Fraud Squad of Sly Seniors Helps FBI

For four years, the FBI’s secret weapon in the war against telemarketing fraud was a semiretired mother of three with a timid voice and an ear for malarkey.

She took over a former fraud victim’s telephone number, listened to con men spin tales about phony prize giveaways, bogus charities and scam investments--and tape-recorded every word.

Feigning enthusiasm, she sometimes got the scam artists into such a selling frenzy that she could put down the phone, stir pasta on the stove, then return a few minutes later without missing a beat.

The 58-year-old woman--call her Susan--was perhaps the most prolific operative among the dozens of volunteers from the American Assn. of Retired Persons who work undercover for the FBI, posing as victims to catch telemarketers on the prowl.

While their real identities are a closely guarded secret, the little-known squad of volunteers has produced some 11,000 recordings of conversations with scam artists in the past five years, revolutionizing the prosecution of phone fraud.

“The tapes are the best evidence we’ve ever had,” said Special Agent Cynthia Larson, who investigates telemarketing fraud from the FBI’s San Diego office. “You’ve got them saying, ‘I can guarantee you’re going to win that car. What color would you like, Mabel?’ You can get all the lies on tape.”

That’s bad news for the con men who prey on the elderly from a network of “boiler room” phone banks concentrated in the San Fernando Valley and “rip and tear” salesmen who call from hotels and phone booths nationwide. State officials are tracking at least 30 boiler rooms that opened in the Valley within the past year.

Tapes from the FBI’s library--which continues to grow by 60 recordings a week--have helped authorities prosecute more than 1,000 people on federal charges and file civil actions against hundreds of fraudulent companies nationwide, according to the Justice Department.

Telemarketing fraud is among America’s worst white-collar crimes, robbing unsuspecting victims of an estimated $40 billion per year with a parade of scams that changes week to week. Most recently, suspected con artists have been hawking movie production investments, Internet services and tickets for Canadian and Australian lotteries.

Whatever the pitch, chances are it has been tried on an AARP volunteer working for the government. Using “sucker lists” seized from various boiler rooms, federal investigators reroute the phone lines of past fraud victims to the volunteers’ homes. Each volunteer maintains a number for personal use, and has a second phone connected to the “mooch line.” When that phone rings, they assume their alter egos and wait for the lies to flow.

“When you know you’re taping them, it’s really kind of comical,” said Susan, who has retired her tape recorder and now works as an administrative assistant at her local FBI office. “They’re hanging themselves.”

After four years, she had turned over 3,000 recordings, but said listening to the telemarketers had become “a little routine.”

Crime-fighting over the phone is an ideal job for people such as Betty, 62, who said she likes staying home because she has trouble with arthritis. With the phone number of a 79-year-old widow redirected to her house, she fields up to five calls per day from telemarketers looking for a score.

A retiree who claims to have a “sixth sense” for detecting liars, Betty said the program has forced her to master the art of playing dumb.

“If they think you may be interested, they make more promises,” she said. “When you talk to the people, they do sound as though they’re telling the truth.”

Investigators said they periodically direct the volunteers to send the scam artists money, provided by the government, to keep up the illusion that there’s a potential sucker at the end of the line. Frank, 76, once was instructed by his FBI handlers to send $1,200 to a suspected con man in Greenville, S.C., who told him he could be eligible to win a $25,000 note. The caller was later convicted on fraud charges.

“I just play along with them,” said Frank, a former Army investigator and real estate salesman. “I act like I’m really surprised and happy that I won this gift. ‘I want to send you the money but, gee whiz, I’ve got to check my checking account, I think I don’t have enough.’ I give ‘em one story after another.”

While telemarketers are now aware that FBI volunteers are lurking on the phone lines, they have little choice but to keep dialing. Lists of repeat victims are perhaps the most valuable commodity in the telemarketing underworld, often selling for $5 a name. And hidden in the lists are the phone numbers that lead straight to an FBI volunteer.

“Telemarketers who are in it to defraud people can’t make a living without calling potential victims,” said Jonathan Rusch, a senior litigator with the Justice Department and national coordinator on telemarketing fraud cases. “We’re simply sitting back and playing the victim.”

In fact, when federal officials devised the program, they used real victims. But investigators said they prefer to use volunteers. Agents found that very elderly victims who tried undercover work sometimes forgot to turn on the recorder. One former victim became upset while taping a conversation with a con man, and blurted out, “We’re going to get you. I’m doing this for the FBI.”

The temptation to spill the secret even rises in volunteers such as Mike, 73, a grandfather and avid golfer who chats with scam artists from an easy chair placed next to his FBI phone.

“It’s getting to the point where you want to tell them they’re liars or laugh at them,” said the retired school superintendent. “You just have to go along with it, show a little enthusiasm. I try to let them do most of the talking. . . . As soon as they say, ‘I hope you’re sitting down, you’ve won a big prize,’ you kind of chuckle to yourself, ‘Here we go again.’ ”

FBI agents also created the program believing that the volunteers would play a passive role; the only time they might confront the telemarketers would be in court.

It didn’t turn out that way for Sylvia, a 60ish undercover victim who masquerades as a 77-year-old millionaire while she takes calls five hours a day, or until she gets tired of listening.

When a salesman unexpectedly showed up at the doorstep of her San Diego-area home to hand-deliver the prospectus for the bogus securities he was selling, she had to think fast. She took on a third identity--that of a housekeeper who had trouble with English.

When the con man asked for her 77-year-old alter ego to come to the door, Sylvia changed the pitch of her voice, faked an accent and said, “She no here right now.”

He left none the wiser.

“They’re looking for people who have some money,” Sylvia said. “They’re looking for elderly people who have a savings account, or an IRA [individual retirement account], or something they can really sink their teeth into.”

One con man thought he could fool Rosalie, 75. The FBI put a recorder on her phone after finding her number in the possession of a scam artist’s courier in Tacoma, Wash. Before long, the suspect called and told her she had won $1.3 million in a publisher’s sweepstakes. Her tape was one of seven used to convict the man on 15 counts of wire and mail fraud in April.

“I lied to him something terrible,” said Rosalie, a grandmother and former school secretary who loves ballroom dancing. “The more you pretend, the more he’s going to come out and tell you.”