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Canada Scam Artists Have a Global Reach

Telemarketing: Phone fraud rings operating north of the border dupe thousands in the U.S. and other countries.

July 07, 2002|MYRON LEVIN | TIMES STAFF WRITER

Overwhelmed by guilt and shame after being defrauded by telemarketers of more than $50,000, Rose Urbanski could not face the ordeal of telling her family what she'd done. So the Bay Area woman got a gun and shot herself.

The crooks who fleeced Urbanski have been convicted and face prison terms. But there are plenty more where they came from: Canada.

In the largest cities north of the border, telemarketing fraud is a thriving cottage industry that dupes thousands of U.S. senior citizens out of untold millions each year. Protected by distance from their victims, con artists also exploit Canada's lenient stance on white-collar crime and the daunting logistics of dragging them across the border to face trial in the United States.

The strength of the U.S. dollar--worth about 1.5 Canadian dollars--has made the scams more attractive. And from their sanctuary in Canada, the crooks are extending their reach, targeting the elderly in England and Australia as well as in the U.S., officials say.

For The Record
Los Angeles Times Sunday July 07, 2002 Home Edition Main News Part A Page 2 National Desk 4 inches; 170 words Type of Material: Correction
Scam artists--The subject of a photograph accompanying a story on telephone fraud in Canada published on today's Business cover should be identified in the caption as Dillon Sherif.

"Across-border [fraud] is getting worse, and ... now England is the target," said Gus LaForge, a spokesman for PhoneBusters, a Canadian database for telemarketing complaints.

Southern California finds itself at both ends of the problem. The region long has been a mecca for home-grown phone fraud schemes, which mainly target victims in other states. But with its large population of affluent senior citizens, California also has been a prime hunting ground for the cross-border rings.

The U.S. attorney's office in Los Angeles has won convictions in five cross-border cases in the last three years and has charges pending in six. Of the 93 U.S. attorneys' offices, those in Los Angeles and Harrisburg, Pa., have been most aggressive in pursuing the rings. But overall, authorities concede, there have been too few prosecutions to drive the grifters out of business.

The fraud rings run the gamut from the large and sophisticated to seat-of-the-pants operations. Nailing the ringleaders is not fully effective because it's easy for their accomplices to start up on their own.

"The only thing they need is a chair and a cell phone," said Sylvain L'Heureux of the Royal Canadian Mounted Police.

Fighting back against the swindlers, Canadian and U.S. authorities have joined forces in three anti-fraud task forces--one each for the Montreal, Toronto and Vancouver areas, where the cross- border rings are concentrated.

Staffed mainly by the RCMP and other Canadian police and consumer agencies, along with smaller contingents from the FBI, U.S. Customs Service and U.S. Postal Inspection Service, the task forces have made inroads--shutting down boiler rooms, seizing assets and intercepting and returning checks to victims.

A Daunting Task

But the fraud rings are so numerous and mobile that many have met with little interference, authorities concede.

"There's so much of this, and we're just scratching the surface," said Laureen France, an investigator with the Federal Trade Commission in Seattle, which also is involved in the crackdown.

Jurisdictional barriers also limit the punishment the scam artists fear most: prison time in the U.S.

The fraud rings rely on a maze of business names, bank accounts and mail drops, along with a repertoire of telephone aliases--all designed to throw authorities off the track. Highly mobile, they also have a frustrating habit of shifting locations every few months.

Working from "sucker lists" of potential victims, some schemes involve bogus investments, while others con the financially desperate out of advance fees for loans they never get.

Perhaps most outrageous are "recovery room" schemes that bring the joyous news that victims' losses from a previous scam have been recovered through a class-action lawsuit. They need only send a check to cover legal or administrative fees, at which point they are victimized again.

But U.S. senior citizens have suffered the heaviest losses in schemes offering cash jackpots in sweepstakes or lotteries run from Australia, England or Spain. Victims are told that with the telemarketer's special system, they have an excellent chance of winning or already have won a big prize. To collect, they must send a few hundred to a few thousand dollars to cover taxes or currency exchange.

Once they have paid, victims are informed that they have qualified for an even larger prize but must send additional fees or relinquish the jackpot to somebody else.

The con men have mastered the art of making "people fear feeling stupid for not participating in what appears to be a good opportunity," said Mike Hartman, a U.S. postal inspector who works with the Toronto task force.

Some crooks have posed as customs agents, telling victims that their prizes are being held at the border until their tax payments are received. Others claim to be working with the FBI to "shut down different gimmicks and scams," as one said in a taped conversation with an Orange County victim.

Crime's Human Toll

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