Growing Canada export: telemarketing fraud


One of Canada’s fastest-growing exports to the United States is telemarketing fraud, which takes in some US$70 million a year mainly from elderly Americans.

In an operation called “Project Colt,” agents from the U.S. Customs Service and the FBI have been working with the Royal Canadian Mounted Police and some local Canadian police forces to fight telephone scams.

So far, they have recovered and returned to victims about US$12 million.

Officials say Canada has become a paradise for this kind of fraud because the penalties there, usually a fine or short prison term, are generally much lighter than in the United States, where offenders can be sentenced to five years in prison for each defrauded victim.

The perpetrators, mostly Canadians and some Americans, operate “boiler rooms” where hundreds of people make calls 16 hours a day, seven days a week. They often use lists of people who are widowed or have Alzheimer’s disease. Officials say there are 40 to 50 boiler rooms operating in Montreal alone, the biggest Canadian center.

One of the largest phony lottery operations netted US$120 million, said Robin Landis, a senior special agent for Customs Service in Washington.

Vancouver and Toronto also are host to many illicit operations, he said.

In a typical scheme, victims get a phone call telling them it is their lucky day, that they have won a lottery jackpot or other big prize. For the prize money to be released, they are told, they must pay a duty, tax or fee of several thousand dollars. They are asked to send a check or wire the money to a bank account or a postal box — quickly, so they do not forfeit the prize money.

To make it look official, victims often are given phony award numbers and telephone numbers for contacting lottery officials.

In reality, Customs Service officials say, no duties are ever levied for claiming a foreign lottery prize or on money or checks moved across U.S. borders.

Sharon Hawkins’ mother, a 75-year-old woman living in Tucson, Arizona, eventually sent close to US$30,000 through Western Union after a man called and told her she had won US$10 million in the Canadian lottery, although she had never played it.

Hawkins’ mother, who did not want her first name used, cleaned out her checking account and took cash advances against her credit cards after getting several calls early last year.

“She wanted to believe them,” Sharon Hawkins said in a telephone interview. “These people were just so nice.”

Like many elderly people, her mother was susceptible to a friendly and sympathetic voice, said Sharon Hawkins, who contacted police.

“I was just horrified. I had no clue that she was so gullible,” she said.

By asking victims to send the money through Western Union, the con artists can feel they can safely pick it up at any one of hundreds of offices.

Other frequent scams: offering loans to people who have had trouble getting credit, with a fee for the loan to be received; soliciting donations for phony charities; selling protection from fraudulent credit-card charges for a fee and obtaining victims’ credit card numbers in the process; and selling investments in banking and real estate deals with promises of huge returns at little or no risk.

The lighter penalties in Canada for telemarketing fraud have led the Canadian Mounties to try to extradite suspects to the United States.

Sylvain L’Heureux, a constable in Montreal, can cite plenty of horror stories: the elderly California woman who lost US$300,000; a victim fleeced of US$63,000 who committed suicide soon after.

He believes the 1,800 complaints received by the Mounties may be “just the tip of the iceberg.”