On July 20, 2018, the U.S. Department of Justice announced that 21 members of an India-based fraud and money laundering conspiracy that defrauded U.S. residents of hundreds millions of dollars were sentenced by a federal court to terms of imprisonment up to 20 years. Additional conspirators were sentenced previously for laundering proceeds for the conspiracy.
According to the Department of Justice, between 2012 and 2016, the defendants and their conspirators perpetrated a complex fraud and money laundering scheme in which individuals from call centers located in Ahmedabad, India, frequently impersonated officials from the IRS or USCIS in a ruse designed to defraud victims located throughout the United States.
Using information obtained from data brokers and other sources, call center operators targeted U.S. victims who were threatened with arrest, imprisonment, fines or deportation if they did not pay alleged monies owed to the government. Victims that agreed to pay the scammers were instructed how to provide payment, including by purchasing stored value cards or wiring money. Once a victim provided payment, the call centers turned to a network of runners based in the United States to liquidate and launder the extorted funds as quickly as possible by purchasing reloadable cards or retrieving wire transfers.
Call centers directed runners to purchase these stored value reloadable cards and transmit the unique card number to India-based co-conspirators who registered the cards using the misappropriated personal identifying information (PII) of U.S. citizens. The India-based co-conspirators then loaded these cards with scam funds obtained from victims. The runners used the stored value cards to purchase money orders that they deposited into the bank account of another person. For their services, the runners would earn a percentage of the funds. Runners also received victims’ funds via wire transfers, which were retrieved under fake names and through the use of using false identification documents, direct bank deposits by victims, and Apple iTunes or other gift cards that victims purchased.
While this matter clearly involves egregious criminal conduct, it also underscores some inherent dangers in working with offshore call centers with questionable or non-existent management, and an overall lack of accountability. The misuse and abuse of consumer data by third-party call centers greatly enhances liability exposure for U.S. based lead generators. Telemarketing legal, operational and quality compliance should be taken seriously by marketers. As should data security and consumer touch point training. It is certainly taken seriously by regulatory authorities investigating and prosecuting unlawful marketing conduct.
The indictment in this case also charged 32 India-based conspirators and five India-based call centers with general conspiracy, wire fraud conspiracy, and money laundering conspiracy.
“The stiff sentences imposed this week represent the culmination of the first-ever large scale, multi-jurisdiction prosecution targeting the India call center scam industry,” said Attorney General Sessions. “This case represents one of the most significant victories to date in our continuing efforts to combat elder fraud and the victimization of the most vulnerable members of the U.S. public. The transnational criminal ring of fraudsters and money launderers who conspired to bilk older Americans, legal immigrants and many others out of their life savings through their lies, threats and financial schemes must recognize that all resources at the Department’s disposal will be deployed to shut down these telefraud schemes, put those responsible in jail, and bring a measure of justice to the victims.”
“This type of fraud is sickening,” said U.S. Attorney Patrick. “However, after years of investigation and incredible hard work by multiple agents and attorneys, these con artists are finally headed to prison. Their cruel tactics preyed on some very vulnerable people, thereby stealing millions from them. These sentences should send a strong message that we will follow the trail no matter how difficult and seek justice for those victimized by these types of transnational schemes. We will simply not stand by and allow criminals to use the names of legitimate government agencies to enrich themselves by victimizing others.”
“Today’s sentences should serve as a strong deterrent to anyone considering taking part in similar scams, and I hope that they provide a sense of justice to the victims, as well,” said HSI Acting Executive Associate Director Derek N. Benner. “There is no safe haven from U.S. law enforcement. HSI will continue to utilize our unique investigative mandate, in conjunction with our local, state, and federal partners, to attack and dismantle the criminal enterprises who would seek to manipulate U.S. institutions and taxpayers.”
“The sentences imposed on these defendants validate our efforts to bring to justice scammers who defraud taxpayers by impersonating employees of the Internal Revenue Service,” said Inspector General J. Russell George. “I wish to thank the Department of Justice, the multiple federal agencies involved, and most importantly, my own investigators who continue to devote countless hours to these cases …”
“The sentences imposed this week provide a clear deterrent to those who would seek to enrich themselves by extorting the most vulnerable in our society,” said DHS-OIG Special Agent in Charge Green. “These scammers should know that their actions carry real consequences, both for their victims and for themselves, and that there are dedicated agents and prosecutors who will go above and beyond to find them, identify them and hold them accountable for their crimes.”
One of the defendants, sentenced to serve 240 months in prison followed by three years of supervised release on the charge of money laundering conspiracy, served as the manager of a Chicago-based crew of “runners” that liquidated and laundered fraud proceeds generated by callers at India-based call centers. Those callers used call scripts and lead lists to target victims throughout the United States with telefraud schemes. In addition to recruiting, training, and tasking runners in his crew, the defendant also coordinated directly with the Indian side of the conspiracy about the operation of the scheme. He was held accountable for laundering between $9.5 and $25 million for the scheme.
Another defendant, sentenced to serve 188 months in prison followed by three years of supervised release on the charge of wire fraud conspiracy, consented to removal to India upon completion of his prison term. This defendant was a co-owner and manager of an India-based call center involved in the conspiracy. In addition to managing the day-to-day operations of a call center, he processed payments and did bookkeeping for the various call centers involved in the fraud scheme.
One of the India-based co-defendants with whom he communicated about the scheme was a payment processor that Indian authorities arrested in April 2017 in connection with call center fraud. After moving to the United States in 2015, the defendant continued to promote the conspiracy by recruiting runners to liquidate fraud proceeds. He was held accountable for laundering between $3.5 and $9.5 million dollars for the scheme.
Another defendant, sentenced to serve 151 months in prison on the charge of money laundering conspiracy, and 120 months in prison on the charge of naturalization fraud to run concurrent followed by three years of supervised release, was a member of a Houston-based crew of runners that he co-managed with his brother, another co-defendant. He communicated extensively with India-based co-defendants about the operations of the scheme, and was held accountable for laundering between $3.5 and $9.5 million. In connection with his sentence on the immigration charge, the court entered an order revoking his U.S. citizenship and requiring him to surrender his certificate of naturalization.
Twenty-two of the sentenced defendants were held jointly and severally liable for restitution of $8,970,396 payable to identified victims of their crimes. The court also entered individual preliminary orders of forfeiture against 21 defendants for assets that were seized in the case, and money judgments totaling over $72,942,300.
Numerous other defendants were also sentenced to various prison terms and, in some cases, deportation recommendations.
Richard B. Newman is a telemarketing and lead generation compliance lawyer at at Hinch Newman LLP focusing on advertising and digital media matters. Visit his law firm website, here. Follow him on Twitter @FTCLawDefense.
Informational purposes only. Not legal advice. Always seek the advice of an attorney. Previous case results do not guarantee similar future result. Hinch Newman LLP | 40 Wall St., 35th Floor, New York, NY 10005 | (212) 756-8777.