Clinton Proposes Cutting Lines in Phone Fraud

President Clinton on Saturday proposed a new measure to crack down on telemarketers suspected of duping elderly people through fraudulent get-rich-quick schemes: Cut the solicitors’ phone lines.

The proposal is part of a legislative package Clinton will submit to Congress next month to “strengthen the safety net for America’s seniors,” he said in his weekly radio address.

“America’s seniors are especially vulnerable to fraud and abuse,” the president said. “Therefore, we must make special efforts to protect them.”

Telemarketing fraud has been a major concern of local, state and federal officials in recent years as stories have circulated of swindlers in “boiler rooms” who con elderly victims out of all or part of their life savings. Their ruses vary. Some operatives tell their victims they can claim cash prizes by paying up-front taxes or fees. Others collect money for phony charities, offer bogus investment opportunities or even pose as law-enforcement agents out to help past fraud victims recover their money.

John Russell, a spokesman for the Justice Department, said federal officials have made telemarketing fraud prosecution a “very high” priority in recent years. “We have the green light from the attorney general for more resources [on the issue] in both the Justice Department and the FBI,” Russell said. “She’s trying to protect people that are saving money in their old age and are getting fleeced by telephonic thieves.”

In their pursuit of telephone crooks, federal officials also are working with their Canadian counterparts to help stop cross-border telemarketing fraud.

But for all the progress that officials say they have made, they frequently run up against a major frustration: Suspected swindlers are allowed to continue using their telephone lines to bilk more victims while law-enforcement investigations of their activities wend their way through the justice system.

Clinton wants to end that problem, an administration official said, by allowing law-enforcement agents to cut the phone lines of suspected swindlers upon showing sufficient evidence of wrongdoing to a federal judge in a process similar to securing a search warrant.

“This new law will send a message to telemarketers,” Clinton said. “If you prey on older Americans, we will cut off your phone lines and shut you down.”

Every year, Clinton said, illegal telemarketers defraud the American people of an estimated $40 billion, and more than half the victims are over 50 years old.

The proposal, if enacted, could help quash a significant number of illegal operations in Southern California, which has been a hotbed of boiler rooms in recent years, said one law-enforcement officer.

“That is a great tool,” said Sgt. Lloyd Downing of the Orange County, Calif., Sheriff’s Department, who has participated in telemarketing investigations with federal and state agencies. “If we can determine that it’s an illegitimate organization, I have no problem with that. I think we would be able to use that in our daily operations in going after these people.”

Since 1993, three federal law-enforcement sting operations, among other efforts, have helped prosecutors bring about 2,000 cases of telemarketing fraud to court.

In one such probe announced last year, the federal government was aided by recruits from the American Assn. of Retired Persons who posed as victims. More than 40 telemarketers were arrested on one day last December in that operation, including 17 in Los Angeles and Orange counties.

Other measures in the crime bill Clinton is planning would:

* Give the Justice Department new power to probe nursing home abuse, setting prison sentences of up to 10 years and fines of up to $2 million for those convicted of repeated neglect and abuse.

* Strengthen enforcement of health-care fraud, allowing federal agents to stop false claims and illegal kickbacks.

* Impose tougher penalties on people who steal from pension and retirement funds.

Protecting the elderly from abuse is not expected to draw criticism, even from a Republican-led Congress that is frequently at odds with the Democratic president.

Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Special Committee on Aging, said he agrees with the president’s priorities on this issue. “As the number of older Americans grows, so does the number of scams targeting them,” Grassley said.

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Times wires services contributed to this story.