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CRM (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. ##### 95-609