Originally created 02/11/99

Canadian telemarketing swindlers prey on American victims



TORONTO -- For decades, Canadians ranging from physicians to film stars have moved to the United States in quest of fame and fortune. These days, brazen Canadian-based crooks are making millions off Americans without ever leaving home.

Their racket: cross-border telemarketing fraud.

Relatively lenient penalties, plus the extra headaches international crime poses for police, have made Canada a location of choice for telephone scammers.

"Americans are being targeted big time," said Detective Constable Gus Laforge, an Ontario police investigator serving on a task force called Phonebusters.

"It's a huge, huge problem," he said. "For every operation we shut down, five others open up. Do we have a handle on telemarketing fraud? No, we don't."

There's no official estimate of how much money Canadian fraudsters have coaxed across the border, but police say some operations have made tens of millions of dollars.

There are plenty of telemarketing swindlers based within the United States, but even Attorney General Janet Reno has cited Canada as a particular problem. She recently spoke of a "significant increase" in Canadian-based scams, notably those aimed at duping American victims -- most of them elderly -- into thinking they have won a Canadian lottery.

One such victim was 93-year-old John Yerger of Tampa, Fla., who paid a $5,000 "processing fee" after being told he'd won a $1 million lottery prize.

"He sounded so sincere," Yerger told the St. Petersburg Times of the telemarketer who called, posing as a police officer.

Caught operating a similar lottery scheme, three Canadian men were extradited to North Carolina and have pleaded guilty to U.S. federal charges they bilked about 1,500 people out of as much as $6 million. The mastermind, Boaz Moshe Langman of Montreal, was sentenced Monday to 7´ years in jail.

Laforge said that sentence is much tougher than those for comparable cases in Canada. He cited the case of a second-time offender, Jack Stroll of Montreal, who recently was fined $200,000.

"That company scammed millions of dollars," Laforge said. "It's a substantial fine, but there's no jail time. Is that a deterrent?"

President Clinton and Canadian Prime Minister Jean Chretien discussed the cross-border fraud problem during a 1997 summit, and a joint-working group later recommended measures that include stricter laws in Canada and more efficient extradition procedures.

A bill targeting the scammers is under consideration in Canada's Parliament. It would make deceptive telemarketing a criminal offense punishable by up to five years in jail, impose new disclosure requirements on telemarketers and make it easier for police to wiretap suspected fraudsters.

"Any change in the law will be helpful," said Sgt. Greg Gard, a fraud specialist with the Royal Canadian Mounted Police.

Police say enforcement has become more challenging because many scam operations no longer use a fixed location to do business and instead use stolen cell phones.

The lottery scam is only one of numerous ploys used by the fraudsters. Other recent examples:

--A federal grand jury in Pennsylvania last year indicted two Toronto men for allegedly bilking U.S. businesses and individuals out of hundreds of thousands of dollars over four years by collecting on false Yellow Pages renewal invoices.

--A U.S.-Canadian investigation led to charges against 48 people allegedly involved in a cross-border scam involving gem sales. The Canadian-based suspects allegedly defrauded several thousand investors of more than $52 million. A minister from York, Pa., said he lost $1.18 million in the scam.

An increasingly common scam involves so-called advance-fee loans. People who have trouble getting loans elsewhere are given loan approval over the phone, but told they must pay fees up front. Once that check is in the mail, the company's phone disconnects and the caller disappears.

Advance-fee loan scam complaints recorded by Phonebusters rose twofold to 6,000 in 1998, from 3,000 in 1997.

Canadian investigators say they have ample motivation to pursue the cross-border fraudsters: Canada's reputation is at stake.

"It doesn't paint Canadians in a particularly good light," said Gard. "It's not how we want to be looked at."