FOR IMMEDIATE RELEASE CRM
THURSDAY, DECEMBER 7, 1995 (202) 616-2771
TDD (202) 514-1888
VOLUNTEER RETIREES GO UNDERCOVER TO HELP SNARE DISHONEST
TELEMARKETERS, MORE THAN 400 ARRESTS MADE IN 14 STATES
LAS VEGAS, NEVADA -- A two-year, joint federal and state
undercover operation in which volunteer retired persons secretly
tape recorded dishonest telemarketers who prey on the elderly
resulted today in more than 400 arrests in over a dozen states.
Retired law enforcement agents and volunteers, recruited
through the American Association of Retired Persons, posed as
telephone subscribers in "Operation Senior Sentinel," which was
initiated and coordinated by the FBI. Tape recorded telephone
calls from telemarketers were forwarded to a computerized
collection point in San Diego, California, where they were
catalogued and indexed for investigation.
"Telephone pitches from illicit "boiler room" operations cost
Americans $40 billion a year," said Attorney General Janet Reno.
She said victims commonly received five or more calls a day from
high-pressure telephone sales people once they made their first
purchase or contribution.
Reno was joined by Kathryn Landreth, United States Attorney for
Nevada, Alan Bersin, United States Attorney for the Southern
District of California, and FBI Deputy Director Weldon Kennedy who
announced that a coordinated nationwide "takedown" today was
expected to result in 422 arrests in at least 14 states. The
operation, which began in 1993, had previously resulted in 114
arrests and the execution of 122 search warrants.
Landreth said the telemarketers targeted in today's operation
were allegedly responsible for ruining the financial security of
many elderly Americans. She described how an Ohio widow lost her
life savings of $240,000 to more than 50 fraudulent telemarketers.
A 92-year-old California woman lost $180,000, and then $5,250 more
in supposed "recovery" fees to a man who said he could get some of
her money back. A woman in her seventies from another Western
state was persuaded by a telemarketer to send him $60,000 from her
and her husband's retirement fund and, when that was gone, to take
out a loan for $13,000 more.
"These stories illustrate the tragedy and the impact of
unscrupulous telemarketers on thousands of the most vulnerable
people," said Landreth.
More than a dozen state attorney general's offices, 38 FBI
field offices, the Fraud Section of the Justice Department's
Criminal Division, and a dozen U.S. Attorney's offices were
involved in the effort. The Internal Revenue Service, the U.S.
Postal Inspection Service and the Secret Service also supported the
operation. The Federal Trade Commission also was involved, and
filed civil actions to coincide with the criminal cases.
"The concept for this operation was first employed by the
Attorney General's Office in Iowa," said Attorney General Reno.
"This case is a textbook example of how law enforcement agencies at
every level can work together, along with concerned citizens, to
combat crime."
The FBI obtained the use of phone lines from defrauded
victims. Phone calls from telemarketers were transferred to
specially trained volunteers from the AARP, or, in some cases, to
law enforcement agents or retired FBI agents, who played the role
of the intended recipient during the tape-recorded conversation.
Thousands of fraudulent sales pitches were recorded and placed in
the national tape library, which was funded by the state attorneys
general, for use in this and other telemarketing fraud
investigations.
"Tragically, these con artists continue to prey largely on
older Americans -- those who may be least able to recover from
losses," said FBI Deputy Director Kennedy. "The FBI and other law
enforcement agencies will continue to use aggressive and innovative
investigative strategies to address this crime problem, while
seeking the cooperation of American consumers," Kennedy said.
Many of the telemarketing offers fell into one of four
categories: 1) fraudulent charities; 2) "premium" promotions in
which victims were "guaranteed" one of four or five valuable
prizes, but were then induced to purchase an over-priced product
and received a cheap prize; 3) so-called "recovery rooms," which
purported to assist victims who had lost money to other
telemarketers, but which charged substantial fees for no meaningful
assistance; and 4) large scale investment schemes.
United States Attorney Bersin said, "Operation Senior Sentinel
means not only that hundreds of con-men will be prosecuted, but
that thousands of others should be deterred." He said, "A
partnership between the victimized elderly and law enforcement is
the key to combating telemarketing fraud."
"Operation Senior Sentinel" grew out of an earlier FBI
undercover initiative, "Operation Disconnect," which, in March
1993, identified 123 illegal telemarketing enterprises and resulted
in approximately 240 arrests. Some of those telemarketers
relocated to other states, and were targeted in "Operational Senior
Sentinel."
The Attorney General urged consumers to resist high pressure
sales tactics and be careful not to give out credit card or bank
account numbers without knowing who they are dealing with. The
Federal Trade Commission, in cooperation with the National
Association of Attorneys General, maintains a national data base of
consumer complaints against telemarketers that can be reached by
telephoning 1-800-876-7060.
Defendants are subject to prosecution for mail or wire fraud
which normally carry a maximum penalty of five years, or if a
financial institution is affected, a maximum of 30 years. Congress
last year enacted a sentencing enhancement in cases of
telemarketing fraud permitting the mail or wire fraud penalty to be
raised another five years, or an additional 10 years if 10 or more
senior citizens are harmed or targeted. A similar enhancement can
be added to the bank fraud sentence.
A criminal charge or arrest is not evidence of guilt, and each
person arrested is entitled to a presumption of innocence until
guilt is established by trial or by plea.
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