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Slam that telephone scam

A federal crackdown should help limit the reach of con artists dialing for your dollars. You can also take steps to protect yourself.

By Steve Dinnen Special to The Christian Science Monitor / March 5, 2001



Mike Havertz started his career with the FBI investigating drug trafficking and terrorism. Now he focuses on telemarketing fraud, which zeroes in on and victimizes a lot of seniors.

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It's a $20 billion-a-year empire that has become increasingly sophisticated since Mr. Havertz went to work in 1993 with the FBI's Boiler Room Task Force in San Diego.

Shady businesses often promise prizes such as cars or jewelry to people willing to pay fictitious taxes or fees. Once the payments are made, the prizes either fail to show or are almost worthless. Many of these operations have moved to Canada after authorities pretty well shut them down in the US.

"Now it's investment schemes," says Havertz. These scams can involve stock offerings of bogus high-tech enterprises that pull in a minimum of $10,000 from each victim. They're so sophisticated that Havertz, investigative coordinator of the task force, says retirement-plan trustees have been duped into signing over control of those accounts to people who quickly looted them.

"They're good," Havertz says of today's telephone crooks.

A Georgia telemarketer was convicted late last year of ripping off $83,000 from an Iowa farm couple in a Japanese yen currency-trading swindle. The salesman was pulling in commissions of up to $25,000 weekly giving people the tried-but-true pitch that he'd turn their piles of money into mountains of cash within weeks. While the telemarketer faces up to 15 years in prison, the Federal Trade Commission has just issued its second warning against foreign-currency trading schemes.

Taping calls

While telemarketers blend the old with the new, so have authorities. One of their best crime fighters has been the tape recorder, which they use to record pitches made by salespeople. A special library in San Diego houses 16,000 tapes made since the mid-1990s by state and federal investigators. Law enforcement officials from all over the country can tap into the library and retrieve tapes to see whether they match up with cases they're investigating, or to build conspiracy cases.

"It's a tremendously effective law enforcement tool," says Steve Peak, an assistant US Attorney in San Diego who's in charge of the task force and library. The taped conversations have helped to shut down hundreds of boiler rooms, since authorities don't have to rely solely upon the sometimes foggy recollections of victims.

Taping is also a very time consuming process, since crooks aren't calling every hour. So state and federal authorities have recruited retired FBI agents and volunteers from the American Association of Retired Persons (AARP) to tape record conversations. They typically answer telephone lines signed over to them by people who already have been victimized, since the crooks keep those numbers handy.

Agent Havertz says one of the better crime-busting tools comes from telemarketers themselves. Oftentimes employees who have left over pay disputes become disgruntled and contact authorities. These people know where the secrets lie and can greatly help an investigation.

Havertz says the power of a subpoena or "target" letter also helps collect evidence. While building a case against a telemarketer can take a year or more, the process can be shortened by subpoening records from individuals, or sending them letters notifying them that they are targets of the investigation.

Havertz says that is often enough to bring the workers in for a visit, where they'll offer evidence against their employer in exchange for leniency. And since telemarketers tend to hop from job to job, he says that cooperative witnesses often can provide information on three or four boiler rooms.