2 Telemarketers Indicted in Credit Scheme

A pair of Canadian telemarketers were indicted Thursday in Los Angeles on federal charges of bilking mostly elderly victims of more than $3 million in a credit card protection scheme.

Philip Arcand, 41, and Roberta Galway, 34, who operated in the Vancouver area of British Columbia, could face federal prison terms of up to 34 years if convicted on all charges, which include mail fraud and committing telemarketing fraud against the elderly.

Canada is a hotbed of phone frauds targeting U.S. seniors because Canadian courts rarely impose prison sentences for financial crimes. U.S. authorities have faced substantial obstacles in extraditing Canadian fraud suspects, but on occasion have arrested suspects when they stepped on U.S. soil.

That’s what happened to Arcand and Galway, who had purchased a home in Las Vegas and were arrested there Aug. 14, said Ellyn Lindsay, an assistant U.S. attorney in Los Angeles.

“It’s unconscionable that these people made millions of dollars--purchasing fancy houses and sports cars--by victimizing the most vulnerable of our population,” Lindsay said.

Arcand and Galway were being held in the federal Metropolitan Detention Center in Los Angeles pending a bail hearing scheduled for Sept. 6.

Operating under such names as American Card Services, Garrison Corp. and Farpoint Services International, Arcand and Galway offered to protect customers from unauthorized use or theft of their credit cards for a fee of $199 to $389 apiece, the grand jury indictment said.

According to the indictment, victims were asked by telemarketers to “verify” their credit card numbers by reading them over the phone. Charges then were put on victims’ cards whether they agreed to buy the service or not, the indictment states.

In fact, the indictment says, Arcand and Galway did not provide any services in exchange for the fees and were aware that major credit card firms already insure customers against unauthorized charges.

An affidavit filed by the FBI identified several alleged victims of the scheme from Hawaii, Michigan, West Virginia and Massachusetts, as well as Southern California.

The affidavit quoted Elaine Kuzma, a former employee of Arcand and Galway, as telling investigators that the majority of customers were elderly, and that “some of them understood what was happening, but many did not and were confused. Further, the telemarketers used high-pressure tactics on them.”

According to the affidavit, Kuzma also said Arcand and Galway owned an expensive house, a Mercedes-Benz, a Corvette, a BMW and a Ferrari and often traveled to places such as Hawaii and Mexico.

Dominic Gentile, Arcand’s lawyer, said his client would plead not guilty. Gentile said certain charges were in error.

“I don’t think anybody’s credit card was charged without them giving permission to do so,” he said. Gentile also said it wasn’t true that customers got nothing in return for their payments.

Although the bulk of the charges involve the offer of charge card protection, Arcand and Galway also were accused of processing credit card charges for other telemarketers involved in the illegal sale of foreign lottery chances.

Lindsay said the case “demonstrates that you should never, ever read your credit card [number] over the phone to someone who calls you, even if they say they’re with your credit card company.”