Deputy Assistant Attorney General Arun G. Rao Delivers Remarks Announcing Nationwide Initiative to Curtail Illegal Telemarketing Operations

Thank you, Sam. 

I am grateful for the opportunity to join the U.S. Department of Justice’s many partners from across government and across the country to discuss our collective efforts to stop scam calls. And I am pleased to share the stage today not only with the FTC, but also with the FCC, as well as distinguished representatives of state attorney’s general offices, including Illinois Attorney General Kwame Raoul and Ohio Attorney General Dave Yost.

We are all aware of the significant problems posed, and immense frustration caused, by scam calls. Like many of you, scam calls have rudely interrupted important moments I’ve spent with friends and family. And we all have heard fraud messages delivered by illegal phone calls, including some that cause the listener to experience fear (such as when a fraudster impersonates a financial institution reporting a purported problem or pretends to be government agency purportedly on the verge of arresting the listener). Scam calls can cause financial devastation – and the full impact of frauds and scams can even extend beyond the monetary loss suffered by the victim. Nearly two-thirds of fraud victims reported experiencing stress, anxiety, difficulty sleeping or depression. 

Stopping these pernicious calls requires taking a comprehensive approach to the problem. We are seeking to bring scam callers to justice through both civil actions (monetary penalties and injunctive relief) and criminal prosecutions (prison time). Additionally, government enforcement agencies recognize that scam call operations require the support of a broad array of bad actors, including those who assist fraudsters in reaching vulnerable consumers by providing “lead lists” or by transmitting scam calls using Voice over Internet Protocol (VoIP) technology. Scam call operations would not succeed in enriching fraudsters without the participation of those who facilitate the movement of money from victims’ bank accounts to fraudsters.

That same comprehensive approach requires that we work across agencies and use all the tools entrusted to us – as the enforcement actions discussed today illustrate.  

The U.S. Department of Justice’s Consumer Protection Branch works closely with the FTC on efforts to stop scam calls. In May of this year, we sued XCast Labs, which (according to the complaint) allegedly facilitated billions of illegal robocalls, including calls that falsely claimed affiliation with the Social Security Administration or pretended be a utility and threatened to cut off service unless the victim made an immediate payment. Our close coordination with the FTC also recently resulted in a civil resolution with Nexway, a payment processing company which allegedly processed payments for technical support scams, including some that used deceptive pop-up notifications warning that the victim’s computer had been infected with a virus to induce the victim to provide money.

The ramifications for making scam calls are serious and can include criminal prosecution. I’d like to share several recent examples with you.    

• First, in a case brought by the Consumer Protection Branch, a defendant was sentenced in March to 65 months in prison for his role in conspiring with Peruvian-based call centers that defrauded Spanish-speaking United States residents by falsely threatening them with arrest, deportation, and other legal consequences. The defendant’s sentencing followed sentencings for seven other call center owner-operators — all of whom were extradited from Peru — and four distribution center operators who processed payments and facilitated the fraud in the United States.
• Next, in a case brought by the U.S. Attorney’s Office for the District of Minnesota, eight defendants have pleaded guilty in the past year in connection with their participation in a $300 million scheme involving fraudulent magazine sales.
• Additionally, in a recent criminal prosecution that followed an FTC civil action, the U.S. Attorney’s Office for the Southern District of New York secured a 78-month sentence for defendant who used telemarketers to target consumers with credit card debt. Thousands of customers of the defendant complained about fraud and the use of deceptive tactics. 

Facilitators of scam calls also risk substantial prison time. For example, last year the U.S. Attorney’s Office for the District of Arizona secured a 160-month prison term for an individual who distributed “lead lists” containing the personal information of thousands of older adults to fraudsters, enabling those fraudsters to target the older adults as part of a lottery scam. And in a case brought by the Consumer Protection Branch and the U.S. Attorney’s Office for the Southern District of California, a defendant was sentenced to 108 months in prison for facilitating a grandparent scam, in which fraudsters contacted elderly Americans and impersonated a grandchild, other close relative, or friend of the victim. The fraudsters falsely convinced the victims that their relatives or friends were in legal trouble and needed money to pay for bail, for medical expenses for car accident victims, or to prevent additional charges from being filed. The defendant was responsible for directing a network of individuals who received and forwarded victim funds – and personally picked up cash from victims.

Finally, a key part of our comprehensive strategy is consumer awareness and education.  Everyone should learn the signs of scam calls and how to help stop them.  Most importantly, please report scam calls to law enforcement.  None of the cases I have discussed today could have been brought without members of the public sharing their experiences with law enforcement.

Thanks again to the FTC for coordinating this event and hosting us this morning, and to all the agencies participating in this sweep for your partnership in this effort.  I look forward to continuing to work with all of you as part of our collective efforts to combat scam calls.