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U.S. Targets Telemarketing Fraud Against the Elderly

TIMES STAFF WRITERS

“You don’t know what I’ve been through,” the 78-year-old woman pleaded with the telemarketing con man who called, pressing her to send him $500, then as little as $100, to make her eligible for a $50,000 cashier’s check.

Having already lost life savings of $180,000 to telemarketing swindlers making similar pitches, she resisted, then began sobbing as he and a confederate turned up the pressure.

Finally, he gave up in disgust. “You’re going to your grave a loser,” he snarled.

The brutal attempt at telephone fraud was taped as part of a two-year, joint federal and state undercover investigation of telemarketing crime aimed primarily at elderly victims. It was aired Thursday as authorities, led by the FBI, arrested 277 suspects in 15 states. That brought total arrests in the operation, known as Senior Sentinel, to 391, with more anticipated.

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In conducting the investigation, retired law enforcement agents and specially trained volunteers from the American Assn. of Retired Persons posed as intended recipients that the illegal telemarketers were trying to reach.

“Telephone pitches from illicit boiler-room operations cost Americans $40 billion a year,” U.S. Atty. Gen. Janet Reno said at a Las Vegas press conference at which the crackdown was announced. She said that victims commonly received five or more calls a day from high-pressure telephone salespeople once they made their first purchase or contribution.

Authorities identified San Diego, Las Vegas and Phoenix as the most popular spots for telemarketing con artists to set up their illicit operations and begin making long-distance calls. Many of their victims are in rural and suburban areas of the Midwest and South.

Operation Senior Sentinel was coordinated by the FBI office in San Diego, where more than 100 of the arrests occurred.

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Assistant U.S. Atty. Steven Peak, who spearheaded cases in San Diego, said that the government wants swindlers to know that “this is just the beginning of Senior Sentinel. We want telemarketers to know that next time they call someone they think is Mabel, an elderly widow in Iowa, they may really be talking to an FBI agent or someone from the AARP.”

Among the suspects caught in San Diego was Derrick Lyle Banks, the man said by the FBI to have called the elderly Colorado woman heard sobbing on the tape. Identifying himself as Robert Banks, he alternated his tough talk with terms of endearment, calling her “sweetheart” and “honey.”

Banks, 29, worked out of his apartment in Spring Valley and is now awaiting arraignment.

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He and other suspects are subject to prosecution for mail or wire fraud, crimes that carry a maximum penalty of five years in prison--up to 30 years if a financial institution is affected. Last year Congress toughened the possible penalty, allowing mail or wire fraud to be punished by an additional five years, or 10 more if 10 or more senior citizens are harmed or targeted.

Many of the telemarketing offers fell into these four categories, the FBI said:

* Fraudulent charities.

* “Premium” promotions in which victims were “guaranteed” one of several valuable prizes but were induced to buy an overpriced product and received a cheap prize.

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* 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.

* Large-scale investment schemes.

“They call it telemarketing fraud but I call it electronic mugging,” said Ayatan Stromberg, an AARP field representative in Seattle who attended the San Diego press conference. “To hear these people lose their dignity and their ability to survive economically, it is just heartbreaking.”

The investigation grew out of an earlier FBI undercover probe, Operation Disconnect, which in March 1993 identified 123 illegal telemarketing enterprises. As of Nov. 30, about 360 suspects had been indicted in that operation, with 296 convicted so far.

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After playing a tape of confidence men making various phony pitches, Alan Bersin, U.S. attorney in San Diego, referred to them as “the kind of people you want to strangle when you hear it that way.”

In the investigation, the FBI obtained the use of phone lines from defrauded victims. Phone calls from telemarketers were transferred to the AARP volunteers, law enforcement agents or retired FBI agents, who played the role of the intended recipient during the recorded conversations.

About 5,000 tapes of telemarketing pitches now are housed in a secret FBI vault in San Diego. Criminalists are cross-indexing the tapes according to names, locations and kinds of pitches to help with prosecution.

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Assistant U.S. Atty. Peak in San Diego said that victims were as old as 94 and that it is not unusual for the criminals to demand a victim’s life savings. “That’s not uncommon in this industry,” he said.

In San Diego, the telemarketing fraud industry has moved beyond the stereotypical “boiler room” with dozens of phones. “We put the boiler rooms out of business three years ago,” Peak said.

Now, many telemarketing fraud artists work out of their homes, hotel rooms and sometimes from their cars using cellular phones, authorities said.

The offices of more than 12 state attorneys general took part in the investigation, along with 38 FBI field offices, the fraud section of the Justice Department’s criminal division and 12 U.S. attorneys’ offices.

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In Los Angeles, authorities said that an investigation called Operation Hot Lead had identified 37 suspects, half of whom were in custody Thursday morning. The rest were being sought and officials predicted that most would be under arrest by day’s end.

Some of the suspects ran large operations that bilked thousands of victims out of a few hundred or thousand dollars each, officials said. Other suspects concentrated on single victims, returning again and again with new scams.

One California woman, for instance, lost more than $100,000, then was hit up again by a fraudulent telemarketer who said that he could get some of her money back for her.

“I would characterize these people as leeches,” Charlie J. Parsons, special agent in charge of the FBI’s Los Angeles office, said of the fraudulent telemarketers. “They keep coming back until they bleed you to death.”

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Parsons said illicit operations have taken root in Southern California, with more than 500 such centers thought to be working in Los Angeles and Orange counties alone.

U.S. Atty. Nora Manella said that the best protection is for potential victims to exercise healthy skepticism.

“If something sounds too good to be true,” Manella said, “it is.”

Times staff writer Jim Newton in Los Angeles contributed to this story. Ostrow reported from Washington and Perry from San Diego.

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