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tv   [untitled]    March 21, 2012 11:00pm-11:30pm EDT

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him perhaps making sudden and uncharacteristic large withdrawals or having multiple overdrafts or the broker is getting calls to cash in his conservative investments and to buy shares in a risky startup that he just heard about from his new best friend. so we all know and many of us have had personal experience that it's really hard to take away the car keys when dad's reflexes are getting slow or his vision declines. but one day we fear that dad's car will hit a child crossing the street, and so we do something about it. similarly we don't want to take away mom's financial driver's license. and then we see mom being taken by a lottery scheme, buying an inappropriate annuity after attending a free lunch seminar, or getting ripped off by her home care aide. so you can see that we have a huge challenge.
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i'll just talk really quickly about the research at aarp public policy institute that about betsy talked about. it was in the investor sphere but we surveyed frontline financial advisers, broker/dealers and their compliance officers about do they understand diminished capacity, do they see it as a problem? do they have protocols in their firm to deal with it? are they worried about financial exploitation? what do they need? and the message was loud and clear, yes, they see it as a problem. almost all of them recognized it. some of them have protocols but their protocols were all over the map. they overwhelmingly said we need training on 0 diminished capacity. it should be mandatory but our firms don't require it. so i think it's interesting that there's a recognition but yet we don't have the tools yet and we're going to all have to start
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working together to create them. >> one of the scams you mentioned was the lottery scam. jeff steger in my office has done some work in lottery schemes as have others. can you talk about what a lottery scam is and a focus on how the scammers used some of their vulnerabilities that both betsy and naomi talked with about, have they use that had to their advantage to steal money? >> sure. as a prosecutor with the cons e consumer protection branch, we're currently participating in a number of investigations involving lottery scams that are emanating from jamaica and preying on citizens in the u.s., mainly elderly people. essentially the scammers will call potential victims in the u.s. including many elderly people and inform the potential victim they have won cash and prizes, sometimes cash and a mercedes, typically a car.
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but mostly money. we're talking about millions of dollars that these people are told they won. and indicate the winnings will only be delivered if the individuals pay up-front fees, taxes, or insurance. victims end up sending the money through wire transfers, through entities david mentioned earlier, through western union, through money dpram, through stored value cards, the green dot card that betsy mentioned. and that money ultimately will be sent down to jamaica. our office is currently in the middle, as i mentioned, involved in a number of investigations. i just want to give a profile of -- profiles of five recent victims that we have talked to meaning within the last couple
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of weeks, and i'm going to be generic because these are ongoing criminal investigations. one is a female, early 70s. she was working at the time. she was living alone. received a call that she had won a sweepstakes prize of $3 million to $5 million. during the conversation, the initial conversation, the fraudster was most interested in knowing from her what it felt like to win the lottery and that was essentially to gain her trust. over time they had many conversations, many e-mails. he was able to get her trust, and she ended up sending tens of thousands of dollars and wiring tens of thousands of dollars which ultimately, we believe, ended up in jamaica. a second victim, a female, in her late 80s living at home alone in a small town, she acknowledged that she entered sweepstakes at times. she was called at least 12 times in a two and a half week period,
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and she ended up wiring money to them. a third victim, a male in his late 70s, early 80s, he was a widower. lived alone in a small town. he was an owner of a small business during his career and, you know, he was a victim of this time of lottery scam. a fourth victim, a female in her 70s, lives in a small town, lived alone, acknowledged she entered sweepstakes such as publisher's clearing house and she was victimized by multiple groups over a period of several months, and she wired money to them. she got suspicious after she didn't get her winnings, but they offered her an excuse saying that because her fees were not coming in as quickly as they had anticipated that her winnings were being delayed and that's how she continued to be caught up in this scam. and finally a fifth victim, a
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female in her early 70s, again, lived in a small town, they sent her a check to purportedly pay the fees, that this was going to be an advance. she deposited the check and she immediately or shortly thereafter with drew the money from the check and sent it out. the check bounced and so she was out that money. to put a little more meat on this profile, these people that we've been talking to most recently, they are elderly but they're not in their 90s. they're not in nursing homes. they typically live alone. they're independent. they have some disposable income but not a huge amount. so after a couple weeks when their disposable income is gone, it's not unusual that they would
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take out a loan on their house or, more typically or typically they would take a cash advance on credit cards. to talk about their profile a little bit more, these scammers who, at least in these investigations, are from jamaica, they will call these individuals more than perhaps their family members will call them. >> jeff, let me stop there. that's something i was going to ask jonathan about. what's striking or what is common about all these individuals is they are living alone and that perhaps part of what the draw is to these folks is they have somebody to talk to and that goes to impostor frauds that i know you may have heard of this, different flavors of it, so to speak. jonathan, can you talk about impostor frauds, what they are and also talk a little bit about your work internationally. as jeff said all this money is being wired internationally and it sounds like perhaps there are
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frauds around the world that are similar to ours and can confirm what we do. >> thanks, mike. first impostor frauds and then as mike suggested talk about the broader ramifications of the types of mass marketing fraud that our section and several u.s. attorney's offices as well as our federal investigator agency partners have been working on. impostor frauds can fall into a couple of different categories. one of them, which has gotten a lot of currency lately among hard core fraudsters is known simply as the grandparent scam. we first heard about this several years ago in japan where -- and the m.o. for this is fundamentally the same as we now hear about today in the united states. people get lists of others, typically senior citizens, although they may be calling these people cold, and when the phone rings and that person picks up at the other end of the phone the person says, it's me.
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and depending on whether they know they're calling an older person, obviously it won't work in every single instance but oftentimes the person will say, if it happens to someone in the united states, johnny, is that you? that's all they need. yes, grandma, it's me. i've been arrested. i'm here in -- fill in the country. i'm here this france. i'm here in the netherlands. i need bail money. can you possibly wire me some bail money? or, i've been in an accident. i need money. i have to pay the hospital. can you just send some money to me right away? naomi and beth touch on different kinds of vulnerabilities that may stem more from neurobiology, these types of scams would play on the
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heart strings of anybody who makes a mistake and never anticipates the possibility somebody would be calling them up with the specific purpose of lying from the very first words of the conversation to get money from them. so they respond in the way they think they need to to help out their loved one, grandson, whoever, and only later on do they find out the $1,000, $1,500 they just wired somewhere didn't go to their grandson. it went in the pockets of fraudsters. and as for other types of impostor scams, the grandparent scam is a variation on things we've seen increasingly, not just in the united states but from other venues around the world. about ten days ago the royal canadian mounted police made arrests in the montreal area of several individuals who were engaged full time in the grandparent scam specifically
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targeting older americans. now, why is it that they would be doing this? well, first of all, for a long time u.s. law enforcement has recognized that there's been a two-way trade, you might say, in fraud between the u.s. and canada. going back as far as 1998, a series of regional task forces were set up across canada with u.s. and canadian participation to work. telemarketing fraud and other types of mass marketing fraud on a collective basis. and all of our major partners and consumer fraud ranging from the federal trade chigs to the fbi the postal inspection service, the secret service, have all participated in different ways in these task forces. the frame of reference has changed. now when jeff talks about lottery fraud, note he didn't say as we might have a number of years back, south florida or southern california, now it's
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costa rica, jamaica, the dominican republic, and farther afield, spain, and other parts of the world. now, in part because we have seen and assistant attorney general brewer's remarks highlighted this as well, as we have seen the globalization of crime in general, we've seen the globalization of fraud including the globalization of techniques. when we first started to compare notes with our law enforcement colleagues going back four, five years ago in australia, canada, the united kingdom, and even nigeria, we started to find that we were talking about the same kinds of scams with the same kinds of techniques targeted against the same kinds, in many instances of senior populations often as well by the same groups of people. so part of what we sought to do, and i think it's fair to say that mike's office, fraud section, multiple u.s. attorneys have focused on this
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particularly. what we're trying to do is take our ability to respond to these types of frauds directed at older americans to the next level where we share information with each other about who from our respective investigations and intelligence we figured out are the main players behind these schemes, where are they launching these schemes from? where are they getting their lead lists from? how are they recruiting? how do they organize? where are they moving their money? more and more what we focus on within the justice department and the rest of the federal law enforcement community has to do with sharing information better, faster, coordinating more effectively as the ftc has done very successfully over a number of years but recognizing that fraud has become globalized and particularly when you are targeting seniors with so many different types of scams whether it's lottery scams, inheritance scams, grandparent scams, ultimately we have to move
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faster, share information faster, and collaborate faster. what i mentioned is one example of what we can do, but it takes that kind of active and sustained cooperation between law enforcement here and in other countries. >> and that's coordination among law enforcement. there's also the international component of these will affect the kind of messages we will send to consumers, and that's something david would like to talk about, about how the ftc is recognizing the international component of much of their work and how it affects the messaging or the messages they give out to consumers -- well, to consumers. >> let me put this in context. i terrific summary of the kinds of scams that are plaguing our older people in the united states, but they pose a real problem, a real challenge both for law enforcement and for consumer education. so let me just sort of run through some of the reasons why that is so. these are retail rather than
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wholesale scams. one of the keys to the scam typically is getting someone on the phone and having a conversation with them. they may be initiated through the internet. they may be initiated through the receipt of a fake check, but generally there is one-on-one interaction between the scammer and the victim. second, as jonathan has pointed out, a lot of these boiler rooms are not in the united states. they're in canada, they're in jamaica, they're in ghana. we get these complaints, you know, now even peru and spain show up on our lists in terms of where these kinds of calls originate from. so these are not the boiler rooms in tampa that we can shut down easily. third, a multiplicity of scams. if you want to educate people about grandparent scams, that's one thing. but these scams take multiple forms. they're grandparent scams, lottery scams, sweepstakes scams, they're fake check scams,
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they're mystery shopper scams. as you multiply the forms the scam takes, you increase the difficulties of doing consumer ad. so we really have a three-pronged approach to going after these scams at the ftc. first and foremost, of course, we want to stop these scams. we want to close down the boiler rooms. we work very closely with the canadian authorities, the jamaican authorities and others, to try to find these guys and to stop them. we also are trying to go after what we think is the pivot point here. at some point the elderly person needs to send money to the scam artist. and that is the point where we can go after them wholesale not retail. so we have money gram under water, we have western union agreeing to agree to essentially the terms we have in our money
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gram order. one of the things we have done and is really starting to yield results is we've insisted on really clear consumer ad. so if you walk into many walmarts today, homefully within a year if you walk into any walmart money gram's principal outlets are in walmart stores. they are under our order. you will see facing you as a consumer a miranda warning. if you think you've won a lottery, guess again. if if you think you're sending money to a relative, call them and make sure. if you think the check you just cashed is a real check, wait a month because it probably isn't. if you've been hired as a mystery shopper, again, sorry, you're out of luck. and training the personnel who actual actually man the desks there to talk to an elderly person who is
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about to wire money to jamaica or montreal or ghana, why are you send issing this money? and one of the sad parts, and this gets to naomi and what beth were talking about before, sometimes they have to fight with the person. you didn't win. oh, but here it says i won a million dollars. and there are tragic stories in ultimately they leave the money gram outlet which won't let them wire the money and go somewhere else and send it. which underscores the consumer front. just to echo what he was saying, commonly in these types of scams and i believe dave will know this, in order to ensure the victim they have won, they may receive documents on ftc letter head, on doj letter head, on irs letter head, on federal
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reserve letter head saying that they've won the lottery in this amount and one of the tactics the government can use is that there are laws against impercent na impersonating a federal employee. >> one of the things green dot has agreed not to allow basically refunds, getting money in jamaica. we're working now with a store value card can company in order to try to combat this fraud because as important as stopping them going after the scammers, as consumer ad is, the way we'll get real traction here is by going after the money and stopping the flow of the money. >> and that's an important conceptual law enforcement ta
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tactic a lot of us are using which is what we've been calling a choke point. where can we attack a legitimate business to stop the flow of money. we've been talking a little bit about what seem to be sophisticated frauds overseas, using phones and wires, but the tried and true door-to-door fraud still exists. ten men are still around. they are not selling aluminum siding anymore and it's something abby kuzma have been doing. if you can talk about the door-to-door fraud that still hams. >> yeah, unfortunately, it still happens. we have seen all of these scams among the consumers we are representing. one of the scams that's very common in our area partly because every year we face a lot of storms which you've all been reading about in southern indiana, tennessee and illinois. we always get tornadoes. we always get very severe storms with hail, et cetera.
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there are a group of scammers that will go from door-to-door and from state to state following the storms. we call them storm chasers. sometimes we have a different group of scammers we call travelers that just come seasonally depending upon what the issues are. in the case of the storm chasers what will happen is they will follow a disaster and they will go door-to-door and say things like, i just repaired your neighbor's roof, and i have some materials left over. be happy to give you a discount on your repair for your house because i have one more day i'm going to be here. if you can decide right now -- so there's always this high pressure sales, the concern for you're going to make a deal only right now. we did it for your neighbor. so they're trying to give a number of areas of comfort with respect to, well, i've already about been in your neighborhood, et cetera. and of course we've even seen
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people get up on the roofs and make damage so that they can ostensibly repair it. a lot of times the insurance company get involved where they talk the person into signingr a money, et cetera. it's a very pervasive thing. we see it every single year and seasonally as well and it's a really big problem. we also see many of the things that you all have been talking about in terms of persons helpers coming into people's homes and taking advantage of elderly persons -- >> i think that's one if you could expand on that because i'm going to go next talking a lot about strangers calling up and it sounds like you're talking about folks who know -- >> this is the opposite of strangers. it can be a family member as we've been discussing, but it can be someone who takes advantage of the situation of being in the home of the individual. we've also seen persons who are committing identity theft, and this is something we warn people about all the time.
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where you got a repair individual who has come into the home to fix the toilet or fix something in the home and especially elderly people but really any of us don't think about what kinds of personal information might be lying around in the house while that individual is wandering around affecting the repair. it's one of the things we educate people about, before you have some stranger into your home, be sure to walk around your home especially where they might be and cover up everything. make sure anything that has your personal identification information is taken and put away some place safe. we find that -- and i really appreciated all the research aarp has done because we find education one-on-one to be much more effective with the elderly than anything else. we go all around the state and i would encourage ftc and the federal partners to use the state ag's office.
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a lot of us do have extensive outreach departments where we go around the state and specifically educate groups of elderly and other vulnerable populations. they listen to us because they think of us as being -- we have a certain amount of authority because we're the ag in their state, we're the good guys, so we have a bit of trust there and, frankly, it's just harder to reach people with paper. and this is a group, a population where you all have awesome materials on the internet, but they don't use the internet, and they don't look on the internet for information. they don't even know they need the information until you tell them this is what's going on. and we do it annually if not more often. >> abby, in the interest of time -- >> sorry. >> we have to wrap up. i leave with one question which is a natural outgrowth of what you're saying and i'll direct it at david which is some folks don't know to ask or don't know what's out there. one of the things i would like
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you to comment on very briefly, how do law enforcement learn about frauds? how can folks be more willing to report them and how can we turn around and tell people about things that are happening? >> well, we depend like every other law enforcement agency on the courage of people to step forward. and so one of the things we've been doing is common ground conferences, going all over the k country meeting with consumer groups, legal services, local law enforcement to try to encourage people to reach out. and that effort has yielded enormous dividends because we are getting people who are in the nursing homes or do reach out to provide services to the elderly. >> i think we'll stop on that because that's a really fascinating point as opposed to waiting for people to come to us and the people in the room here can take that as a last message, you can reach out to where folks are.
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>> get out of d.c. >> well, thank you, folks. thanks for the information. >> good work. the panelists are to my immediate left sallie cooper, the director of operations from the internal ref thank you service criminal investigation, and to her left is carol ide, the civil criminal coordinator in the tax division of the department of justice. and they're going to talk about, again, common tax scams that consumers and individuals should watch out for as they are preparing to file their tax returns. so, sallie, carol, thank you very much. >> hi. good afternoon. thank you for having me on the panel this afternoon. as mike said, i'm sallie cooper, of operations, policy and support for irs criminal
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investigation. and one thing we were talking about as we were listening to all the panels is there is a permeation of scams or commonalities between the scams and every panel that it seems to be presenting today. as far as criminal investigations mission, ci is the investigative arm of the internal revenue service. we support the overall mission of irs but we enforce the criminal statutes relative to tax administration and related financial crimes in order to 0 encourage and achieve voluntary compliance with the internal revenue code. once the investigation is complete we afford a recommendation for prosecution to our partners at the department of justice, specifically we start with the tax division who reviews our work and hopefully authorizes for us to go forward with prosecution and they then in
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turn refer it over to the respective u.s. attorney's office. and carol is going to give a little bit about her mission. >> the tax division at the justice department does review all criminal referrals from the internal revenue certificaservi criminal investigative division. our attorneys do a lot of the prosecutions but we really rely on the local united states attorneys to carry the bulk of that water in the criminal prosecutions. we also have a civil arm, actually more civil attorneys, because, as you know, there's a lot of affirmative tax litigation which actually may be seen as kind of anti-consumer. i've been doing foreclosures for over 23 years so there are a number of people who probably don't like a big part of our mission. but we also combat on the civil side a lot of the kind of scams that we'll be talking about today, that sallie will be talking about today.
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for example, getting injunctions against bad tax return preparers and abusive tax shelter promoters, things like that. so we're working and in accordance with the attorney general's recent memorandum really pushing parallel investigations and parallel proceedings where we civilly shut down a scam, collect any -- as much delinquent tax and penalties as possible but also investigate and prosecute criminally wherever possible. so we're really pushing those parallel proceedings. >> each year irs has been putting out what we call the dirty dozen. and what that is is a list of 12 -- of the top 12 scams that are perpetrated against innocent taxpayers. i'm just going to cover a few of them today but topping the list this year is identity

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