Telemarketing fraud: it's a crime!, 2001

Office of the Governor Office of Consumer Affairs
Dear Trainer:
I thank you for taking the time to review our materials entitled "Telemarketing Fraud: It's a Crime!" We provide training materials to law enforcement and to general audiences so that information about this form of white collar crime will be widely disseminated throughout Georgia. It is our goal to arm Georgia's law enforcement community with the knowledge to investigate and prevent it.
We provide brochures, speaker notes, PowerPoint presentations and a training video, which we hope will enable you to provide detailed presentations about this crime to law enforcement officers and prosecutors in your community. Many state, local and federal agencies have played a role in the development of these materials and for that we are grateful.
Thank you for helping us to get the word out about telemarketing fraud. Please contact our Office if we can be of additional assistance to you with your training program or investigation of telemarketing fraud.
Sincerely,
Barry W. Reid Administrator
The materials included in this training package are designed for law enforcement and prosecution agencies only. Do not disseminate these materials outside of the law enforcement community. This project was supported by Grant No. 1999-LS-VX-0002 awarded by the Bureau of Justice Assistance. The Bureau of Justice Assistance is a component of the Office of Justice Programs, which includes the Bureau of Justice Statistics, the National Institute of Justice, the Office of Juvenile Justice and Delinquency Prevention, and the Office of Victims of Crime. Points of view or opinions in this document are those of the author and do not represent the official position or policies of the United States Department of Justice.

TABLE OF CONTENTS
Supplemental Speaker's Notes........................Section 1 Understanding Telemarketing Fraud.................Section 2 Types of Scams.............................................Section 3 Targeting Victims...........................................Section 4 Investigation Methods....................................Section 5 Conclusion...................................................Section 6 Appendix......................................................Section 7 Master Copy: Pre-Test / Post-Test....................Section 8 Master Copy: Evaluation Form........................Section 9

Supplemental Speaker's Notes for the Law Enforcement Presenter
INTRODUCTION
Consumer fraud is big business in the United States today. It takes many shapes and forms. The purpose of this curriculum is to provide law enforcement officers, investigators, prosecutors and their support staff with a basic knowledge of one of the most prevalent types of consumer fraud today: telemarketing fraud. National statistics estimate that $40 billion dollars is lost to telemarketing fraud annually. It is estimated that Georgians alone lose over $500 million each year.
Telemarketing fraud is theft using the telephone. For the last ten years, Georgia has ranked high among states with the most fraudulent telemarketing operations. During the year 2000, the National Fraud Information Center ranked Georgia 10th in the nation for the highest number of reported telemarketing fraud companies. Georgia also ranked 7th among states where consumers reported victimization.
Con artists use a variety of telemarketing approaches to obtain victims' money over the telephone. For this reason, it is important for everyone to do research before doing business with or sending money to any entity that contacts you over the telephone. In fact, it's probably safer not to do business with anyone who contacts you over the telephone.
Many victims also initiate calls in response to mailers, only to be pitched by fraudulent telemarketers. Every year thousands of consumers lose money to telephone con artists with losses ranging from a few dollars to their life savings. Also, please note that this type of fraud, which is so easily perpetrated over the telephone, is just as often and easily perpetrated by mail and over the Internet.
This course is designed to define telemarketing fraud and discuss various approaches to telemarketing fraud investigation, provide prevention tips, and identify some of the Georgia and federal laws, which have been created to address the problem. The program can be reviewed during self-study by a single officer or presented to a group. In addition, this course package includes other types of information, which will be helpful to officers and crime prevention units as they interact with citizens within their community.
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Several options are available to you when you teach from this program about telemarketing fraud:
The overview course can be taught in about an hour using only limited lecture and the included videotape Telemarketing Fraud: It's A Crime!
Continue beyond the overview with telemarketing terminology, examples of typical telemarketing scams and victim demographics using the PowerPoint presentation included on the enclosed CD Rom. This section adds an hour to the overview.
Finish your program with investigative techniques using the final section of the PowerPoint presentation. This section provides suggestions on investigating telemarketing fraud from initial complaint to search warrant to arrest. Don't forget to review the printed materials in the notebook or electronic copies on the CD Rom. There you will find a telemarketing investigation checklist, sample search warrant, suspect questionnaire, information on Georgia's No Call Program, communications interception, bank demand letter, sample subpoena and other details not mentioned in the slides.
The slide presentation includes lecture notes, audio clip segments of actual telemarketing fraud calls and another visual way of conveying your message. You don't need the slide presentation to present the full course. You can use the notebook as your lecture aid.
The longer program is structured to last up to three hours including a pretest and post-test. The three-hour program is geared for officers, investigators and prosecutors that need a more in depth understanding of telemarketing fraud. Trainers should keep in mind that many of the principles involved in telemarketing fraud investigations apply equally to other economic crime investigations and may choose to teach telemarketing fraud as a component of a longer white collar fraud presentation.
Basic course (approximate time 1 hour)
9 Provide an introduction to your audience from the speaker's notes or the Understanding Telemarketing Fraud and Statistics sections at the beginning of the manual.
9 Administer the pre-test either verbally or in writing.
9 Show the video "Telemarketing Fraud: It's A Crime!"
9 If time permits, ask your audience if they have had any experience with telemarketers or this type of crime.
9 Review the answers to the pretest and provide closing statement.
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Intermediate course (approximate time 2 hours)
9 Provide an introduction to your audience from the speaker's notes or the Understanding Telemarketing Fraud and Statistics sections at the beginning of the manual.
9 Administer the pre-test either verbally or in writing. 9 Show the video "Telemarketing Fraud: It's A Crime!" 9 Continue the presentation using the Telemarketing terminology and Types
of Scams sections in the manual and / or Section One of the CD Rom presentation.
9 If time permits, ask your audience if they have had any experience with telemarketers or this type of crime.
9 Review the answers to the pre-test and provide a closing statement.
Investigator's course (full course lasts approximately 3 hours)
9 Provide an introduction to your audience from the speaker's notes or the Understanding Telemarketing Fraud and Statistics sections at the beginning of the manual.
9 Administer the pre-test either verbally or in writing. 9 Show the video "Telemarketing Fraud: It's A Crime!" 9 Continue the presentation using the Telemarketing terminology, Types of
Scams, Targeting Victims and Investigation Methods sections in the manual and / or the full PowerPoint presentation on CD Rom.
9 If time permits, ask your audience if they have had any experience with telemarketers or this type of crime.
9 Review the answers to the pre-test or administer and review the post-test and provide a closing statement.
9 Ask your students to complete the evaluation form.
Video
The video is approximately 20 minutes long, so prepare the rest of your presentation accordingly.
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Brochures
To order more copies of the "Telemarketing Fraud: It's a Crime!" brochure for your audience or to learn about additional consumer protection materials available, contact Tryllis Hallford at the Governor's Office of Consumer Affairs at (404) 656-4482, or e-mail your request to: tryllis.hallford@oca.state.ga.us. We will continue to supply the brochures until the supply runs out.
Georgia and federal laws
The appendix contains the code section and simplified text of the laws which are referenced in the "Telemarketing Fraud: It's a Crime!" materials. The full text version of Georgia laws can be searched and downloaded from http://www.ganet.org/services/ocode/ocgsearch.htm. Federal laws can be searched and downloaded from http://www.law.cornell.edu/statutes.html or http://www.findlaw.com/.
Pre-Test / Post-Test
A master copy of the pre-test / post-test is included. You may choose to ask your students to retake the test after your presentation and then provide the answers to document the effectiveness of your presentation. Please make copies of these items as necessary.
Evaluation Form
A master copy of the student evaluation and instructor evaluation forms is included. Please make copies of these items as necessary. Ask your students to complete the evaluation form to assist us in revising course materials. Fill in the instructor evaluation form, too. It will help us to quantify and document your training. After the evaluation forms are completed, you can return them by mail or fax to: Program Manager, Telemarketing Fraud: It's a Crime!, 2 M. L. King, Jr. Drive, Suite 356, Atlanta, Georgia 30334, facsimile 404-651-9018. Call or email Tryllis Hallford at (404) 656-4482 or tryllis.hallford@oca.state.ga.us if you have any questions about completing the evaluations.
Assistance
The Governor's Office of Consumer Affairs can assist you in presenting this material on a "time available" basis. Speakers may also be available for a variety of other subjects including telemarketing fraud courses for general audiences, consumer fraud issues, identity fraud investigations for law enforcement, basic computer seizure, credit card skimming and more. A large number of free pamphlets, brochures and other materials related to consumer protection are available in English and Spanish to assist your community presentations, for crime prevention units, or lobby displays. For general assistance please call us at 404-656-3790.
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Telemarketing Fraud: It's a Crime!
There are a number of common misconceptions that police officers, family members, prosecutors and the public have toward telemarketing and the victims of telemarketing fraud - not the least of which is, the victim must be stupid or greedy to fall for a telemarketing scam or that it's the victim's own fault. The fact is telemarketing fraud is a crime and telemarketers oftentimes prey on, even specifically target, the most vulnerable segments of our population. Crooked telemarketers steal not only money but also intangibles such as the self-esteem, trusting nature, and quality of life, and indirectly, even the health of many senior victims each year. It isn't just the seemingly vulnerable that fall victim though. Doctors, lawyers, and other highly educated professionals are just as likely to be taken depending on the sophistication of the scam used.
Telemarketing fraud is a "cross over crime." More often than not crooked telemarketers are now, or have been, involved in other crimes including racketeering, illegal drug distribution and use, robbery, identity theft, securities violations, and worse. Sometimes criminals use the proceeds of telemarketing fraud to support other criminal endeavors. It is not unheard of during investigations to discover that a telemarketing operation is connected to organized crime or offshore money laundering. Many other cases involve crossborder fraudulent telemarketers from foreign countries targeting US citizens.
To be able to effectively address the problem of telemarketing fraud, its necessary to better understand what telemarketing fraud is, including the terminology commonly used by telemarketers, typical scams, victim demographics - why seniors are oftentimes targeted, general and specialized investigative techniques and cross border law enforcement concerns.
Student Performance Objectives
After this block of instruction students will be able to:
Recognize telemarketing fraud as a crime
Understand basic telemarketing terminology
Recognize typical telemarketing scams
Understand basic investigation methods
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Understanding Telemarketing Fraud
Police officers, sheriff's deputies and investigators should understand that telemarketing, though not often liked, is a legal way for charities to collect funds, merchants to sell their products, and pollsters to conduct opinion surveys. Telemarketing fraud is illegal. Telemarketing fraud in general terms is the use of a telephone scheme combined with misrepresentations to steal something of value. Usually the theft involves money. However, an emerging trend is the use of information obtained through pretext calls to facilitate identity theft crimes. It does not matter if the initial call was made from the telemarketer to the victim or the victim made the first call as a result of receiving a piece of mail or seeing an advertisement. If the telephone solicitation is deceptive, it is telemarketing fraud. Fraudulent solicitations and offers made via the Internet are a closely related cousin of telemarketing fraud.
Statistics
It is very difficult to get accurate and specific statistics about the number of telemarketing fraud victims. It is often hard to determine the amount lost by these victims and even the city, state, and country from which the telemarketing boiler rooms operate. Telemarketing fraud is known to be a vastly underreported crime and there is no national crime database that is all-inclusive. By far the majority of crimes in the United States are reported directly to local, city and county police or sheriff's departments. However, many police officers and sheriff's deputies do not recognize that telemarketing fraud is a crime (actually a felony in Georgia) and victims seldom make a report.
Telemarketing fraud almost always crosses law enforcement jurisdictional lines and the victim is told to report the crime to the other agency. Even when the crime is recognized by law enforcement and reported by the victim, (depending on the specific complaint filed) it will not appear in national, state or local statistics. The FBI's Uniform Crime Reports category that is closest in definition to telemarketing fraud is "larceny" in the Part II crimes.
Your agency may not have a complaint or incident report on file, but more than likely you have a victim, mail drop, or boiler room within your jurisdiction. So what happens to the reports? Patrol officers and deputies are crime first responders. Probably fewer than 1 in 10 telemarketing victims call to report. When they do, an officer or deputy may not recognize the incident as telemarketing fraud or, if the victim lost money to an out-of-state telemarketer, the officer may believe the crime should be reported to an agency in that state. The officer or deputy will probably code the report as theft by taking, theft by deception or larceny making no reference to telemarketing fraud.
Next comes the use of "solvability factors'. Law enforcement agencies sometimes base the future assignment of the crime report to overworked investigators on the likelihood of a successful investigation and prosecution. Administrators or records personnel may screen the reports to generate a numeric score they derive from answering several questions. These questions or
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"solvability factors" include: whether the suspect is known or readily identifiable, if the suspect is within the specific agency's jurisdiction or located in another county, state, or country, the total dollar amount lost, and others. Many complaints will not be investigated if the decision to investigate is based only on generic solvability factors that do not account for the nature of telemarketing fraud. The case is placed in "abeyance" or sent to the "dead files".
Throughout the 1990's and up until this year, those knowledgeable in telemarketing fraud prevention and investigation have suggested the estimated loss to victims in the US was forty billion dollars ($40,000,000,000) annually. The origin of this figure can be traced back to testimony provided in hearings held before Congress in the early 90s.
The Georgia Governor's Office of Consumer Affairs (OCA) receives thousands of consumer complaints each year from Georgia citizens and from residents of other states complaining against Georgia based businesses. From January 1, 1999 through June 4, 2001 the Governor's Office of Consumer Affairs received 6,241 complaints of promotion, magazine, and recovery room type telemarketing scams alone. This figure does not include credit card scams, advance fee loans, investment scams, lottery scams and other telemarketing scams reported to OCA or other police and sheriff's departments. OCA figures and estimates suggest that telemarketers steal 300 to 500 million dollars ($300,000,000 - $500,000,000) or more each year from Georgians alone.
Keeping in mind that telemarketing fraud is a vastly underreported crime and a number of telemarketing complaints are reported as theft or larceny, the amount lost is probably higher than the forty billion dollar figure originally reported in the 90s.
Telemarketing Terminology
Individuals that learned the telemarketing business from legal telemarketing rooms started many of the fraudulent telemarketing "boiler rooms." The terminology commonly used by a legitimate telemarketing business or an illegal boiler room is mostly universal, though, certain derogatory terms such as "mooch" and "dupes" probably developed from the criminal side of telemarketing. Some of the more frequently used terms are discussed in the following list.
Automated Clearinghouse Debit (ACH) - A method of payment whereby the telemarketer is able to receive funds directly from the customer's checking or savings account via electronic transfer. This eliminates the actual drafting of a check as well as the float period for the instrument to clear.
Boiler Room - A telemarketing phone room. The term is used to describe the physical and emotional atmosphere of a typical phone room. Most phone rooms are sparsely furnished with groups of desks and telephones and are characterized by a high-pitched level of excitement generated by the sales representatives.
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Charge Back - A customer's cancellation, when the original purchase was made utilizing a credit card or an ACH debit. The customer subsequently receives a refund on his/her credit card and the telemarketer's merchant account is charged with an offsetting charge back for the amount of the sale. Some telemarketers use in-house collections departments on charge backs.
Charity Room also known as "telefunding" where a small portion of the funds raised - usually less than 10% - goes to charity.
Closer - A telemarketing sales rep who specializes in finalizing or "closing" the sale to a customer. "Closers" are usually experienced telemarketers who takeover the sale from the "fronter" and generally command a higher commission per sale. A closer may also be known as a "capper".
Cold Calling Unsolicited outgoing telephone calls to potential customers. Potential customers' names and telephone numbers are usually purchased by boiler room operators in the form of "lead lists," or the telemarketing operation will simply call all of the numbers in a phone book.
Dialers - New, lower-level employees, most without prior telemarketing experience, who make the first, unsolicited "cold" calls to targeted consumers. Once answered the telephone is handed off to an experienced telemarketer.
Dropping Mail - The process of mailing large volumes of promotional materials (award notification letters or cards) designed to entice potential customers to call in to the boiler room. This practice is used as part of an "inbound" system sometimes known as reverse telemarketing, because the victim will make the initial call to the telemarketers. Mail is usually "dropped" several times per week by the telemarketer. Canadian telemarketers that use this system drop mail from United States post offices giving a United States address and postmark to the mail.
Dupes - Persons recognized by the telemarketing industry as being the easiest to persuade to part with their money, based on a number of factors, including age and prior entries into sweepstakes and contests.
Fronter A "fronter" (or opener) is generally, an inexperienced sales rep who handles the first portion of a customer sale. The "fronter" will obtain basic customer background information and provide the customer with an outline of the promotion before turning the telephone over to a "closer" to finalize the deal.
Fulfillment - The actual shipping of the product being offered by the telemarketer. For a boiler room to ship its product to the customer in a timely fashion, it must be able to "fulfill the back end" of the sale.
Gimme Gift The award or bonus that some customers receive. Even though sales reps advise customers that they may receive one of several valuable prizes, every customer actually receives the same "gimme" gift, usually a prize of very low value. Typical "gimme" gifts include a travel certificate or a piece of cheap jewelry.
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Hard Gift - An extra or throw-in gift given in addition to the "gimme gift" in order to entice the customer to make a purchase. Like the "gimme gift," it usually has a very low cost, although it is represented to be quite valuable. Typical "hard gifts" include a diamond pendant, designer watch, or small gold coin.
Inbound Telemarketing boiler rooms that receive incoming customer calls by soliciting customers through the use of mailers, newspaper or television advertising, Internet, or automatic dialing systems.
Laydown A laydown is a "pushover." A customer who is so excited about the promotion or award that he or she becomes an easy target for the sales rep.
Lead Broker A person or business that sells the name, age, telephone number, and other demographic data of potential customers to telemarketers.
Lead List - List of potential customers that a telemarketer may purchase from a lead broker. This list of names and telephone numbers represents potential customers who are most likely to be interested in the promotion. Leads are purchased targeting individuals or groups based on past buying tendencies, contest entries, age, income bracket, poor credit, demonstrated interests or even old or antique sounding names. Strong leads are often purchased for $3.00 to $5.00 per name. Sometimes leads are generated by the telemarketing operation through the use of advertising, cold calling, and direct mailers.
Lottery Scheme - Victims are told they are entered into a foolproof method to win state or foreign lotteries. Sales of foreign lotteries are inherently illegal. The scheme generally purchases few, if any, lottery tickets and overhead and commission costs take a large portion of the funds. Lottery schemes are a favorite of Canadian based fraudulent telemarketing operations.
Mail Drop A commercial mail-receiving agency in which individuals or businesses lease post office style boxes in order to receive mail and other deliveries. Mail drops are used by telemarketers for anonymity and to forward mail from US addresses to out-of-country telemarketing operations.
Mailer - The actual letter, card, or award notification that the telemarketer mails to potential customers in order to entice them to call in for more information. Mail is "dropped" by most boiler rooms that utilize an "inbound" system.
Misreps - Untrue or exaggerated statements made by a sales rep to entice a potential customer to buy (misrepresentations). Misreps may include false statements concerning award, bonus or product values, product or award quality, facts concerning the telemarketing company, odds of winning a specific award, etc.
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Mooch - A sucker. A highly derogatory term used by telemarketers to describe a naive customer who is easily influenced and manipulated by the sales representative.
Mooch List Also known as a "reload list." A list of customers who have previously made purchases in one or more telemarketing promotions. These highly valuable lists are kept by telemarketers until seemingly exhausted. Then they trade or sell them to other boiler rooms, starting the cycle again.
One-in-five - A common promotion used by telemarketers where potential customers are notified that they are guaranteed to receive one of the five listed awards currently being given away. These awards are usually listed in order of descending value and often include an automobile, cashier's check, vacation package, jewelry, etc. Variations on this theme include a "two-in-six" or allowing the customer to delete one of the prizes from those listed.
Outbound - Unsolicited telephone calls to customer contacts generated exclusively through "cold calling" or "list calling." Telemarketers may purchase "lead lists" and sales representatives call these leads without invitation, or the telemarketer may simply call every antique sounding name in the telephone book.
Pitch A pitch is the actual promotion or scam. Typical pitches may involve a prize award, advance fee credit card offer, charitable solicitation, or lottery offer. The pitch is usually printed as a "script" read over the telephone by the telemarketer. Experienced telemarketers modify the pitch as needed to obtain the cooperation of the victim.
Rebuttal - Standard responses used by sales reps to overcome typical customer objections. "Rebuttals" are often preprinted and readily available to the sales rep in order to help overcome customer hesitancy to buy into the scam.
Recovery Room - Boiler rooms that tell victims that, for an up-front fee, they can obtain refunds from companies that previously defrauded them. Often times the recovery room is the same telemarketing operation that originally defrauded the victim - a particularly deceptive form of reloading.
Reload - Any attempt to resell a customer who has already been scammed by the telemarketing operation. Customers who have made a purchase in a previous promotion are often re-contacted and promised the chance of winning more valuable awards in exchange for a subsequent purchase or the payment of fees. Customers can be "reloaded" five, six or more times, each time being promised grander awards or greater chances of winning.
Rip & Tear Crooked telemarketing operations that collect as much money as possible in a short period of time and relocate before they are identified. Frequently, they use aliases and rent mailboxes, known as "mail drops," to help avoid detection. The telemarketers may use cell telephones, or prepaid calling cards and may operate from extended stay motels. Typical "rip & tears" shut down, move, and reopen using a different business name in a few days to a few months.
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Script - The actual printed document used by sales reps to help convey the nature of the promotion. The script contains the "pitch" with all the key selling points deemed necessary to complete the sale. With experience, sales reps tend to develop their own unique pitch or selling style. Script Book Usually telemarketers have available to them a notebook or three ring binder that may contain leads, scripts, the pitch, rebuttals, and other information needed during solicitation calls. In larger telemarketing operations, each telemarketer may have a script book at their telephone station. Verification Used as confirmation of a customer order. Sometime after the sale is made, telemarketers will re-contact the customer, confirm the information provided by the sales rep, and verify that the customer has made his/her payment in the prescribed manner. Sometimes the customer may be transferred directly to the "verification department." Verifications are normally handled by a floor manager or by a specialist termed a "verifier." Oftentimes the verification but not the original pitch is recorded on cassette tapes in the boiler room. Sometimes the verification is recorded by a third party vendor through the telephone system. This one-sided recording is used as leverage against customers that have a change of heart and as false proof of the sale and the legitimacy of the operation to enforcement officials.
End of Basic Course. Skip to Section 6 - Conclusion.
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Types of Scams
Crooked telemarketers do not care if their victim lives or dies, if their victim spent the grocery money, if there will be heat on in the winter, if the money is from a Social Security check or the last of the retirement nest egg. Whatever it takes to separate the money from the victim a telemarketer will say and do.
There are a number of common telemarketing scams and an infinite number of variations crooked telemarketers use. New scams, new methods of delivery (such as the Internet and TV advertising), and new countries of origin emerge each day. Some of the more common scams include prize promotions and sweepstakes, lottery, charity, recovery rooms, magazine promotions, advance fee loans, investments, low interest credit cards, advance fee credit cards, disaster related frauds, telephone cramming or slamming and office supply scams.
Prize Promotions and Sweepstakes
The telemarketing cycle may start when someone fills out a contest entry form at a local mall or a senior citizen receives a solicitation in the mail offering a chance to win a contest. The solicitation may require a small entry fee of $5.00 to $20.00, or the senior will receive a contest offer from a magazine subscription service or reading club trying to sell their products. The senior enters the contest and, believing they have a better chance of winning should they pay the fee or order a product, send along a check. Illegal and deceptive telemarketers as well as legitimate telemarketers purchase lists of these names and telephone numbers as "leads."
The senior will be called by various telemarketing rooms with the news that they are the grand prize award winner or they have been "specially selected" or are "guaranteed to receive" a fabulous prize. The list of prizes might include a new car, $25,000 in cash, a trip to Hawaii or $100 in merchandise certificates. The chances of winning the "fabulous" prizes are 1:3,000,000, whereas the chances of winning the merchandise certificates, which are usually worthless, are usually 1:1. The prize promotion rooms lure consumers into buying overpriced merchandise like worthless travel programs, ineffective health care products, alarm and medical alert systems, jewelry and other items.
Sweepstakes rooms confirm the recipient of the call is the winner of some major cash giveaway. The caller will represent a bogus company using a made up "telephone name." The winner is required to mail or wire money to pay the taxes, bonding agent, import duty, customs fees, courier fees or some other charge before they can get their check. Sometimes telemarketers use the names of businesses that are commonly known in other solicitations from national promotions like Publishers Clearinghouse or Reader's Digest to add "legitimacy" to the pitch. The victim may be told, "The Prize Patrol will be at your door with your check on Friday. Don't tell anyone we'll take your picture and
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make a major media announcement after the award. Again, our hearty congratulations!" Sweepstakes scams are common and originate from wherever a telemarketer might be found in the US or foreign country.
Lottery Scams
"Lottery rooms" are telemarketing boiler rooms that promise the prospective victim an opportunity to purchase winning tickets in foreign lotteries. Lottery rooms often begin identifying prospective victims by mass mailings that offer "free chances" in foreign lotteries for as little as $5 or $10. Those who respond are later contacted by solicitors from the telemarketing lottery room, who offer the victims substantial returns if they "invest" thousands of dollars in further purchases of lottery tickets. These operations may guarantee the winner will receive a check every thirteen weeks (quarterly) worth at least three times the amount invested from the proceeds of the pooled entry into the foreign lottery. Many victims are "reloaded" by the lottery room, often sending in thousands of dollars in multiple transactions.
Victims are told that they have won substantial sums, but in fact receive no money or only a small percentage of their prior "investments" with the lottery room as a method of seducing them to continue to send money. Many of the lottery room scams are the result of Canadian telemarketing operations. Some of these scams offer tickets in the German, Austrian, Holland, or Australian National Lotteries even though many investigations reveal that the victims send their money to Canada.
Lately, some of the lottery scams require the victim to furnish a credit card number, or a savings account or checking account number and bank routing number for payment. An otherwise legitimate merchant processor in the US, under contract to the telemarketer, will electronically debit the victim's credit card or bank account. The funds will then be wired to the telemarketer's bank account in a state bordering Canada making it convenient for the telemarketer to cross the border to withdraw the ill gotten proceeds.
Charity Fraud
Charity rooms (also known as "telefunding rooms") are telemarketing boiler rooms that prey on consumers' generosity, convincing them that the bogus charity is one to which the consumer has previously pledged a contribution or is one to which they should make a contribution. Often these bogus charities will use names closely related to established legitimate charities.
Frequently fraudulent telemarketing rooms try to pass themselves off as representing bona fide law enforcement agencies. This is known as badge fraud. Pitches have included representations that the funds will go for widows and orphans of officers slain in the line of duty, free community self-defense classes, life safety equipment (such as bullet proof vests), and many other seemingly legitimate law enforcement purposes. Many of the calls come from paid solicitors
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working from out-of-state boiler rooms and in most instances have no fraternal affiliation or direct relationship with law enforcement agencies.
One example recently found a local sheriff's department reserve deputy being the willing sponsor for a police charity operated by a telemarketing boiler room in New Jersey. The telemarketing room collected over two million dollars. The deputy received a fee, while only a couple of thousand dollars went to any charitable purpose in Georgia.
Fraudulent charities are constantly being established using the names of actual fire departments, police departments, and veteran organizations without permission. Charity telefunders, not necessarily fraudulent, typically keep at least 90% of all money collected. Charity fraud telemarketers may also send some portions of what they take to legitimate organizations or to individuals, such as widows or children of fallen police officers to attempt to legitimize the fraudulent telemarketing operation.
Recovery Room Scams
Telemarketers sometimes reuse, purchase anew or trade the customer lists of victims that have been swindled to use in "recovery room" scams. In a typical recovery room pitch the telemarketers contact victims known to have lost money and convince them they can "recover" and return some of the victim's money. The focus of the recovery room scheme is the victim's desire to recover losses from previous scams. Telemarketers, usually from the same organization that defrauded the victim in the first place, call with inside knowledge of the fraud and a promise to recover some or all of the losses if fees are paid.
Another common tactic of recovery room callers is to represent themselves as a government appointed attorney or agent charged with restoring funds to a victim seized by the courts from crooked telemarketers. Now popular with Canadian telemarketing scam operations, the victim is required to pay a custom's fee or bonded agent's fee before the stolen money can be returned. For the telemarketer, the recovery room offers a method of depriving victims of their last available dollar.
Advance Fee Loans
Consumers with less than stellar credit ratings are prime targets for telemarketers offering advance fee loans. Part of an "inbound system," the telemarketing operation will place advertisements in small newspapers around the country. The ads have text similar to: "No credit - poor credit - need cash? Call 1-800-123-1234." Consumers that call are asked a series of questions concerning the loan amount requested, current residence, level of debt and income, and other personal information. All callers are "approved" for a loan upon payment of an advance processing or registration fee ranging from $249 and on up. The telemarketing companies sometimes promise the loan will be guaranteed through an independent lender. In a few days or weeks the victim may receive a letter from the telemarketing company as part of their "fulfillment"
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process. The letter informs the consumer that several financial institutions are reviewing their loan application and that the applicant should expect to receive their loan soon. In another few weeks, a letter is sent indicating that none of the financial institutions will offer credit.
The victim who paid a fee for the "guaranteed" loan may learn that the fee is nonrefundable or the company has disappeared. In a legitimate loan situation the loan application is completed and a lender identified before any fees are paid. Advance fee loan scams originate from within the United States and Canada. This type of scam occurs year round but seems to be particularly popular, targeting low-income groups around Christmas.
Magazine Promotions
Fraudulent telemarketers contact consumers under the guise of a prize promotion and attempt to sell them multi-year magazine subscriptions. In a typical magazine room scam the telemarketing operation will contact thousands of people throughout the United States, leading them to believe they've won their choice of $25,000, a Ford Explorer, or a fabulous vacation to Rome, Italy or Hawaii plus three free magazine subscriptions. The victim is told they must purchase only one five-year magazine subscription to qualify for their award. It is common to find that 80% or more of those receiving the magazine pitch calls are seniors between the ages of 60 and 90.
Sales employees make the initial outbound calls. Once the consumer is sold on the idea they have won a contest the call is passed to a "capper" who obtains the customer's bank account or credit card numbers and provides the "claim number". Later, the customer's information is passed to the "verification department" which may re-contact the customer a few minutes, hours or even days later. The verification department employee (termed a verifier) tape-records the final conversation wherein the customer is again asked to agree to the terms of the offer. Many of those called by the verification department agree to the purchase of one magazine for sixty months and allow their charge cards or accounts to be debited for the following eleven months, believing it is a requirement to claim their award. The amount debited may be as much as $1,000 during the period. Customers are told they cannot cancel the order because the magazines are ordered in advance for the entire sixty-month period.
In fact the magazines if ordered at all are usually ordered months after the sale and are for less than the sixty-month period. Some customers may ask during verification when they will receive their $25,000 prize check or new car. Verifiers may tell these customers that they didn't actually win yet, but would be entered into a contest. Some customers may decline to proceed, but many more simply do not ask any questions and are tape-recorded simply agreeing to an offer that omits to mention the award.
The magazine boiler rooms may employ only a few or as many as 80 or 100 employees operating in shifts. The shifts call across time zones beginning with residents of eastern states and ending with Hawaii. These telemarketing rooms tend to intentionally target senior citizens because of their increased
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susceptibility to prize promotion and magazine sales scams. Sophisticated telemarketing operations may have their own in house collection departments. The tactics used by the "collectors" include sending out a series of cards and letters to "errant customers" threatening them with credit problems or garnishment to obtain payments. Meanwhile, declined credit card transactions and insufficient funds denials from direct bank account debits are run once or twice a week to try to "get a hit" on credit cards and bank accounts that wouldn't take it before.
Investments
A desire by investors to grow their nest eggs has provided opportunities for fraudulent telemarketers acting as investment broker-dealers to market extremely high-risk or completely bogus investments. Precious stones, gold and rare coins, unleaded gas futures, lithographs by famous artists, case lots of vintage wine, and Japanese Yen currency options are a few of the investments offered by fraudulent telemarketers. In Atlanta two different investment scam boiler rooms hawking foreign currency options netted $1.3 million in ten months and over $17 million in eighteen months, respectively. Many of the investment scam victims are elderly and the cost to victims of this type of fraud can be staggering. But it's the individuals on fixed incomes that invest their retirement savings that sustain the real financial devastation.
Many investment fraud schemes involve a telemarketing solicitation. The calls may be high volume, random, "cold calls" or from leads generated by investment type advertisements on the television or radio. Investment cold calls are sometimes made using actual brokerage firm customer lists or lists of individuals meeting certain income criteria culled by "lead brokers" from public sources. Potential investors who respond to an advertisement offering free advice or those who fill out a card requesting pamphlets or brochures may find themselves on the telemarketer's call list. Low-income groups are not typical victims of the investment fraud operations and calls are targeted accordingly.
Investment scam artists are quite capable crooks. They may create an air of authenticity by renting "high dollar" office space and maintaining strict business attire dress code for employees. They use seductive sales pitches chock full of misrepresentations based upon current news events to convince their victims that the investment opportunity is a sure thing. Many claim they are privileged to inside information and guarantee a big return within a short period of time, while others may give examples of how much money they have made themselves in the same investment. But all will encourage the investor to act immediately due to the "favorable movement in the market that won't last long".
Many of the foreign currency scam boiler rooms are related to organized crime. Some continue to operate today using offshore bank accounts and obfuscation tactics designed to shield them from law enforcement scrutiny. In a typical foreign currency scam, the investor is encouraged to buy short-term Japanese Yen currency options. The telemarketers charge a front-end commission from each investment. Then, the investor funds are commingled and wire transferred to offshore accounts in countries that have seemingly
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impenetrable bank secrecy laws. Once the investor has sent money to their "broker," they're provided with little verifiable information to confirm the status of the investments. Some investors receive statements from these "markets" established in other countries that rarely track legitimate markets in the US for similar investments. Telemarketers acting as the investor's broker make follow-up calls highlighting the rapid growth within their portfolio and further encourage them to part with even more money.
The fraud may also include frequent trading in the investor's account between different foreign currencies, known as "churning" in order to generate commissions and to further confuse the investor about the nature of the investments and the amount of money actually invested. In actuality, the telemarketer has obtained the services of a "market maker" to facilitate the appearance of trading. The market maker and the telemarketing boiler room split the proceeds of the investment on the "back end" informing the investor, "Unfortunately the market didn't go your way." The investor may never realize their money was placed into a created market used simply to facilitate the crime.
Low Interest Credit Cards
Fraudulent telemarketers also market so-called "low interest" credit cards. Victims are told their current high interest major credit card can be exchanged for a low-interest card. The victim is lead to believe they will receive a new Visa or MasterCard and agree to the "one-time fee" of $100 to $300. If a customer questions the fee, the telemarketer will give them examples of the amount they will save with their new card in interest on typical card balances. The victim is asked to provide their current credit card number to begin the process. Then the telemarketer simply charges their fee to the victim's current credit card. Instead of a new credit card the victim might receive a printed list of ten banks that offer credit cards.
Advance Fee Credit Cards
"Credit repair" telemarketers sometimes market single merchant (also known as private catalog) credit cards alone or coupled with a major credit card offer. The telemarketers imply in the outbound sales pitch that the customer will
receive their private catalog credit card along with a Visa or MasterCard with a high credit limit for a one-time up front fee. The fee usually ranges from $79 to $229. The customer is told the use of the private credit card will help them to establish or reestablish good credit and the Visa or MasterCard can be used to combine all of their smaller account balances to one card.
Most often the victim is sent a credit application, which requires the payment of another fee, for nothing more than a limited
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line of credit from the "private catalog". The catalog is usually a compilation of photos cut out of magazines, glued to paper, and reproduced on a copy machine. Just like the low interest card scam, the victim will also receive a list of banks that provide major credit cards. No major credit card is ever issued. In addition to violating telemarketing laws, Georgia and several other states have specific laws declaring this type of advance fee credit repair a criminal offense.
Disaster Related
Through fear or empathy these con artists attempt to strike an emotional chord with their victims. When disaster strikes, so, too, do the con artists. Fraudulent telemarketing campaigns often start up immediately after a natural disaster or a major regional or nationwide news event. Con artists attempt to pull at the "heart strings" of compassionate citizens when asking for monetary donations for tornado or flood survivors, donations to the families of slain police officers or fallen firemen or any other disaster or tragedy they can "play up" to their victim. Con artists may also attempt to frighten their victims into complying with a request for donations or personal financial information.
Telephone Cramming and Slamming
Have you ever received a call from a telemarketer offering a package of additional telephone features like three-way calling, call forwarding, voice mail and caller ID or maybe some other service that can be billed directly to your telephone account? Cramming occurs when a consumer's telephone bill includes charges for services not requested, ordered or used. The charges are "crammed into your bill" by vendors in the hope that you will not see them to dispute them. Other examples of "crammed charges" include: personal 800 numbers, psychic hot lines, adult chat lines, and paging services.
Ever get a call asking you to switch your long distance service? Telephone slamming is the unauthorized switch of your long distance carrier from one telephone company to another. One way to prevent slamming is to request a "PIC freeze" or "PIC lock" from your local telephone service provider. A PIC freeze or lock will require direct written authorization from you for any change in your long distance carrier in the future.
Office Supply
Businesses deal every day with a variety of suppliers for the purchase of office needs such as copy machine toner, fax paper, pens and pencils and other products regularly used. Office supply scams involve the fraudulent sale of inferior or unordered products to businesses, often based on representations that the products are part of a "standard order." Telemarketers target companies that have inadequate ordering control procedures, have no designated employee responsible for ordering supplies, fail to institute adequate accounting safeguards (such as purchase orders and authorization forms) or are so large that an unauthorized order may simply "slip through the system."
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Fraudulent office supply dealers are called "toner-phoners" or "paper pirates." The names come from two of the most popular products marketed to unsuspecting businesses. A caller purporting to represent a legitimate copying machine service center will contact a company representative to "confirm" an order "already placed" for a new supply of copying machine toner or paper. Because, both of these products are normally used by businesses and are frequently re-ordered, a fraudulent dealer may not arouse suspicion when calling to confirm a fraudulent order.
It's a common trick of telemarketers to contact the company in advance and be able to gain valuable information about the brand of copy machine, paper and toner used - sometimes even the machine's serial number. They may also use this preliminary contact to determine whether the company has a designated employee responsible for purchasing supplies. This information is used to earmark likely targets and to add the name of the usual purchasing agent to the fraudulent order's invoice.
There is no guarantee that the products will ever be sent to the company. Instead, the fraudulent dealer relies on the probability that the unsuspecting company will pay the invoice without checking to verify actual receipt of the product. If the unsolicited order and invoice has been sent to the company and the company resists paying, the fraudsters will employ aggressive collection techniques to obtain payment.
Other Scams
Many other scams exist limited only to the imagination. Some of the other scams regularly employed by crooked telemarketers include: credit card protection or card insurance schemes, travel or vacation offers and work at home programs. In the future watch for telemarketers that promise to remove information from the Internet for a fee, offer International Driver's Licenses, use pretext calls to obtain true identities, and for other scams linked to insurance HMO's. If there is a way to steal over the telephone, crooked telemarketers will sooner or later discover it and try it.
End of Intermediate Course. Skip to Section 6 - Conclusion.
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Targeting Victims
Telemarketing scams tend to follow certain demographic lines. For instance prize promotions, sweepstakes and lottery scams tend to target the elderly. While, advance fee credit card scams tend to affect those aged in their twenties to thirties. It usually isn't by coincidence that certain groups are affected more depending upon the nature of the scam.
Specific telemarketing scams are generally targeted at specific groups. Groups of potential victims are easily identified through traditional marketing techniques some of which identify purchasing habits, types of magazines subscribed to, membership in organizations, age, income level, past contest entries, home owner or renter, and many other factors. Telemarketing operations seek out "leads" on those of us that may be more susceptible to the particular scam pitched - we fall into the appropriate "target" categories.
The National White Collar Crime Center conducted a survey and found that victims of prize promotion fraud were significantly less likely than most victims to report victimization. Only 14% of those who fell victim to a free prize fraud reported the incident to the authorities. Meanwhile, 68% of victims of cramming reported the incident to authorities.
These statistics indicate that victims are less likely to report offenses if the victim believes he or she played an active role in enabling the offender to successfully commit the crime, in this case, the victim providing personal financial information to the con artist over the phone in hopes of winning an award.
Even though the perception is that most victims of white collar crime are older and less educated, victimization studies indicate that many are younger and college educated. For example, advance fee credit card scams are primarily aimed at younger consumers who either have no credit or who have bad credit.
One telemarketing boiler room in Marietta, Georgia hawked advance fee credit cards to hundreds of people across the US. The telemarketers called victims and told them, "You were turned down in the past for our credit card, but we've reviewed your records and decided to offer you, guaranteed, a VISA along with our private label card, for a one time fee of $99." The telemarketers funneled the stolen money through a legitimate out-of-state merchant processing service and on to a bank account in Orem, Utah. During fulfillment the telemarketers mailed to consumers a private credit card application package from a supplier in Missouri that required an extra $49 fee to apply for the private label card. However, the interesting part was the discovery of the lead source.
The leads used by the boiler room were purchased from a lead broker in Greenville, Mississippi for $5 a name. Upon further investigation it was learned
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that the lead broker was mailing out slick two-color printed "pre-approved" credit card applications. The applications included fill in blanks for name, address, mother's maiden name, closest relative, checking and savings account balances, bank account numbers, bank routing numbers, and more. The applications were designed as a return mailer that simply folded over to reveal the return address in Mississippi.
Once the applications were returned, the lead broker sent out letters indicating that the application was denied because the applicant didn't meet the credit requirements. The owner of the Marietta boiler room specifically requested and purchased leads for people that had applied for a credit card, but were turned down. The script used in Marietta was designed to take advantage of past credit card denial to target specific victims. The same specific targeting of victims happens from sweepstakes entry lists, lists of people that have requested investment information, lists of lottery participants, etc.

Seniors as Victims

Telemarketing fraud tends to disproportionately affect senior citizens.

Investigators experienced in working telemarketing complaints, have come to the

realization that seniors oftentimes have a more

trusting mindset than younger generations, making them ready victims for fraudulent telemarketers. This may be because our current

So why are elder citizens often the target of scams?

seniors grew up in a culture that is more trusting,

where a handshake or a promise to do something

9 Elder victims are less likely

is given more weight than by today's generations;

to report their loss.

even considered to be like a contract.

9 Elder victims often have

money set aside, or have

When a telemarketer calls to say,

built equity in their homes -

"Congratulations Edna, never again will you want

elder citizens own more

for money. You are the grand prize award winner

than half of all the financial

in Royal Marketing's $100,000 prize giveaway!"

assets in this country!

The senior tends to believe. When that same

9 Elder victims are more

senior is told they must pay $3,360 for the taxes

likely to be courteous and

on the award, it must be true, because taxes are

listen to a con artist, rather

a normal part of everyday life and expected on

than hanging up the phone.

everything we earn or receive.

9 Older individuals are often

in their homes during the

Sometimes senior victims are afflicted with

day, allowing con artists

Alzheimer's or some form of mental dementia that

greater access via the

causes them to be open to any suggestion made

telephone and in some

by the telemarketer. Most will not recall the

door-to-door solicitations.

conversation later during an interview, if a law

9 Some elders and disabled

enforcement officer happens to learn of the scam.

individuals are victimized

Seniors tend to stay home in proximity to the

due to their diminished

telephone because of physical limitations or by

capacity, memory loss,

choice. Some seniors are lonely and more willing

disorientation, Alzheimer's,

to engage in drawn out or multiple conversations

etc.

with telemarketers. Some believe it is rude to

Telemarketing Fraud: It's A Crime! Page 21

hang up on someone, even a telemarketer. In some instances the telemarketer will become a phone friend, reducing the senior's loneliness and building trust, while cleaning out the senior's retirement savings. Whatever the reasons, the result is that seniors in general tend to be victims more often than other age groups. With the rise in the age of the US population the number of seniors victimized will probably rise as well.
One of the more despicable aspects of telemarketing fraud is the fact that telemarketers do not care about the senior's ability to pay the fees. Criminal telemarketers will say anything to get money. Telemarketers are known to threaten to contact the IRS to report the senior for nonpayment of taxes on their prize award and will even suggest that the senior's Social Security check will be garnished if the tax isn't paid right away. The net effect is a level of coercion that is difficult to hang up on, let alone dismiss as a scam. In some instances this means the power bill won't get paid and the pantry will be empty!
Once the fraud has occurred the senior may be afraid to report it. Some adult children of seniors look at their parents as a burden. When they learn that mom or dad has lost hundreds or thousands of dollars to telemarketing scams, they may get the notion that the senior can't take care of their own finances. The senior victim may fear their independence will be taken away with their checkbook while others fear their children will force them to leave their home to live in a nursing home. The pressure and stresses induced by telemarketers can cause health to diminish. The victimization of seniors is just one unpleasant part of the telemarketing equation.
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Investigation Methods
White collar crime investigations require a certain ability to look beyond the deception. Telemarketers will try to conceal their true identity and location. Telemarketers obtain mailboxes at commercial mail receiving facilities (commonly known as mail drops) as their business address. They use incorporated shell businesses to obtain commercial bank accounts to process and receive the fraud proceeds and their bank accounts may be in another state or country. Some telemarketers use wire transfers and offshore banks to launder the money. Long distance telephone service is changed every few months or cell telephones and prepaid calling cards are used to further conceal the trail. It is typical for telemarketers not to contact potential victims in the same state the boiler room is located, making it even more difficult to investigate and prosecute.
Successful investigations require skill, dedication and commitment. The Georgia Governor's Office of Consumer Affairs can provide additional information, POST approved training and investigative support.
Beginning the Investigation Here or There?
Two things are given in telemarketing fraud investigations: there is a telephone call and a transfer of money (or information). After interviewing the victim, telemarketing fraud investigators will initially try to follow the money in an effort to determine the final disposition of the funds. Remember the gospel of all economic crime investigations, "Follow the money, you'll find the crooks!" But don't give up if the money trail is well hidden; try to track down the physical location of the boiler room through the phone records or through other sources.
Ok, now go interview your victim. Or if they're out of your jurisdiction, interview them on the telephone or ask an officer or deputy in their area to interview them. If your victim is a senior citizen, be prepared for a lengthy interview. Don't rush things. Get copies of everything that may apply to your investigation. Senior victims routinely keep notes about telemarketing calls. These notes may have the business's name, phone name used by the telemarketer, call back phone number, claim numbers, prize amounts or other pertinent info. Check the telephone. Answering machine tapes and caller ID information may be present. Review bank and credit card statements with your victim for the money trail. How did they send their money? Cancelled checks, wire transfer forms, shipping documents may be available. In many instances senior victims will be hesitant to provide detailed information. They may feel stupid for falling for a telemarketer's scheme. Reassure them. Remember they're the victims of the crime and you need their help.
So you've interviewed your victim and maybe you know where the money went. It's time for you to make an initial determination. If your victim is
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complaining against telemarketers in another state or country you must decide if it is better to forward your information to a responsible law enforcement agency there or continue to pursue a local case. Can you follow up the complaint? Will your prosecutor extradite the suspects? If not, cooperate with another agency. Call and offer to work the part of the investigation that is within your control. Obtain a quality written or videotaped statement from your victim and see that it gets to the right agency. Follow up with a call to ensure the complaint was assigned. Remember that helping your victim is still your responsibility.
If the telemarketers are in your jurisdiction, you probably have the duty and responsibility to investigate. Keep in mind that you may not need to identify who made the specific call to a victim. Successful prosecutions can be built based on the daily functions and control of a telemarketing operation. Who hired and trained the employees? Who rented the office space? Who is authorized to access the bank account? Who signs paychecks? Who arranged for the telephone service? Whose name is on the business license or incorporation records? There are a myriad of questions that can be asked to establish who is ultimately responsible for the telemarketing operation. You must focus on answering these questions while identifying other victims.
Initial Investigation
The following section is devoted to providing a list of suggested initial investigation steps. Not every step suggested is needed or even applies to every telemarketing fraud investigation. You probably have a list of local contacts and sources that you use in other economic crime investigations. The Telemarketing Fraud Investigation Checklist in the Appendix will give you a list of suggested investigation steps. Then consider the following investigation techniques, but remember to draw from your own experiences and resources as well.
Complaints
If you're going to successfully prosecute telemarketers operating in your area you will need to identify and interview victims. Because crooked telemarketers usually call consumers outside of the state in which they operate, you may have very few complaints in your agency's records.
Many victims file original complaints with their state attorney general's office or consumer protection agency. Others may complain to the Better Business Bureau (BBB), Federal Trade Commission (FTC), Postal Inspector, FBI, a district attorney, or the American Association of Retired Persons (AARP). In Georgia the Governor's Office of Consumer Affairs receives thousands of consumer related complaints each year and maintains a database available to you. Contact these agencies and ask for copies of all complaints against your telemarketers. A follow up call from you to that complainant may result in valuable investigation leads. Try to identify at least ten complaining victims that may be available to testify in court. Fewer complaints may be needed or when a single victim lost a large amount of money, but do check with your prosecutor. Remember, even though the threshold for felony theft in Georgia is five hundred dollars, telemarketing fraud is a felony regardless of amount stolen.
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Better Business Bureau complaints in Georgia can be accessed through the BBB's website at http://www.bbb.org/ or from your local BBB office. The BBB website will give you the number of complaints on file and general business information. Call or visit your local BBB office for details of the complaints.
The Federal Trade Commission's database of fraud complaints is known as Consumer Sentinel. Consumer Sentinel is available to law enforcement officers via the Internet. Completion of an application and security verification is necessary to access the complaint data online. The Consumer Sentinel database contains fraud complaints and other information from a variety of agencies in the US and Canada including the Postal Inspector, National Tape Library, Canada's PhoneBusters project, the Better Business Bureau and many more. More information can be found at the FTC's non-restricted website http://www.ftc.gov/ or by contacting the FTC at 202-326-2913 or by sending an email to sentinel@ftc.gov or by regular mail to: Federal Trade Commission, Consumer Sentinel Support, H-292, 600 Pennsylvania Avenue, NW, Washington, DC 20580.
Corporations
Many banks require a corporate resolution before they will open a commercial bank account. For this reason many telemarketers will incorporate their actual business name or a shell business. Corporation records may be available to assist your investigation. The corporation records may list the company's officers and their addresses or even the operating address of the telemarketer. Georgia corporation records are available via the Internet at http://www.sos.state.ga.us/. Most other states may have records online or available to investigators by telephone.
Business License and Application
Some telemarketers obtain a local business license. The business license or license application may provide the business's address, telephone numbers, owners' names, or financial data. It may be a local violation in your city or county if you determine the telemarketing operation has not obtained a business license.
Surveillance
Initial surveillance may be as simple as driving by the suspected boiler room to verify its existence. Write down the license plate numbers on cars parked near the business and check the registrations. Watch for patterns in the operation. What time do employees arrive? Who unlocks the door? Is there more than one shift? Does someone leave to go to the post office or a mail drop? If so, are they mailing outbound items (fulfillment) or picking mail up (letters and payments from victims)? Consider video taping or taking photographs of the employees. Identify open doors and the general layout of the building. Preplan now for the possibility of executing a search warrant, while you have a chance.
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Trash Pulls
Though not a pleasant job, trash pulls can be a terrific source of investigation material. Supreme Court decisions have given investigators the ability to obtain and use information gained from trash discarded by telemarketers. Trash discarded in common use business dumpsters on private property or already placed at the curb in residential areas may contain lead sheets, letters, invoices, and other items specific to the telemarketer's operation.
Department of Labor
The Georgia Department of Labor maintains data obtained from businesses and may be able to furnish to you information reported on employees, tax ID numbers, operating locations, and social security numbers and salaries earned by quarter. Remember the data is reported in the following calendar quarter. So, don't be too concerned if your business is not listed. Another tactic of telemarketer operations is to claim that every employee is an "independent contractor" to avoid the reporting requirements. The Georgia Department of Labor can be reached in Atlanta at 404-651-9248.
Phone Names
Telemarketers usually use alias names during calls to consumers. These "phone names" are frequently changed. You should try to match as many of the phone names as possible to the actual user of the name. Compile a list of phone names culled from victim complaints. Later, remember to ask employees during interviews what phone names did they and the other telemarketers use.
List of Awards / Gifts / Promotional Items Pitched Vs. Received
Be it a major cash prize, vacation package, credit card protection, magazine subscriptions, or something else, telemarketers always offer something. Part of your investigation should be aimed at identifying the misrepresentations made by the telemarketers. Was your victim promised a 35MM camera valued at $600 only to receive a cheap plastic camera worth five bucks? If so, that is considered a misrepresentation and represents an effort to deceive. Identify the items promised compared to the items received to quantify the deception.
Information on the Telemarketer's Business Location
Telemarketers may rent a storefront shop, lease a suite of offices, or operate from a single family style house or apartment. Regardless of where they operate from, there will be information available to assist your initial investigation. Contact the leasing agent or apartment management for leases and rental applications. Most applications require bank reference information. Ask how the rent is paid. If the rent is paid by check, bank account applications and signature
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cards may be available. County property records are available for single family style residence locations and may provide the owners name. Don't forget to ask about copies of blueprints or floor plans. They will be helpful in planning if you choose to use a search warrant in your case.
Mail Drops
Telemarketers use mailboxes rented from private companies like Pak Mail or Mail Boxes, Etc. for anonymity. A "mail drop" address may be listed on bank accounts or telephone records or used to receive payments from victims. A mail drop is more properly known as a "Commercial Mail Receiving Agency (CMRA). US Postal Regulations require that each renter of a box at a CMRA complete Postal Form 1583 (PF1583 Application for Delivery of Mail Through Agent). The PF1583 may contain the actual physical address, name, telephone numbers and other information of the renter. Private mailbox rental companies may also have copies of the driver's licenses or other identification of the renter. Private mailbox rental companies and the local post office maintain a copy of PF1583. You can request or subpoena the records from the private mailbox company or contact the Postmaster or Postal Inspector in your area for assistance.
Information on Principals and Employees
Just like in any other investigation you need to know who your suspects are. You should by now have information available to you from bank records, Department of Labor records, the PF1583, leases, rental applications, business licenses, GCIC tag information and your own agency's files. Other sources of information include photos from state driver's license files, credit reports, arrest records, intelligence files, and private databases. These sources and others can be used to give you a snapshot of who the principal owners, operators or telemarketers are in the boiler room. Begin to focus in on potential target suspects, usually the owners, managers, highest wage earners, most prolific or "truth challenged phoners".
National White Collar Crime Center (NW3C)
The National White Collar Crime Center is a federally funded law enforcement training and support agency. NW3C's intelligence analysts can assist member agencies by searching in-house and public databases for information by subject and business name. Other services include financial records and telephone toll analysis, case funding for witness travel, computer forensics and financial crime training and more. For information about NW3C support call the National White Collar Crime Center at 800-221-4424, go to their website at http://www.nw3c.org/ or write to National White Collar Crime Center, Suite 300, 7401 Beaufont Springs Drive, Richmond, Virginia 23225-5504.
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Intermediate Investigation
Ok, once you've completed your initial investigation and have determined you have a "T-Fraud" operation, you'll want to prepare your case to take enforcement action.
This next section provides suggestions on accomplishing your intermediate investigation. Plan on gathering additional evidence needed to demonstrate probable cause through interviews, subpoenas, records analysis, Title 7 bank letters, and other methods. Remember, as in all crime investigations, your ultimate goal is building a solid case beyond any reasonable doubt. Your investigation is not complete until conviction of all those involved in a jury trial. Anticipate possible defense strategies and discount them during your investigation. By the way, now would be a good time to seek the assistance of your local prosecutor. Building your case with an eye toward a jury trial will be much more successful if your prosecutor is aware of your investigation and can provide input on the level of evidence they require.
Victim Affidavits
If you discover lots of fraud victims in several states consider using victim affidavits. Check with your prosecutor on the admissibility of sworn notarized statements. Mail fill-in-the-blank statement forms to your victims with questions you want them to answer. Focus some of your questions on what was promised, what was actually received, the identity of the telemarketing caller or boiler room, and the method of payment. Ask them to sign and have their statements notarized before they send them. Many times a local bank will provide notary service free to customers. Don't forget to ask them to send along any documents they have evidencing the fraud, such as: bank statements, notes, credit card statements, receipts, and cancelled checks.
Retrieve Merchandise From Victim Sent by Telemarketer
Ask your victims to send the actual item they received from the telemarketer. Compare what was promised to what was actually received to determine if a misrepresentation was made during the telemarketer's solicitation. Telemarketers routinely send a "gimme gift" or a "hard gift" during the fulfillment process. Examples of "gimme gifts" include: cheap cameras, perfume, jewelry, lists of banks that offer credit cards, flakes of gold or silver foil, and video or audio taped self-help programs. Examples of hard gifts include: engraved letter openers, medical alert alarm systems, and small gold coins. Typical hard gifts usually carry a value of 10% or less of the total amount lost by the victim.
Taped Conversations Between Victims and Telemarketer
Some victims tape the telemarketers on their own home tape recorders or answering machines. Ask the victim if they have any recordings of the telemarketers. Find out if your victim has received a series of calls and expects to be contacted again. Ask them to tape record future telemarketing calls if it is
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legal in their state. Some states, like Georgia, require that only one party of a conversation must know the call is being recorded (one-party consent). Other states require that each party to the conversation be informed the call is being recorded (two-party consent). Consider the use of a pretext call from the victim to the telemarketer when the telephone number is known. In the Appendix is a list of one-party and two-party consent states. Keep in mind that unauthorized recording may violate wiretap laws.
National Tape Library (NTL)
The National Tape Library houses and maintains recordings of actual telemarketing calls. The NTL is a project of the National Association of Attorney's General (NAAG) and is funded by the attorney generals in several states. Many of the tapes on file at NTL were recorded by fraud investigators role playing elderly victims. In a typical scenario the telephone number of a repeat telemarketing victim is changed with their permission to an unlisted number. The original phone number is routed to an investigator who role plays the victim or an elderly relative. The investigator tape records the telemarketer and notes information obtained from caller ID. The investigator files a copy of the tape with the NTL. The NTL tapes are reviewed and pertinent information is loaded into a searchable database. You can request a NTL search for tapes by subject name, company name, address, telephone number, and more. The NTL can also provide a list of known telemarketers operating in your city, county, state or region based on the tapes they have on file. The NTL will send copies of tapes upon request to support your investigation. The NTL is also a contributor to the Federal Trade Commission's Consumer Sentinel database. Contact the NTL at 619-557-5910, by fax at 619-557-5057 or mail to National Tape Repository, 3838 Camino Del Rio N, #206, San Diego, California 92108.
Postal Information Complaints Permit Numbers- Mail Covers
The US Postal Inspection Service (USPS) may also investigate telemarketing fraud wherever there is also use of the postal system. The Inspection Services' primary responsibility in telemarketing cases is the enforcement of federal mail fraud statutes. The USPS maintains complaint files for victims of mail fraud. In addition to complaints the Postal Inspector may be able to assist by providing information on postage meter tracing, mailbox tracing and PF1583 records (see section on mail drops).
The Chief Postal Inspector and by delegation of authority the five Inspection Service Operation Support Groups (ISOSG) managers can authorize the use of a "mail cover" in your investigation. A mail cover is warranted in telemarketing cases when necessary to identify the source of mail to track victims, additional suspects, suppliers or assets (i.e. bank accounts). Mail covers are permitted only during felony investigations and then only prior to formal indictment. If a mail cover is authorized the local post office will be directed to copy onto prescribed forms (PF2009) the addressee's information, return address, postage meter number or class of mail, and delivery date. The forms are initially sent to the ISOSG Region Office and then are forwarded directly to you. Mail cover information is restricted and the original forms must be returned to the ISOSG after the thirty day authorized period. For more information on mail
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covers contact your local Postal Inspector or the Inspection Service Operations Support Group, 225 N. Humphreys Boulevard, 4th Floor South, Memphis, TN 38161-0009. The Memphis ISOSG jurisdiction includes Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee and Texas.
Check Cashing Companies
In larger metropolitan areas telemarketing employees that don't maintain a bank account often times use check cashing services to cash their payroll checks. Telemarketers may also use these services to cash checks and money orders from victims. Most check cashing companies require each customer to have personal data on file. Larger check cashing companies use computers and image capture software to record each transaction. Most check cashing companies are also Western Union or MoneyGram outlets (see section on wire transfer systems). Telemarketers who pick up wired money transfers from victims may be recorded on in-store video systems.
Telephone Records
Telephone records are almost a necessity in telemarketing fraud investigations when the operation is located in your area. Most phone companies require a subpoena for telephone records. For landline telephones remember to ask for all long distance, toll free and local toll call records in addition to subscriber detail. Consider requesting local call detail (also known as a verbatim) if you need to track local calls, but remember most telemarketers only call out of state victims. Local call detail may provide leads to additional employees and offsite management or owners but check with your prosecutor to see if it is needed first because some landline phone companies now charge a large fee to receive these records. If you know the location of the telemarketing operation but you don't know their phone numbers, subpoena records for any and all telephone numbers that physically terminate at the address.
Review the telephone records for call patterns. Do all of the calls go to out of state numbers? Are most of the calls less than one minute? Are there lots of long distance calls? If you answer yes, you have developed indicators of a
telemarketing operation. Look at the call patterns. Do the calls in the morning and evening tend to track the time zones? Identify out of state calls over five minutes long. The recipient of these calls listened to the telemarketer instead of hanging up. Consider contacting some of these individuals to conduct a telephone interview. The longer the call, the more likely they were taken by the telemarketer. Re-contact some of the numbers from your analysis of recent longer calls. Identify yourself and ask them what their experience was with the company you are investigating. Avoid leading questions. You may develop additional victims and add recent information to "freshen up" your search warrant affidavit.
Cellular telephone service provider records will usually include detail of all outbound calls, whether local, local toll, long distance or toll free. Consider
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language to subpoena the known telephone number and any other number subscribed to by the same individual or business.
The subscriber of the telephone service is usually an indicator of some control over the telemarketing operation. Because long distance service is deregulated, you may find that local telephone service is provided by one company and long distance service is provided by another. Subpoena both companies. Some companies refuse to honor subpoenas issued in another state. You may need to subpoena the company's registered agent in Georgia for records from an out of state telephone company. Your prosecutor or the Georgia Governor's Office of Consumer Affairs can assist you with telephone subpoenas. An example of a subpoena can be found in the Appendix.
Tracking Unlisted Toll Free Numbers
Locating the service provider for toll free numbers can be a frustrating prospect. One source of information is the Service Management System or "SMS" Help Desk. SMS is the telephone industry's central database for the management of toll free numbers. The SMS database contains listings of the companies that have reserved blocks of toll free telephone numbers. The telephone company, which reserves a particular block of numbers is known as "controlling responsible organization" or "resp-org". SMS will fax you a printout containing the controlling responsible organization (also known as the service provider), effective date, status of the number, and the service provider contact number.
SMS only tracks the original controlling responsible organization (i.e.: the company that was assigned the block of numbers). The original company may have resold the telephone number. SMS may not track these resellers, which are not "resp-org's". Once a telephone number is resold, the selling company is responsible for updating the SMS database. The SMS website can provide more information about toll free numbers at http://www.sms800.com/. The website has a public side for general information and a private side for responsible organizations (telephone companies). The public side includes information about the history and anticipated development of the toll free system, FCC oversight, industry agreements, and a searchable database of toll free providers. SMS can also be contacted by mail at: SMS/800, 1720 South Sykes Street, Bismarck, North Dakota 58504. Or contact the SMS Help Desk by telephone at: 1-888SMS-3300, option 1 (1-888-767-3300). Fax your request for all "non-proprietary information" concerning toll free numbers to 701-255-9393.
Once you determine the service provider from SMS call the telephone company at the contact number provided by SMS to determine the records release procedure for that company. Send your subpoena / legal process / investigative demand to the address provided by the specific company.
Listed Toll Free Numbers
Investigators may want only the listed toll free number information when subscriber information and call detail is not required. The Internet is a good source of information to look up business names associated with listed toll free
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numbers. You'll find several sites that provide "reverse look-up" service for toll free numbers using any search engine. Or you can call 1-800-555-1212 for directory assistance when the business name is known and the target number is not.
Courier Services
Telemarketers frequently use private courier services to retrieve proceeds of the fraud from victims. Investment fraud and high dollar telemarketing operations may use the same courier services to send investment literature or other items to potential victims as part of the original solicitation. Victims tend to assign a higher degree of trustworthiness to items received in this fashion (as well as items sent by certified, registered or Express Mail) because of the cost involved. Many high volume telemarketers using private couriers have established accounts and filed account applications. FedEx, Airborne Express and UPS can trace packages from delivery origination to destination. All maintain websites that allow package tracing and in some instances signature retrieval via the Internet, if the package tracking number is known.
Private courier services can provide a list of packages sent from or received by your telemarketers from account number, account name or mailing address. Use of a courier service when arranged by a telemarketer, to pick up payments or donations directly from a victim's residence, is a violation of Georgia's Fair Business Practices Act and Charitable Solicitations Act (See O.C.G.A. Title 10) and another indicator of telemarketing fraud.
Newspapers
Telemarketers hawking advance fee loans and credit cards routinely place ads in newspapers offering their program and a telephone number to call for more information. Other telemarketers advertise for employees in the classified sections. Newspapers maintain billing and other account records that are available to law enforcement officers as a courtesy or with a subpoena. Establishing promotion and employment ads may be an indicator of control of a telemarketing operation.
Wire Transfer Systems
The Fedwire, Chips, S.W.I.F.T., Western Union and MoneyGram wire transfer systems are used to move huge amounts of money each day. Telemarketers use the wire transfer systems to receive money from their victims, to transfer money from "runners" in one state to the actual operation in another state, to move money between bank accounts and to launder telemarketing fraud proceeds "offshore."
Fedwire, Chips and S.W.I.F.T. systems are used to wire money from account to account by investment banks, commercial banks, securities broker / dealers and other financial institutions. Money launderers use these systems by aggregating fraud proceeds from smaller accounts, commingling the money into larger accounts then wiring the funds through offshore banks in countries with secretive banking systems such as in the Commonwealth of the Bahamas.
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Western Union and MoneyGram are private systems used to wire money from individual to individual and are commonly used as a conduit from the victim to the perpetrator. Telemarketers may use "runners" or low-level employees to receive the wired funds from victims. Small private wire transfers can be picked up at thousands of Western Union or MoneyGram offices located in grocery stores, check cashing establishments, and stand alone offices, quite literally around the world. Wire transfers through private systems do not require the recipient to show proof of identity for amounts under a certain dollar level, usually several hundreds of dollars. Telemarketers know this and regularly require victims to send amounts multiple times under the "identification required" level. Smaller amounts are received through these systems without ID by using an agreed upon password and test question. These systems also allow customers to wire money from their home telephone or via the Internet by charging the amount to their credit card as a cash advance.
Bank wire transfer records will show the source account and / or sender and the beneficiary account name, account number, routing number and bank. Private system wire transfer records may include "To Send Money" forms, "To Receive Money" forms, sending and receiving locations, copies of any identification presented and checks. Private wire transfers are initially paid to receivers by check. Amounts over $1,000 are paid with multiple checks. The check(s) can be cashed immediately or cashed later at a bank. Don't forget to ask for surveillance camera photographs or videotapes of the transaction.
Approximately 80% of all private wire transfers are processed by Western Union. Western Union Security can be reached at 314-291-8000. Western Union accepts subpoenas by mail and an advance copy by facsimile. Subpoenas and court orders can be directed to Western Union Custodian of Records, 13022A Hollenberg Drive, Bridgeton, Missouri 63044, fax number 314298-1785. Call 1-800-225-5227 to access Western Union's automated telephone system for more information on charging wire transfers to credit cards, tracking transfers in the system and for a directory of Western Union locations.
Bank Records
Bank records can show the source and ultimate destination of illegally obtained proceeds. Telemarketers use commercial bank accounts to process
checks, money orders and wire transfers. Bank account applications can provide the telemarketer's operating address, mail drop locations, corporate declarations and resolutions, telephone numbers, photo identifications, tax ID or social security numbers, wire transfer instructions, and more. Signature cards will provide an indication of who actually controls the money. Copies of checks and other "items" may help you develop a list of potential victims from the checking account holder's name and address printed on most checks. And, offsets may show laundering or concealment of funds. In bank terminology an "offset" occurs when a telemarketer withdraws cash or writes a company check
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to purchase a certified check, bank check or money order. Some telemarketers establish merchant accounts to process credit card and ACH ("automated clearing house") electronic transactions (See "Credit Card Transactions" in the Appendix for more information). Surveillance photos may capture your suspect depositing the victim's check. Consider freezing the fraudulently obtained money in accounts concurrent with the execution of search and arrest warrants.
Under federal law banks are required to file a report whenever they process a customer cash transaction of $10,000 or larger. Banks are also required to report suspicious activity. These reports are known as Currency Transaction Reports (CTR) and Suspicious Activity Reports (SAR). Multiple cash transactions below the $10,000 CTR required reporting threshold is "structuring" and an indicator of money laundering. The Georgia Bureau of Investigation is the "gateway agency" for making inquiry into CTR and SAR reports by your target's name or social security number.
Records from Georgia banks can be obtained through the use of a subpoena, search warrant, court order or a Title 7 letter. A Title 7 letter, also known as a bank demand letter, is named for the code section in Georgia's law that allows law enforcement officers to obtain bank records for criminal investigations (See O.C.G.A. 7-1-360 (a) (3)). A sample of a Title 7 letter can be found in the Appendix.
Out of state banks may honor the same processes as Georgia banks do or they may require that your court order or subpoena be "domesticated" in their state. Search warrants are usually available from a cooperating agency within the state from which records are sought. Contact the local law enforcement agency, attorney general's office, district attorney, or state police agency that has jurisdiction over the out of state bank and explain your investigation. The out of state agency will probably ask you to provide a sworn affidavit and there must be a comparable law violation in their state for the conduct you allege to be illegal in Georgia. Foreign bank records usually require the use of the Mutual Legal Assistance Treaty (MLAT) process.
Mutual Legal Assistance Treaties (MLAT)
Economic crimes recognize no borders. This is particularly true for telemarketers. Many telemarketing operations targeting US citizens are in Canada. Others have been tracked to The Bahamas, Thailand, Philippines and other countries. In today's global climate, some countries recognize the need to cooperate in law enforcement matters. And, most foreign law enforcement agencies will be unable to assist you directly. To facilitate mutual aid the US has entered into a number of cooperative agreements known as Mutual Legal Assistance Treaties. The MLAT process, though time consuming and sometimes frustrating, may be your only source of investigation assistance outside the US.
An MLAT can be used to obtain bank records, telephone records, search warrants, witness and victim interviews and more. Generally speaking the state or local prosecutor or investigator completes an application for assistance in a prescribed form, when a Treaty between the US and the country from which help is needed authorizes assistance. An Assistant United States Attorney completes
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the application for federal investigators. The application is submitted to the Department of Justice Office of International Affairs (DOJ). The application is reviewed by DOJ for sufficiency, format and consistency with the applicable Treaty obligations. Once approved, the request is communicated to the responsible agency in the country from which the assistance is sought.
Assets
Asset searches will uncover property that may be subject to seizure if purchased with proceeds of the fraud. The NWCCC can assist member agencies with asset searches through information available in public databases. Other records to trace assets are available through Georgia Crime information Center (license plates), Department of Natural Resources (boat registrations), Department of Revenue (vehicle titles), Federal Aviation Administration (aircraft registrations) county records offices, UCC filings, credit bureau reports, Security and Exchange Commission filings, and many others. Asset search and seizure can be a highly specialized area. Consider discussing the seizure of assets with your prosecutor before you take action.
Financial Analysis Telephone Analysis and Charting
Many investigators and prosecutors are unfamiliar with the intricacies of tracing complex financial trails. If your investigation has revealed considerable difficulty in following the money you may wish to enlist the aid of outside help. Consider retaining a certified public accountant, a forensic auditor, your local government's internal auditor, or specialized investigators at the Georgia Bureau of Investigation (GBI) or National White Collar Crime Center (NW3C).
However, in most telemarketing cases the financial trail will be apparent to any investigator who can follow the money from victim to suspect. Usually there will be a bank transaction, credit card transaction, check, wire transfer or electronic debit. If the victim mailed cash, follow the money through the method of transfer, usually either US Mail, FedEx, or UPS. Compare the date of the transaction to the date your victim received the telemarketing telephone call. Identify patterns.
Consider creating visual displays showing the call pattern or money trail. Find your victims' telephone numbers within your suspect's telephone records and compare that to the date of transactions and surveillance camera photographs obtained from the suspect's bank records. If your victim sent a check you may have a photograph of the suspect depositing it into the bank a few days after the call was made. That's good evidence to demonstrate to your prosecutor control and intent. Track the telephone records for call patterns. Did your telemarketers call only out of state? Did their morning and evening call patterns follow the time zones? Most of us hang up on telemarketers in the first minute. Look at the telephone records for out of state calls over five minutes long. Segregate the longer calls into a chart and consider calling the same numbers to identify new victims.
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Undercover Investigations
Consider the use of a former telemarketer from another company as an undercover source in your boiler room. Let them apply for a job and work long enough to develop the information you need to take action. The same may be true for the use of an undercover officer. Remember undercover operations can be dangerous. Monitoring and back up for undercover officers should be considered essential. Check with your prosecutor before conducting any telemarketing undercover operations. Most telemarketers will place a new employee on the telephone the same day they apply for a job. The undercover operative will be monitored on the telephone by someone in the boiler room and will probably be required to defraud consumers to demonstrate their ability to produce. Your agency will likely be responsible to refund money to everyone your undercover operative deceives. In no instance should an undercover officer cash paychecks or keep proceeds of the fraud. It may be enough for someone to apply for a job then leave after they learn who conducts the hiring and training.
Pen Registers
Pen registers are devices that are attached to a telephone line that capture real-time information about activity that occurs over the phone. Pen registers do not provide the content or audio portion of the call. Pen registers provide the date, time and duration the phone was off the hook and the dialed digits. On inbound calls the pen will show if the call was answered. Pen registers with caller identification may identify the telephone number of the phone calling your target if your target has caller ID installed. Pen registers provide call detail wiretaps provide call content and are much more difficult to obtain. Pen registers are available by court order. The legal standard is that information relevant to your investigation is likely to be recovered.
Trap and Trace
Trap and trace devices are attached to a telephone line and identify the telephone number of the phone calling in to your target. There are local and long distance trap and trace devices. Local trap and trace is limited geographically. A long distance trap and trace device installed on the telemarketer's primary customer service or complaint number can be helpful to identify out of state victims, banks and suppliers. The legal standard is that information relevant to your investigation is likely to be recovered. You will need to obtain a subpoena or court order directing the telephone company to provide subscriber information from the numbers trapped, unless you expect to call in the blind. BellSouth currently charges approximately .50 for each subscriber record obtained by court order. BellSouth may not charge for subscriber records requested by subpoena if you request these records separately and on a limited basis. You should check with your telephone company servicing your area for their policy on records requests.
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Wired Communications Intercepts (Wiretaps)
Very few, if any, telemarketing fraud investigations require the use of wire communication interceptions. There usually exists sufficient evidence for effective prosecution in the form of victim, suspect and witness statements, bank records, lease agreements, telephone records and other sources previously mentioned. If your investigation warrants it though, no better evidence is available than the telemarketer's own words. All communications over telephone lines including home, business and cellular are "wire communications." "Electronic communications" include information sent by fax, email, and pagers. All wire and electronic communications are protected and there is an automatic expectation of privacy.
Generally speaking state and federal laws require you to exhaust or discount all other traditional investigative techniques before the court will authorize the interception of communications. It is not necessary to try each investigation technique to demonstrate failure. You can articulate from your training and experience that you know a particular technique will not accomplish all of the goals of your investigation and can therefore be discounted. You must comply with both state and federal laws governing intercepted communications. In Georgia intercepts are initially authorized for a twenty-day period (thirty days for federal wiretaps) and only the District Attorney or Attorney General may apply for an order to intercept wire communications.
Communication intercepts can be expensive, labor-intensive, logistically challenging operations. Most telemarketing rooms use multiple phone lines. Some telemarketers even use high capacity T-1 lines, which are equivalent to twenty-four separate single telephone lines, making target number selection difficult.
You must have access to specialized equipment needed to intercept the calls and provide training to your monitors on equipment use. You must "minimize" the overhearing of privileged and other non-criminal communications. Your agency will be responsible for the cost of the assistance provided by the telephone company to establish the intercept and to install another telephone line for each line intercepted linking the dialed number recorder (slave) to the recording equipment. In telemarketing investigations you may be inundated with telephone calls, each which must be captured. You must notify everyone whose communication was intercepted of the existence (not content until indictment) of the intercept, including your suspects. You may not disclose the contents of any intercepted communications outside of what is necessary for the investigation or actual prosecution in court. If you or anyone else discloses content information, all of your intercepted communications may be prohibited from being introduced as evidence by the court. Transcription costs, court copies, undercover billing, and other things must be factored into the decision to utilize an intercept. Contact your prosecutor early to discuss the feasibility of using communication interception. More information about wire communication intercepts is available in the Appendix and in O.C.G.A. 16-11-60.
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Action and Post Action Investigation
Once you developed your list of victims, witnesses and suspects and have established probable cause you are ready for enforcement action. If your telemarketer is still operating you'll want to use a search warrant to gather direct evidence of the fraud. If you have developed sufficient probable cause to demonstrate control and criminal intent you should consider applying for arrest warrants to be served at the same time. Remember to work with your prosecutor, he or she may want you to search now and later directly indict the responsible parties. Consider obtaining search and seizure warrants or court orders to freeze any bank accounts that contain the proceeds of the fraud or assets subject to seizure.
Search Warrants
Search warrants are routinely used in telemarketing fraud investigations. Every telemarketing room still operating, regardless of the size, should have evidence present. Search warrant affidavits for telemarketing fraud evidence should follow a logical progression either chronologically or by category of information. And, search warrant language specific to telemarketing fraud investigations must be included. Telemarketers have their own terminology and materials specifically used by telemarketers must be listed in items to be seized.
Your warrant may authorize you to search for the same things common in almost any financial investigation like bank records, statements and receipts. But when they apply you should also include items such as: employment applications, lists of employees, phone name and code number lists, leads, lead lists, scripts, pitches, script books, verification tapes and tape recorders, credit card processing machines, lists of customers, the "gimme" gifts, telephones, lists of bonuses, awards, gifts, services or promotional items, cloned phones, prepaid calling cards, and caller ID speed dial, and call return information. If during your investigation you have discovered the use of computers by your telemarketers, remember to include language in your warrant to seize and process computers. Avoid laundry list language. Make sure you justify in your affidavit why you believe the items to be seized are evidence and likely to be found. Base your seizure on your investigation, training, experience, and discussions with others knowledgeable in telemarketing fraud investigations. A sample search warrant affidavit is included in the Appendix.
Plan on gathering a large volume of paper evidence from larger telemarketing rooms. Plan ahead for evidence transport and storage needs. Larger boiler rooms require lots of help to secure the location, interview the employees and suspects, effect any arrests, and to search and package evidence.
Arrest Warrants
Arrest warrant language is best suggested by your prosecutor. However, you may wish to refer to the Appendix for a list of some of the Georgia and Federal laws that probably apply to your investigation.
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Employee and Suspect Statements
Plan on interviewing everyone present in the telemarketing room. Interviews are useful to determine who owns, manages, or otherwise controls the operation. Focus some of your questioning on the specific offer made and what was actually delivered to the victim. Look for the misrepresentations found in the outbound pitch and script. Misrepresentations equal deception. Did they promise an expensive camera but all they have are boxes full of cheap plastic cameras? You may develop probable cause to arrest some individuals within the room while others may have been isolated from the deceptive practices in their specific position and had no criminal intent. A sample interview form is available in the Appendix. You should formulate additional questions based on the nature of your particular telemarketing operation.
Seized Computer Forensics
Crooked telemarketers routinely store their transaction records, leads, scripts and other items needed to run the criminal enterprise on computers.
Others use the Internet or email to send electronic records of sales to merchant processors. The use of computers by telemarketers opens up a whole new source of evidence. However, particular care must be taken when recovering computer evidence to avoid inadvertent alteration or destruction. Some police officers and sheriff's deputies are unfamiliar or uncomfortable with the proper methods used to seize and process computer evidence. If you're not familiar with seizing computers or conducting forensic exams, you must seek assistance from those who are. Many of the larger police and sheriffs departments, Georgia Bureau of Investigation, and the Governor's Office of Consumer Affairs have investigators trained in computer seizure and computer forensics.
Prosecution Report
Once you've completed the "pre-court" portion of your investigation you should compile all of your incident, investigation and supplemental reports, statements, interviews, evidence examples, affidavits, warrants, and charts together with a list of witnesses, victims, and suspects. Most prosecutors appreciate having all of the information they need to plan their trial in a comprehensive report. Include photographs of those items of evidence, exhibits and records too bulky to include in the report. If this is the first time your prosecutor has handled a telemarketing fraud case, you may want to suggest that he or she contact the Governor's Office of Consumer Affairs or the Special Prosecution Unit of the Georgia Attorney General's Office for training or support.
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Impediments to Prosecution
Telemarketing cases sometimes require considerable time and resource expenditures. Cases are usually manpower intensive often requiring the investigator follow bank accounts, telephone numbers, and mail drops. Victims and witnesses must be located and interviewed. Some agencies do not have the manpower or time to spare on lengthy investigations. Even when an investigation successfully identifies those responsible, it may be a challenge to obtain a commitment from a prosecutor. Some prosecutors are not familiar with telemarketing fraud or even white-collar crime cases and may be uncomfortable presenting these types of cases before a jury.
The Governor's Office of Consumer Affairs can provide training and investigative support including assistance with seizing computers, search warrant language, and oral intercept and MLAT suggestions based on experience, and subpoenas for records recovery. Investigators may need to seek out prosecutors experienced in white-collar crime cases. Investigators should endeavor to provide the best product they can to the prosecutor. Remember the goal of the investigation isn't "legally sufficient" probable cause. Your goal is to help your prosecutor obtain a conviction in a jury trial. Regard your investigation as open, until court is adjudicated.
Investigators must "follow the money" from the victim to the telemarketer. This trail usually leads to the identification of bank accounts used by the perpetrators. Some banks charge law enforcement agencies for the production of records. The cost of bank records can be hundreds of dollars for each case. It doesn't take long for the strain of document recovery costs to affect decisions on accepting new cases.
The National White Collar Crime Center (NW3C) may be able to provide case funding for document recovery and witness travel to member agencies. Don't forget to request your prosecutor to include the cost of the investigation in any sentence agreement or in the court's sentence upon conviction. Let the criminal help pay for the investigation from seized bank accounts or during restitution while on probation.
Senior victims may have some type of physical limitation due to health. These limitations cause difficulty in travel should a trial become necessary. Some seniors die before the case can make it through the inevitable delays caused by the backlog in the court systems. If a trial is called for in most cases, the victim must be brought in from out of state.
Ask your prosecutor about the legality of videotaping or deposing certain victim's statements. Enlist the help of your local victim / witness advocate or the Georgia Department of Human Resources Division of Aging Services for more information on working with senior victims. Consider joining NW3C and make use of case funding assistance. Include reimbursement for the cost of witness travel in any sentence agreement.
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The best evidence of a telemarketer's criminal intent to defraud may be listening in on the conversation when the "pitch is being thrown." However, it is very difficult and sometimes cost prohibitive to obtain court-authorized interception of oral communications.
Surreptitious recording is usually an option only in the largest, long-term investigations of active boiler rooms. The majority of telemarketing fraud rooms are short term "rip and tears" that may only be around for a few months. Most telemarketing fraud cases are made without the use of oral intercepts. Contact the Georgia Attorney General, Prosecuting Attorney's Council or the Governor's Office of Consumer Affairs for more information about oral intercepts and possible assistance. Another option is to have victims record pretext calls made to the telemarketer when a phone number is available. This is applicable only to victims in states that allow one-party consent.
Many telemarketers operate from Canada and other countries with anonymity from most law enforcement agencies in the United States. Money stolen from United States citizens crosses international borders each day. I am unable to obtain the telephone records, bank records and other assistance needed to investigate the scam. Then what about extradition?
If a case can be made in the US against telemarketers in Canada or Mexico and an arrest warrant is issued, extradition is not guaranteed. Notify US Customs from contact information in the Appendix. Customs officers will flag your suspect in their system with the intent to stop and arrest the suspect at the US border trying to enter. Consider forwarding your complaint information to the country where the telemarketer operates for further investigation. A list of law enforcement contacts in various countries is available on the Consumer Sentinel website or through the Federal Trade Commission. Consider the MLAT process during major case investigations if records and other investigation assistance are required from a foreign country. "Pass through" bank accounts established by foreign banks at US banks sometimes give the impression that a US based telemarketer is operating somewhere else. Don't just assume they're not in the US.
Civil Verses Criminal Enforcement Action
Civil actions may result in the seizure of the remaining funds obtained by the perpetrators of telemarketing fraud and force the telemarketers to stop operations temporarily. Temporary Restraining Orders can be used to seize a telemarketer's operation. A "receiver" may be appointed by the court to take over the telemarketing company and eventually (once the receiver determines the company is fraudulent) the company closes. However, collection of civil judgments against telemarketers seems to be limited to collecting those fraud proceeds not yet spent and successful collection seems to be the exception and not the rule.
Civil action may be appropriate against telemarketing rooms that operate legitimately or semi-legitimately, that have addressed consumer complaints, and are amenable to corrective action, or when the level of proof needed for criminal
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prosecution cannot be met. Contact the Governor's Office of Consumer Affairs (OCA) if you suspect you have information concerning a telemarketing room that is using deceptive business practices, but does not reach the level of criminal intent. OCA civil investigators may be able to assist you in addressing your concern.
Telemarketing operations that are established with the intent to commit fraud do not seem to be deterred from their fraudulent objective by civil enforcement action. If shut down the telemarketers are pushed into someone else's jurisdiction or simply open up again using the same scam and a new business name. While, criminal action taken against fraudulent telemarketers can result in the seizure of the telemarketer's entire operation - all of the equipment, computers, scripts, leads, telephones, facsimile machines and more is considered inculpatory evidence of the fraud operation and is routinely seized with search warrants. Bank accounts containing the remaining proceeds of the fraud are frozen with the intent of restoring the money to victims. And, anyone that rises to the level of criminal culpability, including: the owners, managers and most paid telemarketers may be charged. Court criminal sentences of telemarketers seems to track about the same level as would be applied to felony theft or embezzlement offenders and sometimes includes restitution and jail time or restitution, probation and fines depending on jurisdiction.
Cross Border Concerns
The last couple of years have seen a dramatic rise in the number of complaints against Canadian telemarketing boiler room. Telemarketers located in Canada use US based merchant processors and mail drop addresses to convince the intended victim that the telemarketing company is in the US, while private company wire transfers, cash payments, bank checks and money orders are used to get the money to Canada. Some Western Union security officials have suggested that the majority of the wire transfers made through their system to Canada from the US are related to fraud.
Canadian "rip and tear" telemarketing operations may only be around for a couple of weeks to at most a few months before they disappear, only to set up shop again under another name. The current process for obtaining bank records or telephone records from another country (needed in almost every investigation) is time consuming and difficult. The investigating agency must make an application for assistance through the Department of Justice (DOJ) Office of International Affairs pursuant to letters rogatory, which is a request from a judge/court/judicial entity in one country to a judge/court/judicial entity in another country, or Mutual Legal Assistance Treaties (MLAT). The process of obtaining assistance from DOJ to the state or local level may require several weeks or months. Once approved by DOJ the MLAT request is communicated to the foreign country and if approved by that country, may still take months or years to fulfill. If the money crosses out of the US the trail becomes exponentially harder to follow.
One example of the difficulty in obtaining foreign records involves two multi-million dollar telemarketing investment rooms that operated in Atlanta. The
Telemarketing Fraud: It's A Crime! Page 42

process at DOJ consumed four months before the request for records was communicated to the Commonwealth of the Bahamas. Twenty-six months later the investigating agency received only a trickle of bank and corporation records needed in the investigation, while the legitimacy of the Treaty itself was challenged in a Bahamian court.
Canadian law enforcement officials recognize the problem of telemarketing fraud originating from within their borders. Contact Canadian antitelemarketing fraud initiative Phone Busters for help. Phone Busters can be reached at 1-888-495-8501 or on the Internet at http://www.phonebusters.com/.
Telemarketing Fraud: It's A Crime! Page 43

Conclusion
One thing is certain, telemarketing fraud is a vastly underreported economic crime that disproportionately affects senior citizens. Cooperation between investigators and prosecutors and between different law enforcement agencies is imperative to stop the fraud.
Many law enforcement officers are not familiar with telemarketing fraud as a crime. Telemarketing fraud is theft using the telephone as the conduit to conduct the crime. Theft is generally viewed as a "crime against property." Telemarketers can affect much more than just the pocketbook or wallet of the victim. As previously discussed, senior citizens are particularly vulnerable to criminal telemarketers. Sometimes a senior will expend their life savings, lose self-respect and lose hope that life will ever get better - all because of the abuse heaped on the senior victim by some telemarketers. Telemarketing fraud often times affects the victim much more than just financially. To the victim, telemarketing fraud is actually a "crime against a person."
Where to Look for Help
The Georgia Governor's Office of Consumer Affairs (OCA) is charged with enforcement of the Fair Business Practices Act (See O.C.G.A. 10-1-390) and state criminal laws prohibiting telemarketing fraud, Internet fraud, identity theft, and home repair fraud.
The OCA maintains a small staff of highly competent civil and criminal investigators whose duty it is to ferret out these would-be telemarketing scam artists, identity thieves, home repair fraudsters and errant Internet marketers, believed responsible for stealing billions of dollars each year. Tools at our disposal include state level authority to subpoena records and testimony, search warrants, cease and desist orders, temporary restraining orders, arrest warrants and all other remedies available in the civil and criminal courts.
OCA criminal investigators are sworn and certified police officers and have the responsibility and the duty to enforce the criminal laws of Georgia. Our criminal investigators routinely use search warrants and arrest warrants as effective tools to combat telemarketing fraud when the boiler rooms are within Georgia. Investigating so called "victim venue" cases (where the victim resides within our criminal jurisdiction, but the telemarketers are in another state or country) are more challenging. OCA investigators and staff work with any jurisdiction to find legally acceptable ways to shut down fraudulent telemarketers. Contact OCA at 404-656-3790 for more assistance.
Telemarketing fraud is a crime. So why then do people fall for telemarketing scams? It is because telemarketing victims are lied to, cheated,
Telemarketing Fraud: It's A Crime! Page 44

and coerced to part with their money. Some victims believe they are conducting business with a reputable firm or are honestly trying to pay the taxes on money due to them. The typical victim is not greedy or stupid as some may misconceive they simply fall prey to the desire each of us has to better our lives. End of Investigator's Course.
Telemarketing Fraud: It's A Crime! Page 45

The following is a list of laws designed to protect Georgia citizens from being taken by fraudulent telemarketers or from being inconvenienced by legitimate ones.
Prohibited Telemarketing Acts - O.C.G.A. 10-1-393.5 It is a felony criminal violation of Georgia law to use the telephone to
defraud someone. This law is usually charged in conjunction with at least one of Georgia's theft statutes.
Deceptive, Fraudulent or Abusive Telemarketing - O.C.G.A. 10-5B-1 During telephone solicitations it is illegal to engage in an act, practice, or
course of business that operates or would operate as a fraud or deceit upon a person in connection with a solicitation of a monetary charitable contribution or to use the services of any person as a courier or otherwise to obtain personally, receipt or possession of a monetary contribution from a residence.
Conspiracy to Commit a Crime - O.C.G.A. 16-4-8 Can be used to charge all of those involved in the telemarketing operation
that had knowledge when any one commits an overt act.
Theft by Taking - O.C.G.A. 16-8-2 Takes or unlawfully appropriates the property of another. Felony
punishment applies if the subject of the theft is valued at over $500.00. Additional penalties apply if the unlawful theft was also a violation of 10-1393.5, 10-1-393.6 or 10-5B-1, including making the theft a felony regardless of dollar value. See 16-8-12 (4)(A)
Theft by Deception - O.C.G.A. 16-8-3 It is a violation to obtain property of another by any deceitful means or
artful practice. Additional criminal penalties apply if the value of the theft was over $500 and the victim is 65 or older. See 16-8-12 (6)(b).
Theft by Conversion - O.C.G.A. 16-8-4 It is a violation to lawfully obtain funds or property of another and then
convert the funds to another unauthorized use.
Telemarketing Fraud: It's A Crime! Page 46

Fraudulent Telephone Solicitation - O.C.G.A. 16-9-54 It is a misdemeanor for telephone solicitors to make false statements
during a solicitation for the purpose of the sale of goods or services or when seeking charitable contributions.
Representing Peace Officer Organization or Fire Services Organization Without Authority - O.C.G.A. 16-9-57
This section makes it unlawful for any person or organization to solicit or accept a fee under the guise of representing a police or fire service organization unless they are employed by or acting under the specific authority of that organization. The violation is a felony if any form of communication used in the solicitation crosses the boundaries of the state.
Promotional Contests - O.C.G.A. 16-12-36 Promotional contests must comply with the disclosure requirements found
in O.C.G.A. 10-1-393. Otherwise, they may be declared a "lottery" in violation of Commercial Gambling O.C.G.A. 16-12-22 (6). Illegal lotteries may be subject to the seizure of property under 16-12-32.
Racketeer Influenced Corrupt Organizations Act (RICO) - O.C.G.A. 16-14-4 It is unlawful for any person through a pattern of racketeering activity or
proceeds derived there from, to acquire or maintain, directly or indirectly, any interest in or control of any enterprise, real property, personal property of any nature, including money. It is also unlawful for any person employed or associated with any enterprise to conduct or participate in, directly or indirectly, such enterprise through a pattern of racketeering activity. A pattern of racketeering activity means two or more acts of any predicate offense. Theft is a predicate offense.
Georgia Protection of Elder Persons Act - O.C.G.A. 30-5-4 Service providers, and specifically bank employees, who have cause to
believe that elder or disabled persons are or have been financially exploited, must report these suspicions to law enforcement, the local prosecutor's office or to Adult Protective Services. Those who fail to report can be charged with a misdemeanor.
Georgia Charitable Solicitations Act - O.C.G.A. 43-17-1 This law requires telemarketers operating as paid solicitors on behalf of a
charity to register with the Secretary of State. It further requires paid solicitors to consent to criminal background checks and to promptly disclose that they are a paid solicitor calling for the charity and not a volunteer. This statute prohibits charities from using a courier service to personally obtain possession of a financial contribution from a residence.
Unlawful Telemarketing Transactions - O.C.G.A. 10-1-393.6 This section of Georgia law specifically deals with fraudulent telemarketers
who charge fees for credit repair, to recover funds from previous telemarketing scams "recovery room scams", and those that use courier services without giving the consumer the opportunity to inspect the merchandise prior to payment.
Telemarketing Fraud: It's A Crime! Page 47

Georgia No Call - O.C.G.A. 46-5-27 This law prohibits telephone solicitations to those individuals who have
signed up for the Georgia No Call List. Exceptions to the rule include; charitable solicitations, solicitations from companies with whom the consumer has previously done business and solicitations from any business whom the consumer has given permission to call.
Mail Fraud - Title 18 USC 1341 The Mail Fraud Statute may be the nation's oldest federal consumer
protection statute and can be used effectively in white-collar fraud and product and service misrepresentation. It defines fraud as a scheme or artifice, which uses the U.S. Mail to obtain money or property by means of false or fraudulent representations. Mail Fraud is a criminal scheme where the postal system is used to obtain money or anything of value from a victim by offering a product, service, or investment opportunity that does not live up to its claims. To prove this claim a prosecutor must establish that (1) the facts surrounding the offer were intentionally misrepresented and (2) the U.S. Mail was relied on to carry out the scheme.
Fictitious Name or Address - Title 18 USC 1342 Any person who uses or assumes or requests to be addressed by, any
fictitious, false, or assumed title, name, or other address other than their own.
Fraud by Wire Radio or Television Title 18 USC 1343 Whoever, having devised or intending to devise any scheme or artifice to
defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than five years, or both.
Telemarketing Title 18 USC 2325 Defines telemarketing in the federal statutes as a crime. Section 2326
provides for enhanced penalties if the telemarketing act was done in conjunction with mail fraud or other offenses and if there are ten or more victims was over the age of 55 or if the fraud targeted persons over age 55. Section 2327 requires federal courts to order victim restitution if the case qualifies under the enhanced penalties section.
False Representations - Title 39 USC 3005 A civil law used to protect the public from aggravated monetary loss where
proving fraudulent intent is difficult. Allows the Postal Service to require the person or his representative to cease and desist from engaging in any such
Telemarketing Fraud: It's A Crime! Page 48

scheme, device, lottery, or gift enterprise conducted all or in part through the US Mail. The Telemarketing Sales Rule Title 15 USC 1601
The Federal Telemarketing Sales Rule administered by the Federal Trade Commission prevents solicitation calls before 8 AM and after 9PM in the consumer's time zone. The Rule also requires companies to create their own "No Call List" of consumers who have expressed a desire to be removed from the company's calling list. The Rule makes it illegal for a telemarketer to withdraw money from your checking or savings account without your express, verifiable authorization.
The Federal Trade Commission (FTC) requires certain disclosures and prohibits misrepresentations. It gives consumers the power to stop unwanted telemarketing calls and gives state law enforcement officers the authority to prosecute fraudulent telemarketers who operate across state lines.
The Telemarketing Sales Rule also gives the attorney general of any state or a victim the ability to file civil actions against telemarketers in federal court.
Telemarketing Fraud: It's A Crime! Page 49

HELPING SENIORS TARGETED FOR TELEMARKETING FRAUD
Warning signs for targeted senior citizens:
The person receives lots of junk mail for contests, "free trips", prizes and sweepstakes.
The person gets frequent calls from telemarketer's offering them something.
The person has made numerous checks or withdrawals for escalating amounts of money to unfamiliar, out-of-state, or out-of-country companies.
The person begins to act secretively about phone calls, finances, and mail.
The person is suddenly having problems paying bills or buying necessities.
Don't:
Blame the person for being stupid, greedy or foolish. Telemarketer's are professional scam artists and make their living by swindling honest people who have good intentions.
Threaten to take away the person's financial or physical independence. This may only make the person secretive and resentful. Most people are ashamed that they are victims and telemarketer's rely on this fact and count on the person not telling authorities or family members.
Do:
Expect that the interview of a senior victim will take longer than most. Expect hesitancy on the part of the victim to admit they lost their money to a telemarketer. Develop trust by demonstrating a caring attitude. Expect the victim to have been victimized by more than one telemarketing company.
Help the person assemble all the necessary documents needed to turn over to investigators or file a report with the state consumer protection agency.
Encourage the person to hang up on future telephone solicitations that seem suspicious, require up front fees, or represent unknown charities.
Encourage the person to have the telemarketer send them information in the mail before agreeing to any solicitation and to always check out the telemarketer before sending any money or providing credit card or other personal information.
Emphasize the criminal nature of telemarketing fraud and help the person learn how to identify it.
Telemarketing Fraud: It's A Crime! Page 50

Help for elderly people targeted by fraud: The first step in helping older people who may be targets of fraud is to convince them that the person on the other end of the line could be a crook! Once they understand that illegal telemarketing is a serious crime, they are more likely to hang up and report calls to the authorities. Older people may be surprised to know that there are an estimated 14,000 illegal telemarketing operations bilking thousands of victims every day. Older people are frequent targets because: It is hard to tell if a caller is legitimate It is hard to hang up. Older people are more formal in their manners and do not wish to be impolite. Some senior citizens can be worn down after receiving multiple calls a day in an attempt to exploit their vulnerability. Seniors tend to trust the caller. Seniors tend to give people the benefit of the doubt and do not suspect them to be criminals. We all want to believe we have struck it rich. People want to believe that it's their lucky day, and may react with anger or suspicion when friends or family question their optimism. Elderly targets of fraud need to know that: As much as $40 billion per year is lost to fraudulent telemarketer's in the US. You can't tell by the tone of someone's voice if the caller is legitimate. Legitimate companies do not pressure you into sending money immediately. Giving money to a fraudulent telemarketer usually means losing it forever. Reporting suspected telemarketing crime is essential to stopping it.
Telemarketing Fraud: It's A Crime! Page 51

MORE TELEMARKETING TIPS FOR SENIORS
Danger Signs of a Telemarketing Scam:
You get a call or postcard from someone telling you you've won a prize and asking for payment to buy something, for processing or administrative fees, for customs, for taxes, or any other reason. Legitimate sweepstakes or prize offers don't ask for payment because it's illegal.
The person says you have to take the offer immediately or you'll miss the opportunity. Legitimate companies don't pressure people to act without time to look into the deal.
The caller refuses to send you written information before you commit to anything. Legitimate companies are always glad to send information about what they're offering.
The caller claims that you can make huge profits in an investment with no risk. All investments are risky and legitimate companies must tell consumers about the possible risks involved.
The caller asks for your social security card number. Legitimate companies don't ask for that unless you are applying for credit and they need to check your credit report.
The caller asks for your credit card number, bank account number, or other financial information when you aren't buying anything or paying with those accounts. Legitimate companies only ask for financial information to bill you or debit your account for purchases that you've agreed to make.
The companies call you relentlessly or after you've asked not to be called anymore. Legitimate companies will take "no" for an answer and will take you off their calling lists if you ask. Con artists will keep on calling to wear you down or get more money from you.
The company offers to get you a loan, or credit, or a credit card, or to "repair" your bad credit if you pay an up-front fee. Legitimate lenders and credit card issuers do not demand payment in advance, and no one can get bad information removed from a credit file if it is accurate.
The company offers to get back money that you have lost to another fraudulent scheme if you pay an up-front fee. Law enforcement agencies don't ask for payment to try to help consumers get their money back and it's illegal for a company to ask for advance payment for such services.
Compiled from information provided by the National Fraud Information Center Hotline telephone number: 1-800-876-7060.
Telemarketing Fraud: It's A Crime! Page 52

TELEMARKETING FRAUD INVESTIGATION SAMPLE CHECKLIST

Initial Investigation

Completed

Gather complaints (LE agencies / BBB / consumer agencies / FTC)

____

Verify date of complaints, i.e. statute of limitations

____

Corporate records (certified copies) business license and application ____

Business surveillance

____

List of employees, past and present

____

Phone names

____

List of awards / gifts / promotional items pitched

____

List of awards / gifts / promotional items received

____

Information on business location

____

Information from leasing agent

____

Information from mail drop (PF1583)

____

Information on principals and employees

____

Picture I.D. / arrest photos

____

Driver's license

____

Credit report

____

Social security number

____

Vehicle description and tag numbers

____

NW3C search

____

Follow Up Investigation Victim affidavits Retrieve merchandise from victim sent by telemarketer Taped conversations between victims and telemarketer Investigative materials from other states Postal information (permit numbers, complaints, mail cover) Check cashing company records / subpoena Telephone records / subpoena
Local Long-distance carrier Courier service records (FedEx, Airborne, UPS, etc.) Newspaper for telemarketing ads, names/subpoena Western Union / MoneyGram wire transfers / subpoena Labor Department records Bank records (statements, items, surveillance photos) / subpoena Tax records Business Principals Assets: Information on personal property of principals Homes (deed, mortgage information, etc.) Vehicles (tag numbers, purchase information) Other Financial analysis Electronic surveillance (pen registers, trap and trace) Oral intercepts (wiretaps)

____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____ ____

Action and Post Action Search warrants Arrest warrants Employee and suspect statements Seized computer forensics Report for prosecutor

____ ____ ____ ____ ____

Telemarketing Fraud: It's A Crime! Page 53

STATE Alabama Alaska Arizona Arkansas California
Colorado Connecticut Delaware
District of Columbia

VIDEO AND AUDIOTAPE USE AND ADMISSIBILITY

Admissibility of

Videoconferencing

Videotaped Testimony Capabilities in

in Civil and Criminal

Attorney General

Cases

Office?

Videotaped testimony is No. State has

generally inadmissible, access through the

since it rarely falls within Alabama

the Alabama Best

Department of

Evidence Rule.

Health for a fee.

Authenticated video

No

testimony is admissible.

Videotaped testimony

No

may be admissible,

subject to other Arizona

Rules of Evidence.

Videotaped testimony is No

admissible if witness is

unavailable.

Videotaped testimony is No

admissible in civil

proceedings if witness is

unavailable to testify. In

criminal proceedings,

videotaped testimony is

admissible, subject to

court's discretion.

Videotaped testimony can No

be admitted in criminal

cases under specific

circumstances. C.R.S.

18-6.5-103.

Videotaped testimony is No

generally admissible in

civil proceedings, not in

criminal proceedings.

Videotaped testimony is Yes

generally admissible in

civil and criminal cases,

as long as it was obtained

to preserve as trial

testimony.

Videotaped deposition of No

expert witnesses may be

admissible, even if

witness is available.

One-Party Consent or Two-Party for Taping Purposes One-party consent
Two-party consent One-party consent
One-party consent One-party consent for law enforcement conversations. Twoparty consent for private individuals.
One-party consent
Two-party consent
One-party consent
One-party consent

Telemarketing Fraud: It's A Crime! Page 54

Florida Georgia
Hawaii Idaho Illinois
Indiana Iowa Kansas Kentucky Louisiana Maine

Videotaped testimony is admissible in civil proceedings, not generally in criminal proceedings. Testimony has to be recorded by stenographic means, but may also be recorded by videotape, unless upon motion, the court orders that it may be taken by videotape alone. Videotaped depositions admissible if both parties stipulate and motions for admissibility granted. Videotaped testimony is admissible if witness is unavailable. Videotaped depositions admissible in civil proceedings.
Videotaped testimony is generally not admissible. Videotaped testimony is admissible if taken as part of deposition in lieu of deposition transcript. Videotaped testimony is generally admissible in civil proceedings. In criminal proceedings, it may be admissible upon motion. Videotaped depositions are allowed and admissible in civil actions.
Videotaped testimony is generally admissible in civil actions. Videotaped testimony is generally not admissible.

Yes
No. State has access to other facilities for a fee.
Yes
No
No. State has access through Illinois Dept. of Central Management Services. Yes
Yes
No. State has access to videoconferencing facility for a fee.
No. State has access to videoconferencing facility for free. No. State has access to videoconferencing. No

Two-party consent One-party consent
One-party consent One-party consent Two-party consent
One-party consent One-party consent One-party consent One-party consent One-party consent One-party consent

Telemarketing Fraud: It's A Crime! Page 55

Maryland
Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska
Nevada
New Hampshire New Jersey
New Mexico

Videotaped depositions may be used and are admissible under limited circumstances.
Videotaped depositions are admissible under limited circumstances. Videotaped depositions are admissible. Videotaping of depositions is allowable on request of either party.
Videotaped testimony is generally admissible in civil proceedings. Videotaped testimony is admissible where the other party was present.
Videotaped testimony is admissible if it meets evidentiary requirements. Videotaped testimony is admissible in both civil and criminal proceedings, as long as both parties stipulate and witness is unavailable. Videotaped testimony is admissible in civil proceedings upon agreement of the parties. In criminal proceedings, it may be admissible through court motion. In civil proceedings, videotaped depositions are subject. In civil actions, videotaped depositions may be admissible. Depositions are not available in criminal actions. Not specified

No
Not as of yet.
No No. State has access to videoconferencing facility for a fee. No
No. State has access to videoconferencing facility for a fee. No
Yes. Fee charged for using the videoconferencing center.
No. State has access to videoconferencing facilities through the Legislative Counsel Bureau for a fee. No
No.
Not specified

One-party consent for criminal investigations. Twoparty consent generally. Two-party consent One-party consent One-party consent
One-party consent One-party consent
One-party consent One-party consent
Two-party consent
One-party consent One-party consent
One-party consent

Telemarketing Fraud: It's A Crime! Page 56

New York North Carolina
North Dakota Ohio
Oklahoma Oregon Pennsylvania
Rhode Island South Carolina

Videotaped testimony is generally inadmissible in civil and criminal cases, with the exception of the unavailability of the witness. Videotaped testimony is admissible in civil actions. Video testimony is admissible in criminal proceedings only in certain child molestation cases.
Videotaped testimony is admissible in civil and criminal actions, subject to certain limitations. Ohio Civil Rules allow for deposition to be videotaped and entered into evidence. Ohio Criminal Rule 15 provides for depositions in criminal cases to be taken in the manner provided by in the civil rules. Videotaped testimony is admissible in civil proceedings, not generally in criminal proceedings. Videotaped depositions may be admissible with judge's discretion in editing objectionable material. For civil, admission of videotaped testimony must be accompanied by a transcript. For criminal, only child victims or child material witnesses under specific circumstances. Videotaped testimony is admissible in both civil and criminal proceedings. Videotaped depositions are admissible, as long as no objections are made prior to trial. (Civil actions)

Yes
No. State has access to facilities through its Cooperative Extension Service network and the community college system. Yes
Yes
No. State has access through the Oklahoma Bar Association. In the process of obtaining.
No
No
No

One-party consent One-party consent
One-party consent One-party consent
One-party consent One-party consent Two-party consent
One-party consent One-party consent

Telemarketing Fraud: It's A Crime! Page 57

South Dakota Tennessee Texas Utah
Vermont Virginia Washington West Virginia Wisconsin Wyoming

Videotaped testimony is generally admissible in civil proceedings, but not in criminal proceedings. Videotaped depositions are admissible, subject to relevancy and authentication. Videotaped depositions are admissible, as long as they meet authenticity and hearsay requirements. Videotaped testimony is inadmissible in civil proceedings. In criminal proceedings, only allowed in child molestation cases. Videotaped testimony is generally inadmissible in both civil and criminal proceedings. Videotaped depositions may be taken pursuant to Va.Code. Ann. 8.01412.7 et seq. Videotaped depositions are admissible if witness is unavailable. (Civil actions) Videotaped depositions are not admissible unless all parties stipulate.
Videotaped testimony is fully admissible if all parties and presiding judge agree. Wis.Stat. 885-40-885.47 Videotaped testimony is admissible if witness is unavailable in both civil and criminal proceedings.

Yes
No
Yes
Yes
No. State has access to other videoconferencing for a fee. No. State has access to other videoconferencing facilities for a fee. No
No. State has access to videoconferencing facilities for a fee. No. State has access to other videoconferencing facility for a fee. Yes, for a fee.

One-party consent One-party consent One-party consent One-party consent
One-party consent One-party consent Two-party consent One-party consent One-party consent One-party consent

Data compiled by the National Association of Attorney's General (NAAG). Last updated 2-1-2001

Telemarketing Fraud: It's A Crime! Page 58

SAMPLE SUBPOENA
STATE OF GEORGIA
ADMINISTRATOR FAIR BUSINESS PRACTICES ACT
GOVERNOR'S OFFICE OF CONSUMER AFFAIRS 2 M. L. KING, JR. DRIVE, SUITE 356-E ATLANTA, GEORGIA 30334 404-656-1762 -- FAX 404-463-8212
OCA-2002-SPXX Re: 010306-99T
TO: BellSouth Corporation Custodian of Records 1960 West Exchange Place, Suite 165 Tucker, Georgia 30083
GREETINGS:
You are hereby COMMANDED and DIRECTED to, laying all other business aside, produce: all items described on Attachment "A" which is attached to and incorporated into this subpoena, to me or my designee, John S. Smith, III, at the Governor's Office of Consumer Affairs, 2 Martin Luther King, Jr. Drive, Suite 356-East Tower, Atlanta, Georgia 30334, on the 24th day of February, 2002. Production, prior to the specified date, may be made by certified mail to the above address, Attention: Deputy Director of Investigations Monty D. Mohr.
This subpoena pertains to a confidential criminal investigation being conducted on behalf of the Administrator of the Fair Business Practices Act, State of Georgia, pursuant to O.C.G.A. 10-1-393.5, under and by virtue of the authority of the Georgia Fair Business Practices Act of 1975, O.C.G.A. 10-1-390, et seq., and is being issued pursuant to the provision of O.C.G.A. 10-1-404. You are, therefore, requested not to disclose the existence of this subpoena. In case of refusal to obey a subpoena issued pursuant to O.C.G.A. 10-1404 to any person, a superior court of appropriate jurisdiction, upon application by the Administrator, may issue to the person an order compelling compliance. Continued failure to obey a subpoena may be punished by the court as contempt of court.
HEREIN FAIL NOT UNDER PENALTY OF LAW.
This the 10th day of February, 2002.
__________________________________
Barry W. Reid, Administrator Fair Business Practices Act of 1975
Telemarketing Fraud: It's A Crime! Page 59

SAMPLE SUBPOENA ATTACHMENT "A"
Re: 010306-99T
DEFINITIONS
a) The term "documents" as used herein shall include, but is not limited to all written material, however produced or reproduced and wherever located, that is owned, possessed, controlled, in the custody of or accessible to your company, constructively or otherwise, and whether prepared or received by your company, and shall include but is not limited to letters, correspondence, certificates, newspapers, logs, journals, accounts, schedules, contracts, prospectuses, marketing and advertising materials, agreements, drafts, reports, memoranda (including memoranda or notes of telephone conversations, other conversations, discussions, meetings, or conferences), telegrams, telexes, photographs, books transcripts, records, pamphlets, office communications (inter-office and intra-office), bulletins, manuals, minutes, marketing studies, statements, notebooks, forms, notices, tabulations, analysis, studies, microfilms, voice recordings, videotapes, tables or statistical or other data, computer stored data (e-mail, etc.), notes or other tangible items, including copies if the copy bears any other marking or notation of any kind; and each such document shall include all attachments, enclosures, and materials underlying, supporting or used in the preparation of any such document, and other documents that relate or refer to each such document.
b) The term "person" as used herein shall mean a natural person, corporation, trust, partnership, incorporated or unincorporated association or any other legal entity.
DOCUMENTS AND INFORMATION REQUESTED
Pursuant to the provisions of the Official Code of Georgia Annotated (O.C.G.A.) 10-1-404, please furnish the following FOR EACH TELEPHONE NUMBER ESTABLISHED ON OR AFTER JULY 1, 2001 WITH THE SUBSCRIBER END TERMINATING AT 1234 MEADOWLAKE CHASE, SOUTHTOWN, GEORGIA 30088:
1) Name(s) and address(es) of subscriber(s); 2) Name, address, and telephone number of any person(s) responsible for paying the telephone bill,
and/or who has paid telephone bills on behalf of the subscriber(s), if different from the subscriber(s); 3) The date the account for each number was initially opened; 4) Credit reference information provided by the subscriber(s) to open the account; 5) Itemized list of services and equipment installed for use of this number (such as: call forwarding,
messaging, voice mail, caller ID, roll over lines, T-1 lines, channel banks, etc.); 6) Text version of any customer contacts or complaints logged referencing this number; 7) Copies of monthly billing statements for the most recent six-month period; 8) Toll and toll free call detail for all calls made to or from each number within the most recent six-
month billing period; and, 9) A complete list of all current telephone numbers located at the above listed address. The preferred method of return of call detail information pursuant to this order is electronically on a computer readable 3 1/2-inch diskette(s) or CD ROM (S) in ASCII format, tab delimited or comma delimited. Or, if you are unable to provide the information electronically, as printed-paper documents.
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LIST OF TOLL FREE SERVICE PROVIDERS

Company Name 800 Ideas.com, Inc. ABCO Communications Inc. ACC Business Access Point, Inc. Accessline Communications Corporation Adeptel, Inc. Advanced Routing Technologies Advanced Tel. Inc. Advanced Telecom Services Advanced Telecommunications Network Inc. Alascom Inc. All Star Telecom Alliance Group Services, Inc. Allstate Communications Inc. Amax Two American Long Lines Ameritech Services Inc. Ameritel AmeriVision Communications/LifelineComm Amrigon Inc. AT&T Canada Long Distance Service AT&T Canada Long Distance Service/AZC01 AT&T-ATX** AT&T-ATX03 ATL Communcations Atlantic Connections ATS Communications Corp. ATX Telecommunications Services Bay Star Communications Inc. Beehive Telephone Inc. Bell Atlantic Bell Canada BellSouth Long Distance BellSouth Telecommunications Bestline BH Telecom Birch Telecom Inc Blink Data Corp Broadview Networks Broadwing Communications Inc-DCT01 Broadwing Communications-CXT01

Phone Number
858-565-4000 707-584-1500 716-987-3069 919-851-4838 866-865-5463 407-682-3022 732-356-6999 225-621-4167 610-688-6000 800-555-4286 907-264-7340 805-963-1619 203-845-9600 818-598-1570 208-475-6021 215-442-9700 312-424-2290 800-799-7000 703-761-7360 248-332-2300 800-575-1010 800-575-1010 800-222-0400 800-222-0400 510-217-5784 603-433-7200 212-425-8800 610-668-3000 800-229-7827 801-250-6639 212-338-7666 613-567-0119 800-251-8149 404-321-2859 800-365-6030 310-273-9023 316-343-7071 866-254-6532 315-422-9567 800-422-1199 512-742-7894

Telemarketing Fraud: It's A Crime! Page 61

Broadwing Communications-DBC01 Broadwing Communications-IXC01 Broadwing Communications-IZC01 Business Telecom Inc. Buyers Online.com Cable & Wireless Cable and Wireless USA-CWC02 Cablevision Lightpath Cais, Inc. Call Management Systems Inc Call Sciences, Inc. Capital Telecommunications Inc. Caprock Communications Capsule Communications Carrier Network Services CGI Long Distance Services Cincinnati Bell Any Distance Citizens Communications Commonwealth Long Distance CO. Communication Management Services Communications Options Inc CommuniGroup Inc. Connect America Inc. Cooperative Communications Covista, Inc. CTC Long Distance Service CYTEL Direct Guidance, Inc. DSI Technology DTI Eastern Tel Long Distance Service Inc. Eclipse Telecommunications Inc.-BUE01 Efficy Group Eglobe Electric Lightwave-ELI Excel Communications Canada Excel Telecommunications Inc. Federal Transtel Inc. First Communications Florida Digital Network Focal Communications Fonorola Inc Fresh Start Communications Full Service Network Full Spectrum Telecommunications, Inc. Fusion Telecom Galaxy Long Distance GCI Communication Corp.

513-369-2100 512-742-7885 512-742-7894 919-863-7253 800-363-6177 703-287-6109 800-486-8686 516-803-5760 202-898-1992 800-647-3425 732-767-5407 717-848-8800 888-702-7970 215-633-9400 954-453-7752 913-722-6005 513-361-1902 469-365-4393 570-270-1911 858-565-2800 419-224-2006 601-353-9118 630-505-0005 973-759-8100 800-805-9000 704-722-2072 281-591-3000 954-261-9436 310-845-7575 507-452-2303 215-628-4111 800-349-1111 888-233-3429 303-512-1455 360-816-3000 514-940-2978 972-588-4739 205-271-7596 330-762-4900 407-835-0483 888-362-2522 416-753-6541 602-999-2929 412-745-9000 727-524-3900 877-639-0816 212-835-2685 907-265-5654

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World Crossing World Crossing/ALF01 World Crossing/ESM01 World Crossing/RC*** World Crossing/SDR01 World Crossing/SRC01 World Crossing/WCU01 World Tone Communications Worldcom, Inc. GST - TELECOM GST Call America GTE Network Services GTS Prepaid, Inc. IDS Long Distance IDT Corporation ILD Telecommunications, Inc. I-Link Communications Inc Illuminet Information & Telephone Services Inc. Infotel Communications LLC. Integrated TeleServices, Inc. Intermedia Communications/EMI Intermedia Communications-LS Intermedia Communications-NF Intermedia Communications-PH Intermedia Communications-UR International Telecom LTD Ionex communications, inc - FST01 Ionex Telecommunications, inc.-FEL01 Ionex Telecommunications, inc.-TTH01 Iowa Communications Network Iowa Network Services IT&E Overseas ITC Deltacom J.D. Services Lambda Operations LDDS Metromedia (EDS) LDMI Long Distance Legacy Long Distance Legends Communications Level 3 Communications LLC. Lightship Telecom, LLC. Lightyear Logix Communications Long Distance Management Long Distance Partnership Lynx Telecom LLC. MCI Worldcom

800-783-2020 800-783-2020 800-783-2020 800-783-2020 920-405-4744 248-433-5183 248-433-5183 540-727-0663 800-589-1531 805-541-6316 805-547-6443 972-615-8799 856-797-3434 305-620-1620 201-928-4320 678-309-1516 800-393-8593 360-493-6100 330-252-2471 218-825-7880 559-447-2100 315-431-8797 318-323-8600 407-949-4318 407-949-4318 407-949-4318 206-479-2878 800-783-9702 605-782-2900 605-782-2843 515-323-4650 515-830-0386 671-646-8886 205-931-1333 801-972-4090 787-717-9514 918-590-8336 313-664-2321 562-491-1991 888-308-8583 303-326-3085 603-314-2000 800-393-7300 713-865-8525 812-456-1241 802-860-0378 801-936-2264 210-255-2473

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MCI Worldcom MCI WorldCom McLeod USA McLeod USA/West Mcleod USA/Access Long Distance MetTel Midwestern Tel Mirage Marketing Nation Wide 800.com National Comtel Network Inc. Nec Lec, LLC Net2000 Communications Net-tel Corporation NetTronix Inc. Network International LLC Network Operator Services Network Operator Services-NKT01 Network Plus Inc. Network Telecom Inc. Network Telephone Services Inc. New South Communications Nextlink Interactive Norlight Telecommunications Inc. North American Telephone Network Northwest Nevada Telco NOS Communications NTS Communications, Inc.-ANT01 NTS Communications Inc One Call Communications Inc. OneStar Long Distance Pac West Telecomm Inc. Pacific Bell Pacific Centrex Services PaeTec Communications, Inc./PKC01 PaeTec Communications, Inc./PKC02 PaeTec Communications, Inc./PKC03 PaeTec Communications/PKC04 Phoenix Network/Qwest Communications Phone USA, Inc. Pilgrim Telephone Inc. PNG Telecommunications PointOne Telecom POPP Telecom Powercom Premiere Network Services, Inc. PrimeTel Communications Inc. Primus/Trescom Prism Resp Org, LLC

210-255-2473 800-624-6762 800-300-4410 800-574-5400 866-752-8726 212-607-2042 314-822-0011 206-505-5566 877-977-9191 818-881-7900 877-784-3410 866-800-6855 202-295-6605 801-990-3222 240-631-3710 903-323-4808 903-323-4808 781-473-3975 626-331-6600 818-992-4300 864-672-5048 503-972-6833 262-792-7914 404-255-9999 702-333-3600 702-547-8793 806-797-0687 ext. 4094 806-762-4565 317-843-1300 800-482-0000 800-399-1234 925-823-2100 818-623-2300 716-340-2714 856-751-0757 561-416-5600 949-753-5474 877-375-4448 800-390-0779 617-225-7000 800-860-9495 512-381-8100 612-797-7926 920-887-3148 888-739-4734 888-774-6383 954-846-1347 202-263-7971

Telemarketing Fraud: It's A Crime! Page 64

PT-1 Communications Puerto Rico Telephone Co. Quebec Telephone Questar InfoComm Inc QWEST IT Qwest/LCI International Qwest/US West Radiant Telecom, Inc. RCC Atlantic RCC Network Inc Regal Results, Inc. Rolinium RSL COM U.S.A. SBC Long Distance Scherers Communications Group Inc. Selective Media Signal One Inc. Siouxland Telephone Company STC/MTI Slater Routing SMS SMS/800 - Business Rep SMS/800 Data Center SMS/800 Galileo SMS/800 Help Desk/TEST SMS/800 Site Support Sol Friedman Communications Southern New England Telephone Southern States Telephone, Inc. Southwestern Bell Corp. Sprint Communications Co. L.P. Starlink Communications Startel State Farm Insurance Companies Suntel Switch 2000 Inc. T.A.P.S. TCG Teleport Communications Group TecNet, Inc. TelAmerica Telcom Affiliates Inc. Tele Corp. Telefonica Larga Distancia Teleglobe Business Solutions Teleglobe International Corp. Telepacific Communications Telephone Express Telephone Service Bureau LLC TeleQuest USA, Inc

718-939-9000 787-792-0910 418-722-4116 801-324-1924 303-672-1090 614-798-6331 602-351-5660 305-914-3454 802-654-5114 320-808-2135 818-501-4486 718-609-9700 800-447-2111 262-938-5646 614-841-2421 415-543-9033 904-247-9900 605-232-3457 801-299-1551 888-767-3300 888-767-3300 888-767-3300 888-767-3300 888-767-3300 888-767-3300 415-267-6155 860-422-6264 407-313-7040 800-234-2355 816-854-3081 800-350-6419 409-821-2830 309-766-1220 800-785-1355 507-385-2440 254-754-1146 303-749-1020 561-994-6222 225-387-4438 970-226-2999 561-687-9833 787-749-5800 ext. 5844 800-871-0999 541-868-7354 800-487-8722 972-274-7850 800-647-3425 816-842-5381

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Telera Telergy Telescan, Inc. TeleServices Inc. Telstar Communications Telvue Corporation The Business Edge Group The Phone Company Toll-Less.com Total Axcess.Com, Inc. Touch America Transaction Network Services Transtel Communications TSR Wireless LLC. TTE of Charleston Twister Communications TXU Communications Telecom U.S. South Communications Union Telephone Company US LEC US Link Long Distance US Xchange USC Telecom-JNT01 USC Telecom-LNK01 Valu-Line of Longview Vanity International VarTec Telecom Inc. VD Corporation Verizon (LEC) Verizon Communications-BELLA Verizon Select Services Viatel, Inc. Vision Communication Services, Inc. Vocall Communications Corporation W.E.P.S. Inc. Wake Up Inc c/o Air One Inc. Warning Communications Inc. WesTel Inc. Western Int'l Media Corp Whos Calling.com Corp. Williams Communication Winstar Telecommunications Inc. Word of Mouth Communications World Access, Inc. World Wide Telegraph Worldcom/MCI Worldcom Worldcom/MCI Worldcom-MCW22 WorldXChange Communications

408-626-6891 888-205-3386 423-282-5043 888-224-1370 505-527-3600 609-273-8888 732-846-7302 215-862-1363 203-975-7502 510-286-8700 720-493-2821 703-453-8352 801-521-0200 888-220-4880 803-744-0150 409-521-7583 936-633-6617 770-240-6160 307-782-6131 800-978-7532 218-568-4000 888-493-7300 800-599-8456 800-599-8456 903-295-6300 858-792-5000 972-274-7850 775-321-8246 212-338-7666 972-874-4444 972-874-4444 800-775-9900 903-758-2912 908-301-0090 516-378-9116 404-365-0800 602-230-0420 512-480-5500 801-238-2275 206-441-7256 877-864-2309 248-204-5132 847-272-7737 708-449-7000 877-272-2576 800-894-5835 800-894-5835 800-576-7775

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XO Communications - NLS** XO Communications-PEN01 XO Communications-VWC01 Xtel Communications Z-Tel Network Services Inc.

800-999-6083 888-288-2580 888-288-2580 856-596-4000 813-262-3226

Check http://www.sms800.com/pub_index.html for updated listings.

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CREDIT CARD TRANSACTIONS
History of Bankcards
The earliest form of the bankcard was "Charg-It", a system of credit developed by John Biggins in 1946, which allowed customers to charge their local retail purchases. The merchant then deposited the charges at Biggins' bank, and the bank reimbursed the merchant for the sale and collected payment from the customer. This system helped introduce the first bank credit card, which was circulated by Franklin National Bank in Long Island, New York in 1951.
Once an application was submitted for credit worthiness a card was issued. Merchants copied information from the card onto a sales slip and called for an approval for each transaction over a specified limit. The bank would then credit the merchant's account for the sale minus a discount to cover the cost for providing the loan.
By 1959, many financial institutions had begun credit programs. Simultaneously card issuers were offering the added services of revolving credit. This gave the cardholder the choice to either pay off their balance or maintain a balance and pay a finance charge.
In 1960, Bank of America, introduced its own bankcard, called BankAmericard, and began licensing regional financial institutions to act as the BankAmericard bank for their region. BankAmericard is now what we know currently as Visa.
Other banks began looking for other ways to compete, in 1966, 14 banks formed Interbank, a new association with the ability to exchange information on credit card transactions. The following year, four California banks opened its memberships to other financial institutions in the Western U.S. (Western States Bankcard Association or WSBA). The product was known as MasterCharge. They have purchased the right to use this name from First National Bank of Louisville (currently known as National City Bank of Kentucky).
The WSBA licensed Interbank to use the MasterCharge name and Logo. In the late 1960's, numerous financial institutions became MasterCharge members to compete with BankAmericard.
MasterCard and Visa
MasterCard and Visa are worldwide payment service organizations composed of Member institutions. They do not:
Issue credit cards Create policies for solicitation of new cardholders or merchants Establish criteria for evaluating applicants
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Set credit limits offered to cardholders Determine procedures for billing customers
MasterCard and Visa are managers of their respective brand. As such, they:
Create advertising and promotion programs to support their brand Develop new products Conduct clearing and settlement processing of transactions (Interchange) Set and enforce rules and regulations governing their bankcards, such as
operational procedures, interchange procedures, and graphic design approval of their cards.
Upon becoming a member of MC/Visa, a bank is licensed to issue cards to its members. These banks are also required to provide cash advances on MC/Visa cards at their teller windows. As a Member, banks are issued a Bank Identification Number (BIN) and pay membership dues and assessments to fund Card Associations.
The Acquirer
The acquirer is a member of MasterCard and Visa, and is contracted with merchants to accept merchant sales drafts, provide authorization terminals, instructions, and support, and handle the processing of credit card transactions. The key responsibilities of the acquirer are:
Sales Investigation Procedures Pricing Merchant Acceptance Support Services Risk Management
The acquirer usually charges a fee or "discount rate" for handling the transactions. The acquirer is licensed by MC/Visa and agrees to follow the association rules and regulations. Some financial institutions are both issuers and acquirers. MC/Visa both require that the merchant be financially responsible and of good repute. The merchant has a written agreement with the acquirer to accept the bankcards as payment and to abide by the terms of the agreement.
The Issuer
The issuer is responsible for the cardholder account program, which encompasses nearly all aspects of cardholder account activities ranging from acquiring new customers to billing current ones. The Issuer's responsibilities include:
Acquisition and marketing of new accounts
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Processing application; establishing credit limits and policies Overseeing design, manufacturing, and embossing of inventory cards Handling of issuing and reissuing of cards Overseeing PIN Numbers Maintaining authorization file Providing customer service Processing payments and handling settlement and income Interchange Establishing collections operations.
Managing a credit card program is expensive. Smaller banks can issue cards without becoming an issuing member by being an agent. The issuer usually keeps most of the income from the cardholder account: the agent receives a small compensation for providing the application. This allows small banks to retain customers who want a credit card program.
Interchange
MC/Visa are at the center of the transaction process, maintaining the flow of funds between issuers and acquirers. Clearing refers to the exchange of financial information. Settlement refers to the exchange of the actual funds for the transaction and the associated fees.
Clearing and Settlement Occur Simultaneously
The acquirer credits the merchant's deposit account for the dollar amount of the sale (less the merchant discount). The acquirer sends the transaction, through a data transport network, to INET (for MasterCard transactions) or Base II (for Visa transactions). A financial institution can be both an issuer and an acquirer.
MasterCard and Visa send the transaction to the issuer overnight, credits the acquirer and debits the issuer for the transaction. In essence, the issuer pays the acquirer for the transaction, via the MasterCard or Visa interchange system. Interchange makes it possible for the issuing banks and acquiring banks to exchange information, transactions and money on a standardized basis. During Interchange, fees are deducted by the issuer from the transaction amount and the issuer pays the net amount to the acquirer. These are called interchange fees.
MasterCard and Visa each own and operate their own international processing system. These systems connect thousands of banks around the world. Member Institutions use these networks to transmit information about bankcard transactions.
Transaction Process Overview
The cardholder purchases goods or services from the merchant. The merchant transmits the transaction to the acquirer.
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The acquirer then submits the ticket to the issuer for payment, via the MasterCard or Visa clearing and settlement systems.
The acquirer credits the merchant for deposits (net of chargebacks, returns, and agreed to fees -- the merchant discount).
The issuer funds its cardholders' purchases (net of chargebacks, returns, and agreed to fees).
The issuer bills the cardholder. Finally, the cardholder repays the issuer for the goods or services
originally purchased from the merchant. The issuer, via the MasterCard or Visa clearing and settlement system, has already paid the acquirer transaction amount, less the interchange fee.
From the cardholder's point of view, it seems as if he or she is paying the issuer for the goods or services originally purchased from the merchant. In fact, the cardholder is actually repaying a loan from the issuer. MasterCard's data processing network is called Banknet. Banknet handles MasterCard's Authorization System. The Banknet settlement system is INET. Visa's data transport network is called VisaNet. The VisaNet authorization system is BASE I. The VisaNet settlement system is BASE II. See the chart titled "Transaction Flow for Merchant" for a graphic depiction of the process.
Retrievals
Functions
Storage of paper (hardcopy) sales drafts and film cartridges Retrieval of items in the hardcopy retrieval and chargeback process Request Fulfillment
Sales Draft Storage
Both merchants and acquirer store hardcopy sales drafts or point of sale (POS) tape. Acquirers and merchants typically hold drafts on-site for 3 years, and hold them off-site for 7 years.
Sales Draft Retrieval
Retrieval areas receive requests from issuing banks. MC/Visa regulations stipulate that a request must be fulfilled within 30 days from the date of receipt. Any request not fulfilled within that time frame can be charged back to the merchant.
Request Fulfillment
Request for all hardcopy sales drafts are fulfilled as quickly as possible for disbursement to the issuing bank. MC requires all retrieval requests be fulfilled electronically through the MasterCom electronic image process system, while
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Visa will allow requests to be fulfilled through the mail along with Visa's Copy Request Manager System.
Chargebacks and Collections
When an issuer disputes a transaction (either at the request of the cardholder or for reasons of its own), the matter is handled through a chargeback or compliance case.
In a chargeback, the issuer returns a transaction to the acquirer, and the acquirer returns the payment previously made in interchange. Chargebacks result either from cardholder disputes or from rules violations by the merchant or acquirer; they help enforce operating rules and correct transaction errors. The issuer always initiates the initial, or first, chargeback. It can result from the issuer finding an error in the transaction, or it may result from a cardholder complaint. MasterCard and Visa have developed standard procedures and time frames for submitting and processing chargebacks.
The Chargeback Process
The chargeback process begins when an issuer, on its own behalf or in defense of a cardholder, returns a presentment from the acquirer. Presentment is the stage of interchange when the acquirer, via the MasterCard/Visa system, presents the issuer with the transaction information. The issuer is automatically charged for the transaction during settlement, which takes place at the same time as clearing. In other words, the issuer receives information about a transaction, for which it has already paid, and realizes that the transaction may be invalid. At this point, the issuer wishes to charge the transaction back to the acquirer.
Functions of the Acquirers
Determine legitimacy of Chargebacks presented by issuers Represent all "representable" items on behalf of our merchants Handle Arbitration Chargebacks if the Issuer disputes the representment Forward paperwork to the appropriate area for crediting/debiting of
accounts
Collection Functions
Acceptance of incoming collections cases from Issuers Acceptance of outgoing collection cases from merchants Submit Arbitration/Compliance issues to Card Associations Reversal of inaccurate merchant transactions
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Transaction Flow for Merchant Credit Card Purchase
1. Customer requests purchase. 2. Credit card purchase is routed for authorization. 3. Credit card purchase is authorized. 4. Merchant transmits batch of authorized transactions. 5. Settlement processor submits transactions into Interchange
with request to pay. 6. Card issuer funds its cardholders' purchases (net
chargebacks, returns and fees). 7. Acquiring bank credits the merchant for deposits (net
chargebacks, returns and fees). 8. Merchant receives summary statement of account activity. 9. Merchant is billed for acquirer services.
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SAMPLE BANK DEMAND LETTER
< YOUR AGENCY LETTERHEAD>
January 17, 2002
Custodian of Records ABC Bank and Trust 2255 East Meadowbrook Road Southtown, Georgia 30088
Greetings:
The <Southtown Police Department> is charged with the duty and authority to investigate and prosecute subject(s) engaged in violations of the laws of the state of Georgia. We are currently conducting a criminal investigation into the activity of subject(s) allegedly involved in prohibited telemarketing acts. To further our investigation, it is necessary for us to obtain bank records from account number 123456789 in the name Scams "R" Us and / or Anthony T. Telemarketer, which potentially evidences the fraud.
Pursuant to the provisions of O.C.G.A. 7-1-360(a)(3), please produce the following by February 1, 2002: 1) Copies of all items from September 1, 2001 through January 17, 2002, including but not limited to: all deposits, all debits, all credit card transactions, all checks, all wire transfers, all money orders, all cashiers checks, all offsets and all other transactions; 2) Copies of monthly periodic statements from July 1, 2001 through January 2002; 3) Copies of all signature cards or digitized signatures for each subject with access to the account; 4) Copies of all account applications and any other material available in support of an account application for the account, including the name, address, telephone number, social security number, and other personal information of the account holder(s); 5) Copies of any other material kept in the normal course of business for the account specified above which evidences the use of the account including, but not limited to, customer service comment records, currency transaction reports (CTR) and suspicious transaction reports (STR); 6) Copies of the identification presented when the account was opened; 7) The current balance of the account; 8) A list of any other accounts held by or accessible to Anthony T. Telemarketer, SSN 012-34-5678 with account number and balance; and, 9) A list of any safety deposit boxes accessible to Anthony T. Telemarketer with box number and the address of the branch location.
Pursuant to O.C.G.A. 7-1-360, "Notification of the depositor or other customer...shall not be made without the consent of the requesting authority." This prohibition applies to all officers, agents, or employees of your financial institution. Any such notification could seriously impair this investigation.
Please contact Detective Goe A. Gettum at (706) 222-4444 should you have additional questions concerning this request or to arrange limitations on the documents that you feel may not be germane to this investigation. If the cost of fulfilling the above request will exceed $100.00, please contact me first for authorization.
Sincerely,
Detective Goe Gettum
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SAMPLE MINIMIZATION TRAINING HANDOUT
The Southtown Police Department in conjunction with the Frakesburg County District Attorney's Office is conducting a confidential criminal investigation into the alleged conduct of the owners and employees of a telemarketing fraud scam originating from within our area.
Southtown PD has developed information indicating this fraud operation is responsible for the theft of up to $10,000 each day, primarily from senior citizens located across the US. The Frakesburg DA has determined that oral, wire or electronic intercepts (commonly known as wiretaps) are necessary to uncover the full scope of the fraudulent activity and to obtain the evidence necessary to prosecute all those responsible.
The District Attorney has applied to the court for orders authorizing the interception, overhearing, and recording of telephone conversations that contain evidence of specific criminal conduct. These telephone conversations are expected to be between subjects conducting fraudulent telemarketing solicitations and their intended victims and between the owners, managers and employees in furtherance of the scheme. Additional conversations authorized for interception comprise those calls made to facilitate the fraud scam, including conversations concerning the source and distribution of fraudulently obtained assets. The details of the targeted criminal organization, subjects named in the court order to be intercepted, and the nature of the calls to be intercepted will be covered in the case briefing.
Court Authorized Intercepts
There are many laws that govern when and how a law enforcement agency may monitor a telephone conversation. For instance: our federal and state legislatures and courts (through case decisions) have determined who may make an application to obtain a court order to intercept telephone calls and for which crimes. These laws and decisions also distinguish or determine the maximum time an order can remain in effect, whom may listen or "overhear" the criminal conversations, require "minimization" training for monitors, what happens if you "publish" what you hear, how the "tapes" are sealed and even who later has access to the information obtained.
The interception being conducted is allowed by a court order termed an "Investigation Warrant". In Georgia the laws governing oral, wire and electronic intercepts are codified in the Official code of Georgia Annotated (O.C.G.A.) beginning at O.C.G.A. 16-11-60. In the federal system the law is found generally within Chapter 119 of Title 18 of the United States Code (U.S.C.). These laws will be complied with at all times. Many of the legal requirements apply only to the prosecutor and case investigator (such as sealing the original tapes for the court). However, failure to comply with the law, on anyone's part, may render
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any evidence gathered inadmissible. Keep in mind that third party interception of telephone conversations absent court authorization is a felony.
The requirements necessarily placed on monitors will be discussed further during the case briefing and minimization training. Training will also be provided in how to use the interception equipment.
Minimization
Monitors must "minimize" the overhearing of conversations not otherwise subject to interception (i.e. allowed by the investigation warrant). The conversations that are not considered part of the criminal activity are outside of the scope of the warrant and must be "minimally" intercepted.
Minimization is not normally applicable to calls under two minutes in length. There are several cases, which have helped to establish the "two-minute rule." And, generally, the courts when determining compliance with the requirement to minimize intercepted conversations will not consider calls about two minutes in length or less. There is no "per se" two-minute rule however, only court decisions that recognize that it is difficult to determine the direction and content of a call in the initial couple of minutes. We can minimize overhearing the unwarranted conversations through a technique called "spot monitoring."
Spot Monitoring
Monitoring investigators are allowed to listen for an appropriate amount of time to determine if the conversation is within the scope of the warrant. For example: A call is intercepted and the investigator begins to overhear the conversation. If the conversation contains criminal conduct as described in the court order (or other serious criminal conduct for which a wiretap order could be obtained) the investigator will continuously listen and record. However, if the investigator can easily discern that the conversation is not criminal in nature and otherwise privileged (such as a conversation with a doctor about a medical condition) then the investigator will stop monitoring. Finally, if within approximately two minutes the monitoring investigator hasn't determined the conversation is criminal in nature, the investigator will stop monitoring for a short period of time. After which the investigator will periodically listen to determine if the subject of the conversation has changed to criminal conduct as specified in the investigation warrant. If the topic of the conversation has changed to one discussing criminal conduct the investigator will continue to overhear and record. If not, the investigator will again minimize that portion of the call. This process continues throughout the entire time the conversation is being conducted and for each subsequent conversation.
In some systems the overheard conversation is recorded on a bank of tape recorders (usually three) and the investigator must manually complete a "minimization log." The log would consist of the time each monitored conversation and the overhearing began usually followed by an "up arrow"
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indicating the investigator was overhearing with a brief description of the nature of the call. The time would again be recorded with a "down arrow" each time the investigator stopped overhearing the call during each period of minimization. A basic example of a minimization log without the narrative follows:

Minimization log

14:23:35 K 14:25:05 L 14:25:35 K 14:26:07 L 14:26:28 K 14:27:11 L

If you are using computer based interception equipment the conversations are recorded digitally. Every time an investigator begins overhearing and recording a conversation the clock time is automatically logged. The computer also automatically logs the time whenever the investigator minimizes a call during spot monitoring. The "minimization log" is required and is used to help demonstrate to the court that investigators are only monitoring criminal conduct conversations and minimizing the overhearing of all others.

Investigators shouldn't fixate on exact time limits during spot monitoring. You must make the determination of how long you should overhear each conversation. It may be better to monitor the initial conversation (always less than approximately two minutes) followed by cycling the equipment on and off every ten or twenty seconds to check for a change in the conversation depending upon the nature of the call you are recording. Or you may choose to cycle the equipment on and off once every minute. New monitors tend to "over minimize." So, remember your goal is to capture the complete criminal conversation. After a while you will develop your own pattern based upon the calls you hear.

Privileged Communications

There are distinct examples of otherwise privileged classes of communications recognized within our legal system. Several examples include: doctor-patient, husband-wife and client-attorney conversations. These same distinctions may not apply to conversations, which contain criminal conduct and are authorized for intercept by the Court's order. As stated in 18 USC 2517 (4) "No otherwise privileged wire, oral, or electronic communication intercepted in accordance with, or in violation of, the provisions of this chapter shall lose its privileged character." If it is a privileged communication it should be extensively minimized. However, if the parties are discussing criminal activity subject to this investigation, you should listen and record. Investigators will monitor all calls for criminal conduct as authorized by court order and continue to be circumspect during spot monitoring by intelligently minimizing all calls, regardless of the titles of the parties involved.

Telemarketing Fraud: It's A Crime! Page 77

Foreign Language Intercept If you do not understand the language spoken between the parties, record
the entire conversation. The conversation can be minimized from your recording "after-the-fact" by someone who speaks that language to determine if the conversation is pertinent. Other Offenses Not Specified in the Original Order
You should continue to monitor and record if you collaterally intercept and overhear conversations evidencing other serious criminal offenses. To be used, as evidence in Georgia, the conversation detailing the new offense must be one for which intercepts are already authorized by law. Notify the prosecutor and case investigator as soon as possible if you intercept conversations containing other criminal conduct. The prosecutor will present the information to the judge that authorized the original order at the appropriate time. Before allowing the use of overheard conversations of other serious crimes as evidence, the court must find that the intercept of the additional offense(s) was done in accordance with all laws governing interception. Publication
O.C.G.A. 16-11-64 (8) states: "Any publication of the information or evidence obtained under a warrant issued under this code section other than that necessary and essential to the preparation of and actual prosecution for the crime specified in the warrant shall be an unlawful invasion of privacy under this part and shall cause such evidence and information to be inadmissible in any criminal prosecution."
Keep in mind that you are part of a confidential criminal investigation. Its ok to tell your family where you are and what you're doing. However, do not speak about the specific details of the case being investigated or the contents of the conversations you have overheard to anyone not involved in the investigation or prosecution.
Telemarketing Fraud: It's A Crime! Page 78

SAMPLE SEARCH WARRANT AFFIDAVIT
Affidavit for a Frakesburg County Superior Court Search Warrant for the entire premises of 1234 Meadowlake Chase, Southtown, Georgia 30088. The location to be searched is within "The Meadowlakes" subdivision, and is adjacent to the intersection of Meadowlake Chase with Winding Creek Court. The location to be searched is a two-story, split-level, single family dwelling with built in two-car garage. The front of the location is beige stucco with white trim. The sides and rear are constructed of beige siding. The number 1234 is prominently displayed on a black mailbox at the entrance to the driveway. The property is currently under the custody and control of Anthony T. Telemarketer.
1.
Your Affiant is a sworn and certified peace officer within the state of Georgia and is currently employed in the Criminal Division of the Southtown Police Department as an investigator. Your Affiant has over sixteen years of experience as a police officer, including nine years as an investigator with the Frakesburg County or Southtown Police Departments. Your Affiant has attended the University of Georgia, Southtown Vocational Technical School, Police Technical School, Federal Law Enforcement Training Center and the Georgia Public Safety Training Center and currently holds both basic and intermediate POST certifications. Your Affiant has amassed over three thousand hours of advanced law enforcement related training, including training specific to the investigation of identity fraud, computer crimes, computer evidence recovery, financial crimes, and other white collar crime investigations. Your Affiant has written and executed numerous search warrants each of which has resulted in the seizure of evidence for disposition by the Court.
2.
Affiant is currently assigned to the investigation of a telemarketing operation known as World Marketing Group (WMG), located at 1234 Meadowlake Chase, Southtown, Georgia 30088.
3.
The investigation was initiated after the Carson County District Attorney's Office received a complaint from Ms. Virgie Jackson of Ocean Springs, Mississippi. During a subsequent interview by Affiant, Ms. Jackson stated that on September 10, 2001, she received a telephone call from "Mr. Will Kelly, Assistant Director of World Marketing Group." The caller stated that Ms. Jackson was the winner of a large sum of money from a sweepstakes she had entered in 1995. The caller informed Ms. Jackson that to receive her prize she had to pay $900 for certain fees. Ms. Jackson initially declined to pay the fees. Kelly then
Telemarketing Fraud: It's A Crime! Page 79

informed her that she could send "$414 now and the balance of the fees after she received her prize payment."
4.
Ms. Jackson was given instruction by Kelly to mail the fees to World Marketing Group, 44000 South Carson Drive, Suite E-51, Smerson, Georgia 30080. Ms. Jackson did as instructed by sending a personal check made out to World Marketing Group, at the address specified by Kelly. Ms. Jackson never received anything for the fees she paid. Ms. Jackson provided her original check to Affiant. The check is endorsed "World Marketing Group 3251633527" and stamped with an ABC Bank and Trust stamp. Ms. Jackson is 74 years old, born May 24, 1923.
5.
Affiant and Investigator Jay Johnson of the Carson County District Attorney's Office went to the address given by Kelly to Ms. Jackson and discovered the location to be a Mailbox Plus outlet. After investigators presented identification, a clerk stated that Box E-51 was issued to World Marketing Group in July of 2001, and that "Greg Telemarketer" is the box holder. The rent is paid on the box until March 2002. Affiant knows that U. S. Postal Regulations require that Postal Form 1583 be completed for delivery of mail to a private mail distribution facility such as Mailbox Plus. Form 1583 includes information such as a customer's physical home or business address. The clerk indicated that Telemarketer had not yet returned the required form.
6.
Affiant contacted Debbie Thomas of ABC Bank and Trust Area Administration concerning the account number listed on the back of Ms. Jackson's check. Ms. Thomas indicated the account is listed to Anthony T. Telemarketer d/b/a World Marketing Group, using the address of 1234 Meadowlake Chase, Southtown, Georgia 30088. Ms. Thomas provided copies of various documents used to open the account including: an application by Anthony Telemarketer for a business credit line for Scams "R" Us company d/b/a World Marketing Group, and a Frakesburg County Business Permit issued to World Marketing Group. The application and the business permit both list the business location as World Marketing Group, 1234 Meadowlake Chase, Southtown, Georgia 30088. The application specified that Telemarketer wanted further information on "PC Express It." Affiant knows that PC Express It is the ABC Bank and Trust version of computer software, used on a customer's home or business based computer for the purpose of computer based electronic access to accounts. Ms. Thomas added the account was opened in July 2001 with the deposit of a $799 check from Mr. Joe Bacon of Lafayette, Indiana, and that the account is open and active.
Telemarketing Fraud: It's A Crime! Page 80

7.
Affiant contacted Mr. Joe Bacon on December 10, 2001. Mr. Bacon stated that he received several telephone calls in July 2001 from a representative of World Marketing Group. Mr. Bacon was given the news that he was the winner of two $50,000 checks. In order to receive his prize, Mr. Bacon was required to send $799 to cover certain fees. He was given direction to send the fees via FedEx to World Marketing Group, at the address of the South Carson Drive mail drop. Mr. Bacon was told to expect the delivery of his two checks by courier in August. Later, he received another call from World Marketing Group requiring an additional $1,000 in fees. Mr. Bacon sent the additional fees via US Mail. Mr. Bacon added that he never received anything for his fees. Mr. Bacon is 71 years old, born July 22, 1926.
8.
Affiant contacted the Frakesburg County Revenue and Licensing Office, to inquire on the business permit of World Marketing Group. Affiant learned that permit number 1144567 was issued July 18, 2001 to Anthony Telemarketer. The business type is listed as "Medical Call Systems" and as a single proprietorship. The business address is listed as 1234 Meadowlake Chase, Southtown, Georgia 30088. The business name is World Marketing Group.
9.
A subpoena was issued to Bellsouth for telephone subscriber and call detail information for three telephone numbers given by Anthony Telemarketer to Georgia Power, ABC Bank and Trust and Mailbox Plus. Bellsouth provided the subscriber information for each number listed on December 27, 2001. The address of the subscriber for each telephone number is 1234 Meadowlake Chase, Southtown, Georgia 30088. Preliminary call detail from one of the telephone numbers indicated that 551 long distance toll calls were made from this address from July 1, 2001 to December 18, 2001. The account for this telephone number became active in June 2001. The calls are to states across the U. S. with the exception of Georgia. No toll calls are made to individuals within Georgia. Affiant knows from experience that telemarketers who operate illegally routinely will not contact victims from the state the organization operates from. This practice is designed to hinder investigation and subsequent prosecution.
10.
Affiant knows that using deception while engaged in telemarketing is a felony violation of state law known as of Prohibited Telemarketing Acts, O.C.G.A. 10-1-393.5; that False Statements by Telephone Solicitors is a violation of O.C.G.A. 16-9-54, and furthermore that Theft by Deception is a violation of O.C.G.A. 16-8-3.
Telemarketing Fraud: It's A Crime! Page 81

11.
Affiant knows from training, experience and from discussing telemarketing fraud operations with other Southtown investigators that telemarketing companies consistently exhibit similar methods of operation and usually maintain at least the following documentation in the normal course of business: lists of employees and phone names used, applications for employment on each employee, lists of bonuses, awards, gifts, services or promotional items, customer sales sheets, shipping documents and invoices, corporate bank records and account statements, employee commission sheets, copies of sales or promotional pitches, lead sheets, contact lists, ledgers, listings of telephone numbers, journals or logs of contacts, books, paid bills and receipts, income tax forms and records, general ledgers, sales tax books, accounts receivable ledgers, accounts receivable journals, records of employees, records of cash payments, financial records, financial statements, sales contracts, documentation regarding safety deposit boxes, documentation regarding alternate mail drop locations, entry/exit cards and keys for safety deposit box or boxes or storage areas where additional financial records are maintained or where incoming mail from victims is received at, records of assets in nominee names, notes, address books, records, receipts, address books, individual bank records and account statements, cashier's checks, money drafts, letters of credit, property deeds or lease agreements, credit card statements, travel records which contain information on the use or destination of funds obtained from victims, electronic debit forms, electronic transaction records, wired money transaction records, and alternate shippers records such as UPS, FedEx, Roadway Express and private individualized carriers. In addition to the aforementioned items, on premises phone equipment is often capable of returning calls to potential victims, additional suspects, and suppliers of services to telemarketers, by using *69, call return, speed dial, or by monitoring telephone numbers captured in caller ID systems. Answering systems using electronic or tape storage media are often present and used by telemarketers as contract or customer verification devices, and to answer telephone calls of complaining victims. Telemarketers who operate illegally also often use cloned telephones and prepaid telephone calling cards.
12.
Affiant has learned through investigation and contact with others also knowledgeable in telemarketing fraud that illegal telemarketing operations or "boiler rooms" often use computers and other electronic recording devices to store or contain business records and records evidencing telemarketing fraud operations. The subject of this investigation, Anthony Telemarketer, has requested computer software information from ABC Bank and Trust. As some or all of the items described above are or may be stored by means of written or printed documents, audio taped conversations, digitally taped files, or digitally stored information or computerized information services, the items and materials to be searched shall include information recorded by any means including central processing units, printers, terminals (keyboards and display screens), magnetic tape drives and magnetic discs and storage media, magnetic tapes either digital,
Telemarketing Fraud: It's A Crime! Page 82

analog or voice, magnetic discs, magneto-optical discs, optical discs, punched cards and paper tapes and computer print outs.
13.
Experience and training of your Affiant, in addition to talking with other law enforcement agents shows that conducting a search of a computer system, documenting the search, and making evidentiary copies of data storage devices is a lengthy process. It is necessary to determine that no security devices are in place, which could cause the destruction of evidence during the search. In some cases, it is even impossible to conduct the search without expert technical assistance.
14.
Since computer evidence is extremely vulnerable to tampering or destruction through error, electrical outages and other causes, removal of the system from the premises will assist in retrieving the records authorized for seizure, while avoiding accidental destruction of the records. It would be extremely difficult to secure the system on the premises during the entire period of the search. Even when computer information storage devices have purportedly been erased or deleted, they may still be retrievable through the use of commercially available utility programs or with expert technical assistance.
15.
The paragraphs above justify the removal of all computers, computer disk drives, computer or electronic storage devices, computer tape backups, computer disks, computer software and all documentation for that software from the premises into law enforcement custody to allow a complete analysis of the data in any computer and on any storage media.
16.
Affiant has probable cause to believe that evidence, as described above, is now contained within or on the curtilage of 1234 Meadowlake Chase, Southtown, Georgia 30088, in violation of the laws of the State of Georgia.
17.
No Knock Request
On December January 3, 2002, Affiant drove to 1234 Meadowlake Chase, Southtown, Georgia. Affiant observed three vehicles parked in the driveway: a 1994 Ford Aerostar van, Georgia license 331LEE registered to Angela Telemarketer, DOB 09-27-1962; a 1987 Jeep Cherokee, Georgia license 93739TE registered to Gee Telemarketer, DOB 01-11-1961; and a 1984 BMW 318i, Georgia license 6789QS registered to Tony Telemarketer, DOB 01-111961.
Telemarketing Fraud: It's A Crime! Page 83

18.
Affiant obtained the criminal history records of Anthony Telemarketer through the Georgia Crime Information Center (G.C.I.C.) and determined that criminal history exists for Telemarketer since 1989 in Georgia, Colorado and California. Some of these offenses include acts of violence such as: assault with firearms on person; exhibiting deadly weapons; willful discharge of firearms in a negligent manner; and exhibiting a deadly weapon not a firearm. Other charges include: fraud, forgery, burglary, perjury, carrying a loaded firearm in a public place, battery on person, illegal use of credit cards, and grand theft. Anthony Telemarketer's most recent recorded arrest occurred in Frakesburg County, Georgia on June 3, 2001 when he was charged with sodomy/aggravated sodomy.
19.
Anthony Telemarketer's extensive criminal record gives evidence to his total disrespect for law, and his propensity toward violence. Affiant has cause to believe that pre-announcing the presence of law enforcement officers prior to the execution of the search warrant will greatly enhance the danger to the officers present, to Anthony Telemarketer, and to the community at large. Affiant therefore requests that "no-knock" authority be authorized to lessen this danger.
20.
Wherefore, Affiant makes this Affidavit and prays for issuance of a Search Warrant in due form commanding that he along with any other law enforcement officer and with any proper and necessary assistance, for the search of the above described premises or the curtilage thereof, including any vehicle within the curtilage, and any person on the premise or curtilage reasonably believed to be engaged or connected with said illegal activity, for the said property heretofore described, and for the seizure and safe keeping thereof, either in daytime or in the nighttime, or on Sunday, as the exigencies of the occasion may demand, in order that evidence may be procured to be used in the prosecution of such person or persons who have unlawfully used, possessed, or are using or possessing the same in violation of the laws of the State of Georgia.
_________________________________ Detective Goe A. Gettum Criminal Investigation Division Southtown Police Department
Sworn to and subscribed before me this ____ day of January 2002.
_____________________________ Judge
Telemarketing Fraud: It's A Crime! Page 84

SAMPLE GENERAL INTERVIEW QUESTIONS World Marketing Group

Date: _________ Interviewing Officer / Agency: _______________________

Ask questions to establish positive identification. Require a photo ID if available. Take a photograph of the subject and run a check for any outstanding warrants before they leave. Use the back of this form if you need more space. Please provide the question number corresponding to each answer on the back. Ask any additional questions you deem appropriate.

Name:

Date of birth:

Social Security Number:

Address:

Any other place of employment:

Telephone number(s):

Height:

Weight:

Drivers license number and the state it was issued from:

1. How did you become involved with World Marketing Group?

2. Who hired you? 3. How are you paid? Who pays you? How much? 4. How long have you worked here? 5. What were you hired to do?
6. Who are the managers? 7. Who are the owners?
Telemarketing Fraud: It's A Crime! Page 85

8. Have you ever worked with any of the owners or managers of World Marketing Group anywhere else? (If yes, obtain name, place, type of business, and what was sold or pitched.)
9. What department do you work in (management, customer service, fronter, capper, re-verifier, collections etc.)?
10. Who furnishes you the leads (names of people to contact)?
11. What do you tell clients when you contact them? (What is the pitch?)
12. What are the phone names you use? 13. If the person you speak to has accepted the offer what do you do
next?
14. Have you ever been asked to do anything other than make outgoing calls?
15. Have you ever picked up mail or gone to the bank for World Marketing Group?
16. Who does fulfillment? 17. Is your car parked outside now? 18. What kind of car do you drive (color, license tag number and state)? 19. Do you have anything in your car from or related to World Marketing
Group? 20. What are the names and positions of the other telemarketers? Who
are the top moneymakers? 21. Who gives you directions, training, or assists you in closing a deal?
Telemarketing Fraud: It's A Crime! Page 86

CUSTOMARY ASSISTANCE AVAILABLE FROM THE UNITED STATES CUSTOMS SERVICE (USCS)
If your jurisdiction has issued an arrest or seizure warrant and has placed it on NCIC and the subject of the warrant is outside of the United States, the U.S. Customs Service can help you.
The USCS will detain the subject of your warrant if he or she attempts to enter the United States, either via its borders or through an international airport. Once the USCS has detained the subject, it will contact your office. Once your office verifies that the warrant is valid and that you wish the subject to be held, the USCS will contact the state enforcement agency where your subject is detained and request that it detain the subject until you can pick him or her up.
Your jurisdiction will incur the cost of your subject's incarceration until you arrive to transport him or her to your jurisdiction. In addition, your jurisdiction will incur the cost of transporting the subject from where he or she is held to your jurisdiction.
Contact the USCS' National Law Enforcement Communications Center if you have questions about this process. The Center's number is 1-800-973-2867. If you are seeking additional information about the USCS, please visit its home on the World Wide Web. Its address is: http://www.customs.treas.gov/. Updated 1-19-01
Telemarketing Fraud: It's A Crime! Page 87

LIMITING TELEMARKETER'S ACCESS TO YOU

The Georgia No Call Law prohibits telemarketers who are selling a product, service or goods, from contacting those Georgians who have their name and telephone number placed on the No Call List, with some exceptions. The Georgia Public Service Commission maintains the No Call List while the Governor's Office of Consumer Affairs enforces the law. It costs $5.00 per phone number to join the List for two years. Consumers may sign up for the Georgia No Call List by submitting a check or charging the application fee to a credit card. This fee is non-refundable. To register for the Georgia No Call List, call 1-877-GANOCALL or visit the website at www.ganocall.com. Most residential telephone books contain a copy of the application in the Customer Service section. To reduce or avoid unwanted sales calls and mail solicitations from Direct Marketing Association members, send your name, address, telephone number and a request that your name be removed from the list to:

Direct Marketing Association Telephone Preference Service P.O. Box 9014 Farmingdale, NY 11735-9014

Direct Marketing Association Mail Preference Service P.O. Box 9008 Farmingdale, NY 11735-9008

E-Mail Preference Service
The Direct Marketing Association also has a service to reduce spam (unsolicited commercial e-mail) from its members. To sign up, fill out the form online found at: www.e-mps.org

Credit Card and Credit Reporting Agency Lists
You may also wish to contact your credit card companies to direct them not to sell your credit information to other entities. You can also call 1(888)5OPT-OUT 1(888)567-8688 to "opt out" of having pre-approved credit offers sent to you for two years. This service is provided by all three credit-reporting agencies.

Telemarketing Fraud: It's A Crime! Page 88

More Help Be aware of ways in which you allow access to your personal information
through the telephone, mail and other daily activities. Did you know that legitimate magazines sell their subscription lists to other companies who then solicit your business? Also, know that, if you fill out a sweepstakes entry form at your local grocery or drug store, you can count on receiving a telemarketing solicitation call in response to your entry, but don't count on the prize.
Know that sometimes criminals really do rummage through trash to obtain their victim's personal financial information such as credit card numbers. Stealing personal information such as credit card numbers, social security numbers, and driver's license numbers to obtain something of value is called "identity theft." When discarding such information, consider using a shredder so the discarded information is illegible.
Identity thieves also look over their victim's shoulders to memorize bank account numbers on checks in the grocery store, or calling card PIN numbers at telephone booths. Be aware of your surroundings, not only for your personal safety, but also for your financial safety.
Telemarketing fraud and identity theft are criminal offenses in Georgia. Georgia law allows for increased civil and criminal penalties for those who target individuals over the age of 60 or those who are disabled.
Telemarketing Fraud: It's A Crime! Page 89

TELEMARKETING FRAUD: IT'S A CRIME PRE-TEST AND POST-TEST

Pre-Test
1. True False

A charity can send a courier to pick up a cash donation from a residence.

2. True False

A U.S. Citizen could never win a Canadian lottery (or any other foreign lottery) by buying tickets in the U.S. over the telephone or through the mail.

3. True False Mutual Legal Assistance Treaties can be used to obtain evidence from other countries.

4. True False It is illegal to require someone to make a purchase in order to receive a prize.

5. True False

Fraudulent telemarketing solicitations for charitable giving usually increase after a natural disaster or a tragic national event.

6. True False

Magazine sales over the telephone often result in long-term subscriptions with negative option renewals.

7. True False There are ways to prevent the unauthorized switch of my long distance telephone carrier.

8. True False There is no way that I can limit telemarketers' access to my telephone number and me.

9. True False

Con artists who target elder and disabled Georgians can be subjected to enhanced penalties.

10. True False Telemarketers cannot call my home before 8:00 a.m. or after 9:00 p.m. in my time zone.

Post-Test
True False True False
True False True False True False
True False
True False True False True False
True False

Did you change some of your answers after the presentation?

ANSWERS TO TESTS

1. True False 2. True False
3. True False 4. True False 5. True False 6. True False 7. True False 8. True False 9. True False 10. True False

A charity can send a courier to pick up a cash donation from a residence.
A U.S. citizen could never win a Canadian lottery (or any other foreign lottery) by buying tickets in the U.S. over the telephone or through the mail.
Mutual Legal Assistance Treaties can be used to obtain evidence from other countries.
It is illegal to require someone to make a purchase in order to receive a prize.
Fraudulent telemarketing solicitations for charitable giving usually increase after a natural disaster or a tragic national event.
Magazine sales over the telephone often result in long-term subscriptions with negative option renewals.
There are ways to prevent the unauthorized switch of my long distance telephone carrier.
There is no way that I can limit telemarketers' access to my telephone number and me.
Con artists who target elder and disabled Georgians can be subjected to enhanced penalties.
Telemarketers cannot call my home before 8:00 am or after 9:00 pm in my time zone.

Telemarketing

It's A Crime!
Student Evaluation
Please answer the following questions and return this form to your instructor.

Name: ________________________________ Title: ______________________ Agency / Office: ___________________________________________________ Address: _________________________________________________________ City: __________________ State: ________ Zip: ______ Telephone: ________ Email: ___________________________________________________________

Overall this training was:

Not Helpful 1 2 3 4 5 Very Helpful

One thing I will do as a result of this training is: ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________

I would have enjoyed this training more if: ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________

I would like more information on: ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________

For more information about telemarketing fraud or other consumer fraud training programs, contact the Georgia Governor's Office of Consumer Affairs at 404-656-3790. Thank you for completing this evaluation. You response is important to the future development of presentation materials.

Telemarketing

It's A Crime!

Instructor Evaluation
Please answer the following questions and return this form by mail, fax or email to: Program Manager, Telemarketing Fraud: It's a Crime, 2 M. L. King, Jr. Drive, Suite 356, Atlanta, Georgia 30334, facsimile 404-651-9018, email: tryllis.hallford@oca.state.ga.us.

My agency's primary responsibility is: Law enforcement Prosecution Victim / witness advocacy Training
What was the date of this training session?

The audience consisted mostly of:
Patrol officers Deputies Investigators Prosecutors Support staff Advocates

How many students attended this session? How many hours did this session last?

Overall the training materials:
Meet my needs as an instructor Have added to my capability Apply somewhat Need some help

What questions developed, which should be included in future revisions: ________________________________________________________________ ________________________________________________________________ ________________________________________________________________

I would like to have more information on: ________________________________________________________________ ________________________________________________________________ ________________________________________________________________

Name: ________________________________ Title: ______________________ Agency / Office: ___________________________________________________ Address: _________________________________________________________ City: __________________ State: ________ Zip: ______ Telephone: ________ Email: ___________________________________________________________

Governor's Office of Consumer Affairs
Pr esent s

Telem a r k et ing
I t's A Crime!

Understanding Telemarketing Fraud
Telemarketing is a legal way of selling
merchandise, conducting surveys, and soliciting donations

Understanding Telemarketing Fraud
Telemarketing is a legal way of selling
merchandise, conducting surveys, and soliciting donations
Telemarketing fraud is illegal

What I s Telemarketing Fraud?
State and federal laws vary but in general: Any scheme to defraud in which persons carrying out the scheme use the telephone
as a primary means of communication with the victim in conjunction with a solicitation to send money to the scheme

What I s Telemarketing Fraud?
The direction of the call doesn't matter:
Outbound initial call made by the
telemarketer from a lead or list of numbers

What I s Telemarketing Fraud?
The direction of the call doesn't matter:
I nbound initial call made by the
potential victim usually in response to an ad or a piece of mail

What I s Telemarketing Fraud?
Telemarketers often target a specific demographic based on the scam, for example:

What I s Telemarketing Fraud?
Telemarketers often target a specific demographic based on the scam, for example: Advance fee loans and credit cards to
people trying to establish credit and those with bruised credit

What I s Telemarketing Fraud?
Telemarketers often target a specific demographic based on the scam, for example: I nvestment scams to high income
groups like doctors and lawyers

What I s Telemarketing Fraud?
Telemarketers often target a specific demographic based on the scam, for example: Prize scams to those most trusting, like
seniors

What I s Telemarketing Fraud?
Common telemarketer's tactics: High pressure won't take no for an
answer
I nsistence on an immediate decision Must immediately wire or overnight fees No detailed information provided Play on the victim's needs, desires or
sym pat hy
Keep it a secret for now!

Telem a r k et ing Terminology

"SCRI PT and PI TCH"
z A script is the pre-printed text
designed to be read over the telephone to a prospective victim
z The pitch is the specific solicitation

Seized Script

"BOI LER ROOM"
z A telemarketing phone room z Sparsely furnished, easily dismantled z Term originated in the 1920's z Also used to describe the highly-
charged atmosphere generated by the sales personnel

Boiler Room "Personnel"
Fronter Closer Verifier

Fr ont er
The "fronter" will obtain basic customer
background information and provide the customer with an outline of the promotion before turning the telephone over to a "closer" to finalize the deal

Closer
A telemarketing sales rep who specializes
in finalizing or "closing" the sale to a cust om er

Closer
Closers are usually experienced
telemarketers who may takeover the sale from the "fronter" and generally command a higher commission per sale

Verifier
Sometimes after the solicitation is made,
a telemarketer known as a "verifier" will
re-contact the customer to confirm the
information provided by the sales rep.

Verifier
Oftentimes the "verification" but not
the original pitch is recorded and later used as leverage against customers that have a change of heart or as false proof of the sale

"LEAD LI ST"
z A list of potential customers
z Leads are sometimes self-generated by the telemarketing operation through the use of advertising, cold calling and direct mailers, or are purchased from a lead broker

Seized Lead List

"MAI L DROP"
A commercial mail receiving agency in
which individuals or businesses lease mail boxes in order to receive mail and other deliveries
Used by telemarketers for anonymity

"RI P & TEAR"
Frequently use aliases, pre-paid
telephone service or pay phones, receive money by wire transfer and rent "mail drops" to help avoid det ect ion

"RI P & TEAR"
Operations that collect as much
money as possible in a short period of time and relocate before they are ident if ied

"GI MME GI FT"
z The award or bonus that some victims receive
z Typical "gimme" gifts include a travel certificate or a piece of cheap jewelry

Bogus savings plan requires another upfront
fee
Real gold coins, value 1/ 10th the amount paid

Wor t hless purchase cer t if icat es

"FULFI LLMENT"
The delivery of some item to the
victim after payment is received by the telemarketer

"FULFI LLMENT"
Often times the victim will receive a
"gimme gift" such as a loan or credit card application, vacation voucher, cheap camera, purchase certificate, et c

" MOOCH"
z A sucker
z A term used by telemarketers to describe a nave customer who is easily influenced and manipulated by the sales rep when closing the sale

"MOOCH LI ST"
z Lists of easy victims, known as "mooch lists" are highly valuable to the telemarketer

" RELOAD"
An attempt by telemarketers to steal
again from a victim using the promise of winning more valuable awards or the recovery of money already lost for a fee

" RELOAD"
Victims may be "reloaded" five, six or
more times - each time they must make another purchase or pay additional fees

Typical Scams

Typical Scams

Prize promotions I nvestment scams Travel scams Foreign lottery One in five Magazines

Charity fraud Credit repair Employment scams Office supply Advance fee credit
cards

Pitching the Scam
Enthusiasm and friendliness I ntroduce the customer to the prize
scheme
Guaranteed reward Customer turned over to a closer Processing or shipping fees Up-front fees are always a prerequisite

Prize Promotion
Victim is told they have won a huge
prize
Must pay taxes, bonded agent fees,
customs fees, or make a purchase before they get their prize
I f successful telemarketers will usually
call back promising larger prizes in an effort to reload the victim

Foreign Lottery Scams
Telemarketers promise increased
chance of winning
Join the pool for $3,000 guaranteed to
receive a check every thirteen weeks for $28,000

Charity Scams
May assume the name of a legitimate
organization like F.O.P. or Red Cross
Telemarketers solicit donations for
disaster victims, families of fallen officers, anti-drug programs
Typically less than 10% of funds
collected (if any) go to the charitable purpose

Magazine Scam
Telemarketers call promising the victim
won a wonderful prize but must first participate by purchasing a magazine
Victim may receive a worthless travel
voucher or other gimme gift
Victim's credit card or bank account is
debited for hundreds of dollars for long term subscriptions

Advance Fee Credit Cards
Victim is cold called or mailed an offer
for a pre-approved Visa or MasterCard and a catalog card
Victim pays an up front fee, which is
debited from their bank account, paid by money order, or wire transfer

I nvestment Scams
Quick high value return on investment Precious stones Gold and rare coins Gas futures Vintage wine Foreign currency options Targets high income groups and first
time investors

Recovery Room Scam
Victim has already lost money to
telemarketing fraud
Telemarketers call again promising to
get money back for a fee
Sometimes represent themselves as a
"court representative" charged with distributing settlement money

Ta r get ing Vict im s

How Fraudulent Telemarketers Target Victims

Cold calling Lead brokers Mooch lists Mailers Contest entry
forms
Antique names

Classified ads Television
commercials
Cable programs I nternet Countertop boxes

Typical Victim Profile
I ndigent Savvy business professionals Novice investors Doctors, lawyers, scientists, etc Anyone

Typical Victim Profile
Main target Senior citizens

Why Seniors
More likely to be at home Retirement income / pensions Separation from friends and family Loneliness

Why Seniors
Too polite to hang up Diminishing memory Trusting - "my word is my bond" Seniors own more than half of all the
financial assets in this country

Analysis

Computer Forensics

Search Warrants Subpoenas

I nvestigation M et hods

Unique Challenges
Lengthy investigations Cross jurisdiction issues Potential cost of large investigations A sequence and timeliness to these
invest igat ions
Must stay ahead of telemarketer May need to school the prosecutor,
judge, and jury

I dentifying And Developing Evidence
Track victims through prosecutor's
offices federal, state and local
Other law enforcement agencies Office of Consumer Affairs or equivalent Better Business Bureau FTC database (Consumer Sentinel) NW3C database

I nterviewing Victims
Establish contact as soon as possible Obtain the dates and context of victim's
contact with the telemarketer
Document content of all conversations What was the victim promised? What did the victim receive?

I nterviewing Victims
How much money did the victim send? How often? By what method? Review financial transactions in detail -
may need to refresh memory with docum ent s
Consider affidavit or questionnaire form
- if multiple victims

Sample affidavit

Check with your
pr osecut or before using
a "form" affidavit

Documents To Obtain From Vict im
Returned checks Copies of certified checks or money
orders
Credit card statements Wire transfer receipts Advertising solicitations

Documents To Obtain From
Vict im
Newspaper ads Promotional materials Records of correspondence Victim's notes Tapes of any phone calls Bank account statements

I dentifying And Developing Evidence
Western Union/ MoneyGram transfers UPS/ FedEx/ private courier services Check cashing outlets Commercial Mail Receiving Agencies
( PF1583)
Bank surveillance cameras National Tape Library

Subpoenaing Records
Bank records Merchant processor records I ncorporation documents (d/ b/ a
records)
Labor Department records

Subpoenaing Records
Mail drop records Shipping company records Telephone company records I nternet service provider's logs,
subscriber information and screen capt ur es

Additional I nvestigative Tools
Using the assistance of insiders / flip a
telemarketer (use caution)
Dumpster diving Surveillance City or county business license office

Additional I nvestigative Tools
Utilities (gas/ electricity/ water) I nterview businesses adjoining
telemarketing rooms
Mail cover Bankruptcy and other civil court records

Additional I nvestigative Tools
Taped phone calls (legality)
Setting up mooch lines National Tape Library
Trap and trace Wiretaps Telephone record analysis Bank record analysis

Undercover Operations
Apply for work with company Once inside, can obtain pitch sheets,
learn about inner-workings, key players, methods used to solicit victims, etc
Should never contact actual victims or
cash paychecks unless prosecutor approves
Safety and monitoring concerns

Search Warrants
Telemarketers have their own terminology and the materials specifically used by telemarketers should be listed in the items to be seized as evidence.

Search Warrants

Monitoring tapes Ledgers Bank checks Cashiers checks Pitch
sheets/ scripts

Pay records Mailing lists Sales orders Leads and notes Operating
manuals

Search Warrants

Wire transfers Money orders Account
st at em ent s
Merchant credit
card accounts

Mailing envelopes Customer lists Pictures of victims

Search Warrants

Correspondence
from government regulatory agencies
Records reflecting
company ownership
Promotional items Accounts payable

Stored telephone
messages
Computer
hardware/ software (obtain expert advice)

Computer Evidence
Telemarketers routinely use computers I nclude computers and components,
data and software in search warrant
Obtain knowledgeable assistance to
properly seize and process the evidence

Considerations When
Executing a Warrant
Bring enough personnel to interview all
telemarketers (stories change quickly)
Always document any statements made Computer specialists may be needed Voluminous records - be prepared with
storage site (know what you're looking for)
Be prepared to search multiple sites

Evidence Analysis
Who made the bank deposits? Consider
getting bank surveillance photos
Track the money where did it go? Track the suspect's telephone records
identify calls made to your victims
What was the victim promised verses
what they actually received

Financial Analysis

Forensic accounting

Trace the proceeds

Check cashing

businesses

Banks

Merchant accounts

Credit cards Wire transfers

FOLLOW THE MONEY!

Telephone Analysis
I dentify the longer calls from suspect's telephone records to track potential
vict im s

Seized Script

Seized Script
LOOK FOR DECEPTI ON I N THE SCRI PT:
"YOU'VE ALSO BEEN PRE-APPROVED FOR YOUR VI SA BANKCARD"
THI S COMPANY COULDN'T PROVI DE VI SA CARDS!

Seized Lead List

Probably vict im s because they were "taped"

Who To Charge?
Potential targets
Owners Managers Key telemarketers Other controlling personnel Anyone with intent to defraud Whomever controls the money

Charging Considerations
Can you prove knowledge/ intent? Criminal or civil action Specific intent Pattern of conduct Length of time

Charging Considerations
Management responsibilities Hiring and firing Training / advertising / writing the
pit ch
Total compensation

What to charge
Prohibited telemarketing acts Theft by deception Theft by taking Fraudulent telephone solicitation

What to charge
RI CO Conspiracy RI CO False statements by telephone solicitors Other code sections may apply (such as
credit repair or computer crime statutes) depending upon the type and method of scam used

Summary
When investigating telemarketing fraud, you alw ays have tw o key components of the crime a telephone call and a transfer of
money. Follow the phones and follow the money!

Summary
Coordinate your efforts w ith other
agencies!
Return the favor cooperate w hen
asked to assist another invest iga t or !

Any Questions?

Telemarketing
It's A Crime!
The materials included in this training package are designed for law enforcement and prosecution agencies only. Do not disseminate these materials outside of the law
enforcement community. This project w as supported by Grant No. 1999-LS-VX-0002 aw arded by the Bureau of Justice Assistance. The Bureau of Justice Assistance is a component of the Office of Justice Programs, w hich includes the Bureau of Justice
Statistics, the National I nstitute of Justice, the Office of Juvenile Justice and Delinquency Prevention, and the Office of Victims of Crime. Points of view or opinions in this document are those of the author and do not represent the official position or
policies of the United States Department of Justice.