Canada Scam Artists Have a Global Reach

Overwhelmed by guilt and shame after being defrauded by telemarketers of more than $50,000, Rose Urbanski could not face the ordeal of telling her family what she’d done. So the Bay Area woman got a gun and shot herself.

The crooks who fleeced Urbanski have been convicted and face prison terms. But there are plenty more where they came from: Canada.

In the largest cities north of the border, telemarketing fraud is a thriving cottage industry that dupes thousands of U.S. senior citizens out of untold millions each year. Protected by distance from their victims, con artists also exploit Canada’s lenient stance on white-collar crime and the daunting logistics of dragging them across the border to face trial in the United States.

The strength of the U.S. dollar--worth about 1.5 Canadian dollars--has made the scams more attractive. And from their sanctuary in Canada, the crooks are extending their reach, targeting the elderly in England and Australia as well as in the U.S., officials say.

“Across-border [fraud] is getting worse, and ... now England is the target,” said Gus LaForge, a spokesman for PhoneBusters, a Canadian database for telemarketing complaints.

Southern California finds itself at both ends of the problem. The region long has been a mecca for home-grown phone fraud schemes, which mainly target victims in other states. But with its large population of affluent senior citizens, California also has been a prime hunting ground for the cross-border rings.

The U.S. attorney’s office in Los Angeles has won convictions in five cross-border cases in the last three years and has charges pending in six. Of the 93 U.S. attorneys’ offices, those in Los Angeles and Harrisburg, Pa., have been most aggressive in pursuing the rings. But overall, authorities concede, there have been too few prosecutions to drive the grifters out of business.

The fraud rings run the gamut from the large and sophisticated to seat-of-the-pants operations. Nailing the ringleaders is not fully effective because it’s easy for their accomplices to start up on their own.

“The only thing they need is a chair and a cell phone,” said Sylvain L’Heureux of the Royal Canadian Mounted Police.

Fighting back against the swindlers, Canadian and U.S. authorities have joined forces in three anti-fraud task forces--one each for the Montreal, Toronto and Vancouver areas, where the cross- border rings are concentrated.

Staffed mainly by the RCMP and other Canadian police and consumer agencies, along with smaller contingents from the FBI, U.S. Customs Service and U.S. Postal Inspection Service, the task forces have made inroads--shutting down boiler rooms, seizing assets and intercepting and returning checks to victims.

A Daunting Task

But the fraud rings are so numerous and mobile that many have met with little interference, authorities concede.

“There’s so much of this, and we’re just scratching the surface,” said Laureen France, an investigator with the Federal Trade Commission in Seattle, which also is involved in the crackdown.

Jurisdictional barriers also limit the punishment the scam artists fear most: prison time in the U.S.

The fraud rings rely on a maze of business names, bank accounts and mail drops, along with a repertoire of telephone aliases--all designed to throw authorities off the track. Highly mobile, they also have a frustrating habit of shifting locations every few months.

Working from “sucker lists” of potential victims, some schemes involve bogus investments, while others con the financially desperate out of advance fees for loans they never get.

Perhaps most outrageous are “recovery room” schemes that bring the joyous news that victims’ losses from a previous scam have been recovered through a class-action lawsuit. They need only send a check to cover legal or administrative fees, at which point they are victimized again.

But U.S. senior citizens have suffered the heaviest losses in schemes offering cash jackpots in sweepstakes or lotteries run from Australia, England or Spain. Victims are told that with the telemarketer’s special system, they have an excellent chance of winning or already have won a big prize. To collect, they must send a few hundred to a few thousand dollars to cover taxes or currency exchange.

Once they have paid, victims are informed that they have qualified for an even larger prize but must send additional fees or relinquish the jackpot to somebody else.

The con men have mastered the art of making “people fear feeling stupid for not participating in what appears to be a good opportunity,” said Mike Hartman, a U.S. postal inspector who works with the Toronto task force.

Some crooks have posed as customs agents, telling victims that their prizes are being held at the border until their tax payments are received. Others claim to be working with the FBI to “shut down different gimmicks and scams,” as one said in a taped conversation with an Orange County victim.

Crime’s Human Toll

As victims go, Rose Urbanski, who was 70 when she killed herself in March 2000, was younger than most.

“My mom was a very bright woman,” said her daughter, Sandy Grisolio, who lives in Orange. “I can’t even imagine how she got involved in this.”

Her death also came as a shock to Mark Beauchamp, a customs agent who had interviewed Urbanski while investigating those who conned her. Alarmed when Urbanski spoke of suicide, Beauchamp thought he had talked her out of it.

“Obviously [her death] was distressing, and I felt very bad for the family,” he said.

Although suicide is rare, the emotional and financial toll on victims often is profound.

“It has really knocked my mom down in the dirt--I mean, financially wiped her out,” said Larry Jones of San Luis Obispo, whose 85-year-old mother, Leah Larsen, lost at least $140,000 in one of the scams. “If there’s any way for these guys to sit behind bars for the rest of their lives, so they’re not going to be robbing elderly people like my mother, then I think that’s a really good thing.”

Said Ellyn M. Lindsay, an assistant U.S. attorney in Los Angeles who specializes in prosecuting telemarketing fraud: “It’s not just money; it’s a complete personal betrayal and the devastating loss of self-confidence that you could be taken in this way.”

Senior citizens’ sense of self-worth “is on the wane, anyway,” Lindsay said. “They look at this and say, ‘You know what? I am old and I can’t take care of myself anymore.’ ... You see, over and over, people just ending up in nursing homes after this.”

The task forces took shape after complaints reached such a crescendo in 1997 that then-President Clinton and Canadian Prime Minister Jean Chretien ordered that something be done.

In recent years, the task forces have closed scores of boiler rooms and made dozens of arrests, intercepted and returned millions of dollars to victims and frozen swindlers’ assets. Project Emptor, the Vancouver task force, has used British Columbia’s consumer fraud statute to seize $30 million in cash, real estate, luxury cars and boats. With court approval, the loot will be divvied up among victims.

“We’re making a difference,” said Sgt. Barry R. Baxter of the RCMP and head of Project Emptor. “We’ve taken $30 million of their toys.”

But authorities say tough prison terms, the best deterrent, have been far too infrequent.

In Canada, financial crimes typically draw a sentence of probation or fines. Even when criminals are jailed, they become eligible for release after serving one-sixth of a provincial sentence or one-third of a federal prison term.

The U.S., though also criticized as too tolerant of white-collar crimes, is draconian by comparison. Federal laws provide enhanced penalties for telemarketing fraud and for scams that target the elderly. In the U.S., moreover, inmates must serve at least 85% of a federal prison term.

A few of the swindlers have drawn tough sentences in the U.S. One ringleader got 11 years in New Jersey and another got 10 years in Florida; in Los Angeles, two Vancouver-area con men got prison sentences of seven years and of five years, 10 months.

But jurisdictional red tape is a heavy drag on such cases.

One obstacle involves treaty requirements for transferring evidence seized in Canada to U.S. federal authorities. To get such evidence, federal prosecutors must file a request that is scrutinized first by the Justice Department’s office of international affairs and then by the Canadian justice department. Then the request must be approved by a Canadian judge, over the objections of defense lawyers. The process easily can take a year or more.

Extradition often is more time-consuming, potentially taking at least three years for defendants to exhaust their appeals. This leaves plenty of opportunity for elderly victims to die or lose their memories before they can testify. Indeed, extradition is such a barrier that authorities have had their best luck nabbing suspects who rashly stepped onto U.S. soil--including those who crossed the border to do their banking, to vacation at Disney World or to make house calls on victims.

Suspect on the Move

When it comes to exploiting the international border, Dillon Sherif wrote the book.

The Iraqi-born telemarketer originally was known as Nuraldin Shareef Karim, but then borrowed a more dashing alias from lawman-hero Matt Dillon of TV’s “Gunsmoke” fame.

A man who draped himself in elegant clothes and drove a canary-yellow Ferrari, the 40-year-old Sherif also was meticulous about his work. A notebook seized last year in a raid on his Vancouver operation contained entries on keeping his aliases straight, including the reminder: “My name used Mario Lopez.” Another entry sized up a target: “She desperately wants to help her children who are ‘crashing’ economically.... She has back trouble but I think she also has $’s!!--go for big play.”

Maud Noble, a Beverly Hills senior citizen, was contacted by a “George Thomas”--in reality, Sherif or one of his minions, authorities say. Noble remembered him as a polite and religious-sounding man who said things like “bless you” all the time. He sent Noble a dozen red roses--this, after persuading her to liquidate her investments to send him $55,000.

“He was a very good actor,” Noble said. “I couldn’t forgive myself for such a mistake.”

In 1998, Sherif settled a pair of government lawsuits by agreeing to a court order barring him from pitching lottery chances.

Almost immediately, however, Sherif turned up in Spain, where he allegedly resumed targeting the elderly. Spanish authorities arrested him in June 1999 on charges of defrauding victims of $1.5 million.

After gaining his release, however, Sherif skipped bail and fled Spain for Vancouver. With the Spanish arrest warrant hanging over his head, the tireless Sherif set up shop again in his old stomping ground.

With cash from the United States pouring in, Sherif was arrested in October on a criminal complaint from the U.S. attorney in Los Angeles. Although Sherif was accused of violating the 1998 court order, of skipping out on his trial in Spain and of stashing large sums in Costa Rican and Panamanian accounts, his lawyer argued that he should be allowed to post bail. The Canadian court agreed.

The Canadian prosecutor had warned that Sherif was a serious flight risk and should be held pending extradition. But British Columbia Supreme Court Justice Bryan F. Ralph decided instead to set bail at $200,000 and require Sherif to surrender his passport.

Sherif quickly vanished. Soon after his disappearance, education officials in Syria requested the school records of his children. U.S. and Canadian authorities believe he is in that Middle Eastern country.

A court spokesman said Justice Ralph had no reason to think Sherif would flee, particularly after surrendering his travel documents. “Despite that fact, he took off,” which is “something that no judge on Earth is able to anticipate,” spokesman Lloyd McKenzie said.

Lindsay, the assistant U.S. attorney in Los Angeles, was livid.

“When we caught him, he was doing it [telemarketing fraud] again, in violation of the [court] order.” Yet “the judge in Canada sees fit to release the guy, with this history ... who has millions of dollars offshore.”

“He’s going to do this to more people. He’ll do it from wherever he can get a freakin’ telephone. And we had him,” Lindsay said.

“You can see how our attempts to deal with this problem are hindered by the international aspect.”