10-Agency Task Force on Fraud Now in Action

Vowing to “make the kings of the boiler room, kings of the cellblock,” local, state and federal officials on Thursday announced that a Fraud Task Force, aimed at eradicating a problem costing American consumers about $500 million a year, is in operation.

“Southern California is the investment fraud capital of the world and that’s one title we’d like to lose,” Atty. Gen. John Van de Kamp said.

The task force, made up of representatives from 10 agencies, went public by announcing the recent arrests, indictments or convictions of more than a dozen businessmen on a variety of mail and wire fraud charges.

Each year, Van de Kamp said, consumers across the country lose millions to “fast-talking telephone swindlers from Southern California.”

To combat the problems, representatives of agencies--including the Los Angeles and Orange County district attorney’s offices, California Department of Corporations, Securities and Exchange Commission, FBI, Secret Service and the Postal Inspection Service--are meeting monthly to share information and decide how best to investigate and prosecute scores of fraud cases, officials said.

Combined Resources

“It became apparent that no one agency had the jurisdiction, much less the resources, to mount a full-scale assault on the burgeoning fraud problem in this area,” U.S. Atty. Robert Bonner said. “Newport Beach, in particular, has become a haven for fraudulent boiler-room operations.”

The term boiler room was apparently coined long ago, when telephone salesmen worked in basements filled with boilers and steam pipes, Van de Kamp said. He said a new law requiring telephone salespeople to register with the state after Jan. 1, 1986, is designed to put fraudulent sales operations out of business.

By sharing information and coordinating efforts, task force members recently took legal action against people operating schemes ranging from the sale of vitamins and phony vacations for $298, to a partnership selling overvalued land in the Antelope Valley, Bonner said.