Canada teams up to protect Americans
By Jim Haley - Herald Writer - heraldnet.com
01/05 - VANCOUVER, B.C. - It's a $70 million-a-year business, and the operators have few scruples.
Their customers are mainly Americans, usually elderly people who hand over thousands of dollars - even their life's savings - to telemarketers who befriend and cajole them over the phone.
The con artists often are Nigerians who hold Canadian citizenship. They use the U.S-Canadian border as a shield to avoid prosecution.
About 5,000 U.S. citizens reported falling victim to the scheme in 2004, according to PhoneBusters, a Canadian-based scam reporting center. It's not known how many other victims simply don't report being taken.
The problem is so big that federal governments on both sides of the border have joined forces to put the boiler rooms out of business, prosecute offenders and recover money for victims.
"We know where they're operating out of, and we're not too happy about it," said Gord McRae, superintendent of the Royal Canadian Mounted Police Commercial Crimes Section in British Columbia.
His division includes Project Emptor - as in "caveat emptor," or "buyer beware" in Latin.
Project Emptor is one of three international task forces to combine the resources of the RCMP, the FBI, the U.S. Federal Trade Commission and British Columbia consumer officials. Customs and postal authorities on both sides of the border are also involved.
"I want to make their lives as miserable as possible," McRae said of the con artists.
The task force hopes to drives the bad guys out of business by bringing them to trial in the Unites States, where they could wind up "getting some real prison time," said assistant U.S. District Attorney Ellyn Lindsay of Los Angeles.
"Short of that, if one boiler room ceases to be in business because of real consequences, that's pretty good," Lindsay said.
Lindsay relies on getting the Canadian criminals to the United States, where she has prosecuted 18 of them in the past four years.
On the Canadian side, Bruce Coleman of the RCMP concentrates on intercepting packages and mail from the United States that contain checks or money orders from unwitting victims.
He has intercepted about 900 mailings in the last year, but that's just a fraction of the money being sent over the border.
"We have no idea how much we're missing, but we probably are getting a half of 1 percent. It's really brutal," Coleman said.
Granite Falls victim
Edie George, 80, of Granite Falls recently got a notice saying she had won a $4 million sweepstakes.
"I was so excited I spilled my coffee on it," she said.
She was directed to send in $20 for "processing" her winnings, and was told not to tell anyone about her winnings until the money had been put into her account
She sent the money.
Instead of a big prize, she was deluged with more mail. She was winning lotteries all over the planet.
"Then I started getting more and more," she said. "The more I waited, the more I got."
The trick is to make the contacts sound legitimate until they build up a bingo parlor's worth of security codes, identification numbers and file numbers, ticket numbers, serial numbers and "lucky star" numbers.
All the numbers need to be reported back to an agent, who controls the "winnings." Phone and fax numbers direct the victim to a "closer," investigators said, whose job is to milk the victim.
And they do a very good job of it, too, the RCMP's Coleman said.
Once a victim falls for the trap, they are put on a "sucker list," Coleman said. The list is sold to others looking for easy marks.
Sgt. Gerard West, who runs the RCMP's Vancouver operation, estimates 100 operators, large and small, work the scam out of Vancouver and its suburbs.
"It's not always the same bad guy," West said. "They sell to other telemarketers, who will take another kick at the cat. The key is to get some personal information about people."
The business is so lucrative that the bad guys can afford mass mailings to prospect for new victims.
"They always play on hope," West said.
With that in mind, telemarketers sometimes even send a check to the victim as the first installment on their winnings, West said.
Cash it right away, the victim is told, then quickly send back several thousand dollars to free the rest of the prize.
Banks cash the check, but it bounces. Meanwhile, the victim sends more money to the closer.
Ultimately, the check the victim takes to the bank for deposit looks legitimate but is phony, and the victim winds up not only sending money to a private commercial mail center in Canada but also having to make good on the bad check.
It's against U.S. law to play offshore lotteries from this side of the border. And McRae emphasized that "there is no lottery in Canada that requires money upfront to claim your winnings."
Clues on catching the crooks come from victims who report the thefts to central locations in the United States and Canada. Names, addresses, things that are said on the phone, are all small pieces of the puzzle that eventually forms a picture, West said.
The task force focuses on criminal apprehension and prosecution of scam artists. If it has enough evidence, the bad guys' assets are frozen in hopes of returning some of the stolen money to victims.
Today's boiler room
Catching the crooks isn't easy. Modern technology works against the good guys.
A few years ago, the picture of a boiler room included a basement with a large phone bank and lots of people making calls. Today, a crook can buy a cell phone, pager and a phone calling card for $100, and operate out of the back seat of a car, McRae said.
There are all kinds of variations on a theme, said Nora Collas, an FBI agent from Los Angeles who spends much of her time in British Columbia working with the task force.
There are loan scams for people who have had difficulty getting credit, where an upfront fee is required. There's even a scam recovery scam where telemarketers target previous victims on the pretext of recovering some of the losses.
"We investigate these crimes because of the victims," Collas said. "They lose money, they lose self-esteem, they lose confidence."
She works from information supplied by victims and said that's why it's important to report being scammed. Collas gathers information for possible use in court, sometimes forcing telemarketers to cross the border willingly for prosecution without extradition.
The international border makes investigation and prosecution more difficult, McRae said. Canadian sentencing laws are easier on the crooks.
That's why Collas works with Assistant U.S. Attorney Lindsay in Los Angeles. Through extradition and other means, Lindsay prosecutes defendants in her jurisdiction. She's able to do so partly because there's almost always a victim from the Los Angeles area.
Both Collas and Lindsay praised the level of cooperation and effort given by the RCMP and other Canadian officials.
But Lindsay also faces obstacles.
In nearly four years, she has charged 46 people connected with the telemarketing business in Canada. Twenty-six of them are still in Canada and have not been prosecuted. Eighteen have pleaded guilty or been convicted at trial, Lindsay said.
A handful are extradited, but she focuses mainly on catching the crooks when they cross the border for some other reason, or negotiating with them to give up.
The Canadian penalties "just don't have any deterrent effect," she said.
Lindsay and Collas recently teamed up to secure a 10-year prison term in Los Angeles for one telemarketer.
The real penalty
The real penalty often comes from seizing the crooks' assets. The Federal Trade Commission in Seattle and the Business Practice and Consumer Protection Authority in British Columbia are part of the international team, and their job is to go after the money.
Laureen France, senior FTC investigator in Seattle, gathers witness statements on this side of the border and sends them to Vancouver. The information sometimes leads to search warrants and to court orders in British Columbia freezing bank accounts and property.
"Often it's the cooperative relationship that puts pressure on the defendants to settle," France said. "We could not do this work without this partnership.
"The taxpayers in Canada don't get any benefit particularly out of (the investigations), yet we get a tremendous amount of assistance from our Canadian partners.
"It's no panacea, but it's certainly better than it was six years ago" when the task force was started, France added.
Indeed, measuring success is difficult, and crooks always are getting better.
The team would like to take credit for scam artists recently shifting to victims in Great Britain, but "sitting on a reservoir of humility is useful," France said. "Things would be worse if we weren't on the beat, but I'd never say we're winning the battle."
In November, the FTC announced returning $1.5 million to U.S. victims from seized bank accounts. But those announcements are few and far between.
One team member reaps the most reward and personal satisfaction from getting money back for victims. That's RCMP task force member Coleman, who works with customs and postal officials in Canada to intercept money meant for scam artists.
He sometimes gets thank-you notes from people whose money he saved. Other victims have difficulty remembering whether they sent anything or not, and "once you get on that vicious cycle, the bad guys play it," Coleman said.
There are times he has to convince people that they are not going to win big bucks. Even after his warning, a few have continued to send money to Vancouver, partly because they previously invested so heavily in the scam.
The crooks frequently tell victims to disguise checks because the IRS or customs object for some reason. Many of the intercepted checks or money orders are hidden in magazines and marked "wedding pictures" or something else, Coleman said.
The address, frequently a mail drop in Vancouver, arouses suspicion and leads to interception.
At least for a time, many victims want to believe the crooks instead of the cops.
"These people are victimized by very clever and driven people who are greedier than they are," Coleman said.
Boiler-room telemarketing scam operations tied to the mob
Case wrapping up. But investigators warn of schemes still prevalent
in Montreal area
01/05 - Montreal - They were so aggressive in their telemarketing schemes, they managed to give an elderly woman a heart attack while she was on the phone.
As the prosecution of one of the biggest fraudulent telemarketing operations uncovered in Canada wraps up in court, investigators who worked the case warn such schemes are still prevalent in the Montreal area.
In February 2001, investigators from Project Colt, a joint task
force that targets illegal telemarketers, shut down a Laval "boiler
room" where callers had been using phones to trick elderly Americans
out of their life savings.
Posing as lawyers, judges and even police investigators, the telemarketers would convince elderly people who had already lost money to fraud artists that they had recovered lost lottery winnings. To collect their millions, the victims were encouraged to send in thousands of dollars for fees and taxes.
If the smooth approach didn't work, the callers grew more aggressive.
"It was unbelievable, some of threats they were making on the telephone, the language they were using toward these people to solicit the last cent from them," said Inspector Saverio Orlando, of the RCMP's commercial crime section, one of the partners in Project Colt, which includes the Surete du Quebec, Montreal police, the FBI and others.
While it has often been described as a nonviolent crime, illegal telemarketing in Montreal has increasingly come under the umbrella of violent criminal organizations. An unsolved homicide in which a man was shot in 2003 in Riviere des Prairies is believed tied to telemarketing.
"The money gathered through telemarketing goes toward serving other crimes," said RCMP Sgt. Jean Rivest, who headed the investigation, dubbed Charisma.
He added someone who opens a boiler room in Montreal today is probably tied to organized crime or has its blessing.
For example, Rivest said, telemarketers have been known to use the Hells Angels and the Italian Mafia to launder cheques collected from their elderly victims. He estimates organized crime groups take a 35 per cent cut of the cheques they launder. Many independent money launderers have been muscled aside by groups like the Mafia, he said.
Americans are targeted in particular because the generation currently enjoying its retirement years tends to be made up of people who have socked money away. Americans of that generation tend to save more money for retirement than Canadians because they don't have the same social safety net.
During one month in 2001, the telemarketers made 1,971 calls. They received or were about to receive money from 533 victims. That includes 117 victims who sent in more than $1.2 million.
One of the wiretapped phone calls captured a woman who suffered a heart attack while a telemarketer aggressively went after her. The man, a 40-year-old Montrealer, is to be sentenced this year.
He is just one of the 25 people arrested in 2001 who have either pleaded guilty or been convicted in Charisma. At least seven other people still await sentencing. One person died awaiting trial.
The ringleader, Denis Morin-Baribeau, was arrested while on vacation in the U.S. The 42-year-old Brossard man, who had ties to the Hells Angels in Quebec, is serving a 10-year sentence he received in Massachusetts in 2003.
PAUL CHERRY - The Gazette