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Transcript of "Operation Global Con"

Press Conference
WASHINGTON, D.C.
May 23, 2006
ATTORNEY GENERAL GONZALES: Good afternoon. I'm joined by Federal
Trade Commission Chairman Debra Majoras, Chief Postal Inspector Lee Heath,
Attorney General Francisco Dall 'Anese Ruiz of Costa Rica and Chip Burns,
Assistant Director of the Criminal Division of the FBI.

Over the past 15 months, United States and foreign law enforcement agencies have
targeted international fraudulent mass marketing schemes in the largest enforcement
operation of its kind. The results of Operation Global Con have been dramatic with
565 arrests both here and abroad.

We all know the annoyance of phone calls, junk mail and SPAM and pop-up ads
that bombard us with seemingly incredible financial offers. For millions of
Americans these intrusions have been more than a nuisance. Operation Global Con
targeted international mass marketing schemes. These criminals use telemarketing,
the Internet and mass mailings to cheat unsuspecting people through bogus
investments, fake lotteries, and sweepstakes schemes, phony credit cards and tax
frauds.

In Miami, Florida, for instance, two defendants allegedly duped investors in the
United States and Europe for more than $3 million. Investors in Discovery Capital
believed it to be legitimate because the defendants would occasionally use funds
received from new investors to send out purported interest and dividends. Allegedly
the rest of the money went to fancy cars and million dollar homes for the
defendants.

In the United States alone, law enforcement conducted 96 investigations into this
kind of criminal conduct and arrested nearly 140 people. Along the way, nearly 3
million victims have been defrauded of more than $1 billion. We have succeeded by
working together with our international allies including authorities in Canada, Costa
Rica, the Netherlands and Spain to take down even more criminals abroad. Among
other supportive countries have been the United Kingdom, New Zealand and
Nigeria.
This close cooperation enabled us to develop virtual task forces. Cutting-edge
technology enables us to reduce the actual exchange of personnel typical of
international task forces. Our virtual task forces with Costa Rica and the
Netherlands provide a new model for bringing international con artists to justice.

In such a massive effort we have many people to thank. From our foreign partners,
I'd like to thank the Royal Canadian Mounted Police, the Costa Rica Attorney
General's Office, the Costa Rica Judicial Investigation Organization, the Amsterdam
Police, the Dutch Public Prosecutor, the Competition Bureau of Industry Canada,
the Phone Buster's National Call Center in Canada and our six joint US-Canadian
task forces across Canada.

I would also like to thank our American partners, the US Postal Inspection Service,
the Federal Bureau of Investigation, US Immigration and Customs Enforcement and
the Federal Trade Commission plus the Diplomatic Security Service, Department of
Commerce Inspector General, Internal Revenue Service Criminal Investigation, and
Commodities Futures Trading Commission along with 30 US Attorney Offices and
the Criminal and Tax Divisions of the US Department of Justice. As you can see,
there's been a lot of people working together to address this issue. I want to thank
all of our partners, thank all of the agencies involved in this effort as we fight for
consumers everywhere.

And now I'd like to turn the podium over to the Chairman of the FTC.

MS. MAJORAS: Thank you, Attorney General Gonzales.

The Federal Trade Commission enforces competition and consumer protection laws
to promote a free and vigorous marketplace. The challenges we are facing include
fraudulent telemarketers, SPAMmers, and con artists who defying national
boundaries strike from anywhere in the world and prey on our US consumers.

We are meeting these international challenges with a robust program that combines
our own law enforcement actions with collaborations with law enforcement partners
here and around the world. During Operation Global Con, the FTC filed 21 federal
court cases against 143 defendants and halted multi-national mass marketing scams
that cost American consumers more than $150 million.

We stopped deceptive advance free credit card offers, bogus medical discount card
pitches, fraudulent business opportunities and deceptive SPAM. For example, in a
case against Call Center Express, we obtained a $13.9 million judgment against
scammers who used telemarketing boiler rooms in Venezuela and Guatemala to
trick Spanish-speaking Americans into paying advance fees that range from 149 to
$299 for non-existing credit cards. The court permanently banned the defendants
from marketing any credit products to consumers. They had advertised the cards on
television in our country and promised thousands of people that they would have
quick access to credit cards regardless of their credit histories. The court
permanently banned them and we put them out of business.

And in FTC v. USA Beverages we stopped a business opportunity fraud whose


perpetrators were actually in Costa Rica but who used Voice Over Internet Protocol,
VOIP as we know it, to make it appear to American consumers as though they were
operating from and calling them from within the United States.

Increasingly the key to successfully prosecuting these cross-border frauds is the


coordination among law enforcers and the FTC participates in whatever capacity is
needed. As part of this effort, for example, an FTC staff attorney was designated as
a Special Assistant United States Attorney to assist the Justice Department in the
prosecution of the sweepstakes scam based in Costa Rica which the Attorney
General just mentioned.

I join Attorney General Gonzales in thanking the Costa Rican authorities for
assisting our law enforcement efforts in bringing these perpetrators to justice.

And just last week in FTC v. DataCom Marketing we stopped a Toronto-based


operation that may have taken as much as $1 million a month from American
business for business directory listings that they neither wanted nor needed. And we
worked closely with the US Postal Inspection Service, Canada's Competition Bureau
in Vancouver, the Montreal Police and members of the Toronto Strategic
Partnership on this investigation of this scam. The Competition Bureau executed
search warrants on the defendants' offices and provided the FTC with the ceased
documents that we used to support our case. So these results confirm the tremendous
benefits that we can get when we work together.

Much enforcement work remains in the area of multi-national mass marketing fraud
and we are committed to continuing to root out and shut down these global
scammers. I'd like to thank very much all of our law enforcement partners and, in
particular, the Attorney General for the work that we have done together with the
Department of Justice. Thank you very much.

CHIEF POSTAL INSPECTOR HEATH: Our global economy creates a wealth of


opportunity for both the legitimate businesses to offer a wide variety of goods and
services to their customers. Mass marketing has evolved through the use of the
Internet, telemarketing and direct mail as a highly effective method to reach
customers.

And while the vast majority of these solicitations are legitimate, there exists a
criminal element which has copied this business model and turned it into a cash
machine for unlawful enterprises.

Today we have trumped the criminals with our own business model. Operation
Global Con is a reversal of fortune for international swindlers who exploit those
who can least afford to bear the loss including older Americans, the disabled, and
others who are disadvantaged in our communities. Our model has built an effective
partnership of prosecutors, law enforcement, regulators, and international
authorities.

The United States Postal Service is the linchpin of a $900 billion mailing industry.
This industry thrives on the trust that the American public has in that commerce
transacted through the US mail is secure and free from compromise. Postal
inspectors are dedicated to preserving this trust in their relentless pursuit of
criminals engaged in mail fraud.

As an example of the many successes attributed to Global Con, Postal Inspectors


conducted parallel investigations in February of 2006 with the Amsterdam Police. In
our operation dubbed Dutch Treat this partnership shuttered an advance fee scheme
in the Netherlands that targeted American consumers and individuals from several
other countries.

The Nigerian criminal organization behind this scheme defrauded over 200
Americans of more than $1.3 million. The number of victims and losses continues
to climb as we delve deeper into the scheme and review additional evidence.

The defendants SPAMmed e-mail accounts claiming that a terminal cancer patient's
desire to bequest $55 million to charity was at risk unless the victim would help
fund up front legal expenses, taxes and bank fees. In compensation, victims were
offered a percentage of the inheritance which never materialized.

Four suspects were indicted on charges of mail fraud, wire fraud, and bank fraud,
three of whom were arrested in the Netherlands by Amsterdam Police. The fourth
defendant is currently a fugitive. Remarkably more than 20 perspective victims in
the United States were saved from losses totally more than a half-a-million dollars
when Postal Inspectors and their partners intervened during the investigation.

In another case, Postal Inspectors worked side-by-side with our Costa Rican law
enforcement partners in Operation Jackpot which was designed to dismantle an
international sweepstakes scheme that targeted thousands of elderly US citizens.
Victims lost in excess of $15 million. The criminals led their victims to believe that
they had won hundreds of thousands of dollars but to get their winnings the victims
had to pay up-front insurance fees, usually several thousand dollars. The winnings,
of course, never came.

Over 20 individuals have been charged with various federal crimes including mail
fraud. Within the last several weeks searches and arrests have been carried out in
Costa Rica, Florida, Texas and California.

Invaluable assistance has been provided by the US Immigration and Customs


Enforcement, the US Department of Commerce, the Federal Trade Commission, the
US State Department Diplomatic Security Service and momentarily the Attorney
General for the Republic of Costa Rica will provide you with more insight regarding
this large-scale investigation which took place in his country.

I hope the victims find a measure of solace in the justice that has been served.
These crimes are particularly tragic in that they are preventable. Armed with the
right knowledge, most consumers can recognize a fraudulent scheme and make the
right decision before they become a victim.

I'd like to thank the Attorney General for his leadership in protecting the American
public and acknowledge the outstanding contributions by our international partners
from Costa Rica, the Netherlands and Canada and our domestic partners at ICE, the
FBI and the FTC. Thank you.

ATTORNEY GENERAL DALL 'ANESE RUIZ: Good afternoon, Attorney General


Alberto Gonzales, all the authorities gathered here today and members of the press.

Operation Global Con has allowed Costa Rican law enforcement officers,
prosecutors and judges, this around 160 personnel, to perform in a coordinated
effort to work with their counterparts in the United States to combat international
mass marketing fraud schemes. This criminal activity was based in San Jose, Costa
Rica, but the illegal effects were felt by US citizens.

With this operation we were able to arrest five suspects, confiscate approximate
300,000 US dollars and obtain a great amount of evidence. On the other hand, our
police have shown good preparation and performance and I must congratulate our
Director General of the OIG, Mr. Jorge Rojas who is also here with us today.

If we have to repeat this joint work to look for more suspects or to combat other
types of crimes, we will be more than happy to do it. Let this commitment be clear
and a firm message to all international criminals to resign from the idea to establish
their criminal networks in Costa Rica because there they will not find their way to
evade from other countries the justice from other countries like in this case from the
United States.

ATTORNEY GENERAL GONZALES: Okay. Questions?

QUESTION: Judge Gonzales, yesterday you told us that you were going to allay the
concerns of Members of Congress about the search that was conducted on Capitol
Hill over the weekend. And apparently, if I may say so, sir, it appears that those
efforts so far have failed somewhat.

The Speaker of the House says that it was done in the wrong way. And the Majority
Leader says, "I wonder whether anybody at the Justice Department has looked at the
Constitution lately." Those are members of your own party, sir.

I'm wondering if you have something more that you can tell them today publicly that
would alleviate their concerns about a possible violation of the separation of
powers.

ATTORNEY GENERAL GONZALES: We are in discussions privately about what


can be done to alleviate the concerns. I obviously, personally, and the Department
collectively, we have a great deal of respect for the Congress as a co-equal branch
of government, as a separate and independent branch of government and, obviously,
are sensitive to their concerns. As I indicated yesterday we are working to try to
address those concerns. We have had discussions with the House. Those began last
night. We hope to have discussions today to continue working on this.

We respectfully, of course, disagree with the characterization by some. We believe,


of course, that we have been very careful, very thorough in our pursuit of criminal
wrongdoing and that's what's going on here. We shouldn't lose sight of the fact that
the Department of Justice is doing its job in investigating criminal wrongdoing. We
have an obligation to the American people to pursue the evidence where it exists.

Obviously, of course, there are additional considerations in this particular case. We


want to continue to try to work with the Congress to alleviate the concerns. I talked
about yesterday this being a unique step in response to a unique set of
circumstances. It is true it has never been done before. The reason it has never been
done before is not because there's never been corruption in the Congress
unfortunately, as there has been corruption in the Judiciary Branch and corruption in
the Executive Branch unfortunately. The reason it has never been done before is
because we have before been able to reach an accommodation, to reach an
agreement to receive the evidence that we need to prosecute wrongdoing through a
subpoena. For a variety of reasons, that could not occur here. We worked very hard
over a period of time to get the information, the evidence that we felt was important
to a criminal investigation.

At the end of the day, the decision was made that this was absolutely essential to
move forward with that investigation. But, again, we understand the sensitivity of
this matter and we are going to continue to work with the Congress, to speak with
the leaders in the Congress so that we can allay their concerns.

QUESTION: Attorney General Gonzales, as long as we are talking about something


different, the VA matter, are you concerned that the Justice Department, the FBI
was notified so long after this data went missing and in essence you came to the
trail when it was cold?

ATTORNEY GENERAL GONZALES: What I will say about that is that as soon as
we were notified of the problem we immediately sprang into action. As soon as I
was advised by Secretary Nicholson, I called the FBI Director and directed that we
put whatever resources was necessary to address this issue. And so I am focusing on
what we can do moving forward to successfully conclude this investigation and
specifically questions about what may have happened in the past before all that, I
will defer to the VA.
QUESTION: I'd like to just follow up on that. Is there any reason to think that this
material is in the hands of someone who would exploit for identity theft? Or,
contrariwise, is there any evidence to think it's been thrown away or never will be
put to that purpose?

ATTORNEY GENERAL GONZALES: We just do not know. We just do not know.


We have no reason to believe that people understand that the thieves understand
what kind of information that they have and whether or not they have taken
advantage of that. We do not know whether or not they have thrown away, you
know, the information. We just do know, but we did feel that out of respect and in
deference to our veterans that this was something that we needed at least make them
aware of and to take appropriate steps to prevent themselves from becoming victims
of those who would want to steal their identity.

QUESTION: Attorney General Gonzales, can you tell us when you were notified?

ATTORNEY GENERAL GONZALES: As I talked about yesterday -- do you mean


in terms of when the theft occurred?

QUESTION: Yes.

ATTORNEY GENERAL GONZALES: I will give out that information at the


appropriate time. I talked about the fact that we want to be as forthcoming as we
can about the information. I know there has been some information in the media,
some confirmed, some not confirmed. I am not comfortable at this time to talk about
specific facts without talking to my investigators to ensure that I am not going to
say something that inadvertently somehow screws up an investigation or disrupts or
harms an investigation would be a better term of saying that.

QUESTION: Attorney General, I would just like to get back to the subject at hand
here, but your own numbers on this indicate a rather slim conviction rate to say the
least. None in Spain. None in the Netherlands. None in Costa Rica. Twenty percent
in Canada. Forty percent in the United States. Dealing with all those other countries,
namely, Canada which has been a huge irritant I know for US Attorneys when it
comes to cross-border crime of this type where the average sentence in a Canadian
court is about two to three months for committing this type of crime. Have you
transmitted your concerns to either the Dutch government, the Canadian
government, your friend from Costa Rica, about the nature of the fact that justice
systems in other countries do not seem to recognize the seriousness of the crimes.

ATTORNEY GENERAL GONZALES: Listen, I do recognize that we are dealing


with justice systems that are different from the United States. They have different
crimes, different penalties and different sentences. We have to respect that. We also,
of course, have to deal with the issue of extradition in some cases, sharing of
information. So these are challenges that exist not just with respect to these kinds of
crimes but with respect to all kinds of crimes such as terrorism and child
pornography and trafficking for example.

To answer your question, yes, we have had discussions -- I have not had direct
discussions with my colleague here about this specific issue; but, of course, I often
have discussions with my counterparts overseas about the challenges that exist
because of the differences in our laws and what can we do to accommodate those
differences. In some cases take advantage of differences.

Believe me, we have had numerous conversations about this. We understand the
challenges that exist because of our different legal systems and different sentencing
regimes.

QUESTION: Just to follow up on that one. Let's take Canada specifically. Have you
put in a request of the Canadian authorities to have the perpetrators in Canada
extradited to the United States -- ATTORNEY GENERAL GONZALES: I do not
know if there has been a specific extradition request but we can certainly give you
that information with respect to Canada.

Yes, sir?

QUESTION: Attorney General Gonzales, I was wondering if you could explain why
the administration felt that it was necessary to collect the telephone detail records
from the phone companies in your anti-terror -- the President has addressed this in
a limited way, but I wondered if you could.

ATTORNEY GENERAL GONZALES: There has been no confirmation about any


details relating to the USA Today story. Now, the President has confirmed that with
respect to domestic collection, none of that is occurring in the United States without
a court order. He has also indicated that we understand we have legal obligations in
terms of collection of certain kinds of information. And those legal obligations are
being met.

I will say that what was in the USA Today story did relate to business records. As
some of you may know the US Supreme Court I believe in 1979 in Smith vs.
Maryland held that those kinds of records do not enjoy fourth amendment
protection. There is no reasonable expectation of privacy in those kinds of records.

There is a statute that deals with -- there is a statutory right of privacy but that
statute recognizes that with respect to business records there are a multiple number
of ways that the government can have access to that information, to business records
and, of course, the government such as the FBI can issue national security letters
and obtain them through those means. There are a number of legal ways, of course,
that the government can have access to business records.

Yes, sir?

QUESTION: Attorney General, in terms of the 2.8 million victims, any idea how
many of those may be from other -- are the majority of them from the United
States? Or are there victims in Canada and the other countries as well?

ATTORNEY GENERAL GONZALES: Well, the 2.8 million victims are here in the
United States and obviously there are other victims in other parts of the world. I do
not know what those numbers would be nation by nation. I do not know whether or
not -Any idea Madam Chairman? We can get that information for you.

QUESTION: I have a question. Can you illuminate the specific criminal cases found
in Costa Rica and the name of the criminal organization?

THE INTERPRETER: He is not allowed to go and give out any particular


information related to the ongoing investigations in Costa Rica. He did say that they
have been able to identify approximate 200 Costa Ricans that were involved in this
operation, but they are not allowed to go into particular details.

QUESTION: Judge Gonzales, as long as we are talking about the concerns of


veterans and lawmakers today and everybody who owns a telephone, can you tell us
about the concerns that were raised after your remarks on Sunday where it appeared
that you were burning to jail journalists for receiving and publishing classified
information.

ATTORNEY GENERAL GONZALES: I am glad you asked this question.

QUESTION: Did you really foresee approving cases like that going forward of
prosecuting journalists?

ATTORNEY GENERAL GONZALES: I was responding to a question about is


there a possibility, is there a statute that would seem to allow the prosecution and
the publishing of certain kinds of classified information. And such a statute exists.
So the possibility is there. But let me just, let me try to reassure journalists. My
primary focus quite frankly is on leakers who share the information with journalists
and, of course, I would much prefer to deal directly with responsible journalists and
try to persuade them that writing or publishing a story that jeopardizes or
compromises national security, secret programs of the United States which been
very effective in protecting America against terrorist groups like al Qaeda that it
would be better not to publish those kind of stories.

I would prefer, much prefer to work with the press and try to prevent those kinds of
stories from running as opposed to doing something else.

STAFF MEMBER: Last question.

QUESTION: If I may ask a question for both you and the FTC CHAIRMAN? Are
you surprised that so many people fell for these scams, some of which seemed to be
pretty obviously phoney?
CHAIRMAN MAJORAS: No. I am afraid that surprise went away right after I took
this job. The fact of the matter is that those who prey on consumers know their
vulnerabilities. They know their audience. They know who to go after. So, for
example, take the phoney credit card scam on the Spanish-speaking Americans.
What the scammers know is that many of these Spanish-speaking Americans are
new to our country, do not have an established credit rating here in our country.
And so they may fall for, "Hey, it doesn't matter whether you have a good credit
record. We'll give you a credit card anyway." They want to establish a financial life
here in the United States, so they want that and so you might know that it is too
good to be true, but these folks are learning and there is a vulnerability there. And
that is what we find time and time again with scammers. They zero in on those who
will actually believe them.

Weightloss fraud is a huge one that you know we deal with at the FTC. And you
think to yourself, "How on earth can anyone believe that if you rub this cream all
over you body and go to sleep that you are going to lose weight by morning?"

And yet diet and exercise is really hard and people want to believe that something
else will help them to lose weight. So we take it as it comes and we try to protect
consumers. If it is deceptive, we want to go after it.

ATTORNEY GENERAL GONZALES: Thank you everybody.

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