Officials Put Pressure on Telemarketers

Criminal charges have been filed against 20 people and two companies in Southern California under a little-enforced law requiring telemarketing firms to register with state officials and to maintain a $100,000 customer protection bond, federal, state and local authorities announced Wednesday.

The three-day sweep of “boiler room” phone banks in Los Angeles and Orange counties was intended to promote compliance with the state’s telemarketing law.

FBI officials estimate that there are 5,000 boiler rooms in Southern California, but only 146 such firms are listed in the state registry.

Locating illicit firms has proved difficult, state officials said, because telemarketing con men often use multiple addresses as mail drops or dummy offices.

Atty. Gen. Dan Lungren said the state law should serve as a tool for law enforcement investigators trying to track telemarketers and root out fraud.

“We will not allow consumers to be victimized over the phone lines,” Lungren said.

The law requires each firm to provide the attorney general’s office with the addresses of all offices, its telephone numbers, aliases of phone solicitors and details about any investments or prizes offered.

Companies also must provide incorporation records and copies of written sales pitches, and they must post the $100,000 bonds to help protect the public from suffering losses through telemarketing activities. But registration alone is not proof that the firm offers a worthwhile opportunity, investigators cautioned.

Failure to register carries a maximum penalty of one year in jail and a $10,000 fine for the owner of the business. Phone salespeople who work for an unregistered company face up to six months in jail and a $2,500 fine.

Individuals charged in the operation hawked such investments as an oil drilling operation, a treasure hunt and a movie.

Federal regulators have accused employees at two of the firms involved in the sweep--a Sherman Oaks firm selling investments in an online casino and an Encino company offering investments in an Internet access provider--of defrauding consumers.

Richard Wade, supervisor of white-collar crime investigations for the FBI’s Los Angeles office, said agents may pursue fraud charges against other defendants.

“Everybody wants to get rich quick,” said City Atty. James Hahn. “But it’s not going to happen with a cold call over the phone.”

Industry officials estimate that illicit telemarketers con victims out of $40 billion per year, often using high-pressure sales tactics to squeeze money from elderly investors. Consumers who suspect that they have been swindled can call the Federal Trade Commission at (202) FTC-HELP.