‘Yaks’ Take ‘Mooches’ to ‘Dances’ : Telephone Pitchmen Cater to Greed and Gullibility
“The stupidity of people never ceases to amaze me,” the salesman said. “Something is wrong with a person if they will send me $20,000 or $30,000 over the phone.”
The salesman, who works in North Miami Beach under the name Kevin O’Brien, is typical of thousands of high-pressure telephone sales people around the country pushing questionable investments despite aggressive state and federal efforts to clean up the telemarketing industry.
O’Brien, who agreed to be interviewed on the condition that his real name not be used, makes thousands of dollars in commissions on various investments that he unabashedly describes as scams. A successful day on the phone “is like magic--it’s like winning the quinella in the ninth race,” said O’Brien, who formerly sold discount furniture.
Many Successful Days
There are many successful days, made possible by tactics designed to take advantage of greed and gullibility.
As in legitimate telemarketing operations, the salesmen operate out of so-called boiler rooms, which range in size from crowded, unmarked storefronts housing a half-dozen sales people to 100 or more desks and telephones located in respectable downtown high-rises.
According to federal and state investigations and interviews with boiler-room operators, most salesmen spend 10 to 12 hours a day on the phone, making hundreds of calls.
Leads come from a variety of sources. O’Brien and others interviewed said a skilled boiler-room operator will buy and sell lists of names and phone numbers of easy marks to other operators. Salesmen, too, keep their own roster of people who have sent large sums of money to a voice on the phone. In addition to the lists, salesmen depend on business directories, local phone books and leads provided by other customers.
‘Yaks’ and ‘Mooches’
In the language of the boiler room, the salesmen are “yaks.” The customers are “suckers” or “mooches.” Hooking a new customer into sending money is called “dancing.”
And the longer the potential customer “dances,” the better chance the salesman has of closing a deal.
Once a customer sends any money, the salesman’s goal is to call back and “load them”--sell them more of whatever they are buying.
Many boiler-room managers insist that their salesmen stick to a carefully prepared script. The script, or “pitch,” provides answers for virtually every objection raised by a potential customer.
For example, if the potential customer says, “I want to ask the Lord,” a script used by the now-defunct First American Currency Inc. of Laguna Hills instructed the salesmen to respond: “Do you feel that I would be on the phone with you if the Lord felt that this was something you shouldn’t do?”
Hooking a Prospect
If a customer said he wanted time to think about the deal, the salesmen were instructed to say there was a shortage of whatever commodity was being touted. That often hooked a reluctant prospect.
The script continued: “ ‘If it’s available, do you want the entire 2,500 (ounces of a precious metal)?’ If he says yes, put him back on hold, wait 30 seconds, pick up the phone and say, ‘Mr. Jones, congratulations! We just bought 2,500 ounces. . . . We just made it.’ ”
First American, which grossed about $12 million a year, was shut down and placed into receivership late last year by a federal judge at the request of the U.S. Commodity Futures Trading Commission, which charged that the firm was selling illegal credit contracts for precious metals.
Salesmen interviewed said the quickest way to end a conversation with them is to simply hang up the phone.
But hanging up was not easy for an Oregon woman who sent $1,000 to a Los Angeles company to defray the “gift tax” in a phony sweepstakes scam. She said she stayed on the line with a salesman for an hour and a half. Later on, her husband spoke with the salesman for another hour and the two became convinced that what the salesman told them was true.
A Kind of Brainwash
“He sounded so nice,” said the woman, who asked not to be identified. “We really believed him.”
Repeating the pitch a hundred times a day serves as a kind of brainwash, so that after a while O’Brien and others say they stop feeling guilty.
“I had a widow with four children from Ohio who invested $50,000 (in an oil lease) and never saw a penny of it again,” O’Brien said with a laugh.
The operators put enormous pressures on the salesmen, but the rewards can be great, the salesmen say. One salesman said that consistent sales of such big-ticket items as gemstones, precious metals or oil leases can earn $10,000 a month in commissions. Some operators will offer drugs and free travel as incentives, another said.
Experienced salesmen frequently move from boiler room to boiler room, either seeking more money, or evading legal problems when law enforcement officials arrest the owners.
However, in virtually every boiler-room case pending in U.S. District Court in Los Angeles, it is the owner, not the telephone sales staff, who has been prosecuted. Prosecutors contend that they do not have the resources to attempt to round up all the salesmen.
U.S. postal inspectors who investigate boiler-room cases say most scams run their course in a year or two. The Postal Service says one exception involved a Malibu man whom they charged with running a phony office-supply company that grossed $36 million in four years. The case is now pending in Los Angeles federal court.
