General · December 15, 2020 0

Forth Strategy for War Against Transnational Elder Fraud

Protecting the Greatest Generation: U.S. Attorney for the Eastern District of Texas Sets Forth Strategy for War Against Transnational Elder Fraud

DALLAS, TX (STL.News) United States Attorney Stephen J. Cox addresses the North Texas Crime Commission (NTCC) today via a Zoom meeting for their regular monthly meeting.

U.S. Attorney Cox was introduced by Assistant U.S. Attorney Camelia Lopez and NTCC Chair David Dean:

“Thank you, David, for that introduction, and thank you to the North Texas Crime Commission for hosting us. I’ve heard about your good work supporting law enforcement since I arrived in the Eastern District of Texas in June, so it is a privilege to speak with you today.

I am especially grateful that you are hosting this forum that allows us to focus on one of the significant challenges facing our nation’s law enforcement community and those we serve.  In particular, I’m glad to speak about what we can do to protect our senior citizens.

Whether part of the “Greatest Generation,” or “Baby Boomers,” or the “Silent Generation” in between, our parents, grandparents, and great grandparents worked hard to ensure a better future for us.  While the challenges we face individually or as a society may be great, we owe our elders a great debt and should be working to ensure their days are safe and secure.

Safety and well-being have been a focus for all of us over the past few months.  We have been home bound.  Witnessed businesses large and small suffer to the point of collapse.  Adapted our work, education, and social lives around obstacles we could not have imagined a year ago.

Yet many of our challenges pale in comparison to what seniors have dealt with: enforced isolation … even enforced or encouraged sheltering with Covid-19-positive patients in care facilities.  At their most vulnerable moments many are unable to be with loved ones, friends, or even a minister due to lockdown restrictions.

Due to the pandemic, we have learned a great deal about our society over the past few months.  Some of it has been inspiring.  Some of it disappointing, even troubling.

One of the takeaways should be that our elders deserve far better than what our society provides them.  To that end, I’d like to focus our attention today on what we as law enforcement authorities can do to address one particularly challenging problem: the very real and ongoing threat of transnational crime rings that prey on our nation’s seniors.

When you hear talk of elder fraud, it is all too easy to think about one-off scams or swindles, whether for credit card charges, identity theft, or some other form of financial fraud.

But I want to challenge all of you to think about this problem in a wholistic and deeper way.  Think of elder fraud as a noxious weed in an otherwise well-tended garden.  You can see the weed above the surface, but not the deep roots under the soil that are the real problem.  Without addressing the root, the blight continues and spreads.

The same can be said of elder fraud.  You see the phone scam, but not the Russian mafia, the Indian call center, the shadowy money laundering or cryptocurrency network that operates in the distant background. These crime networks are the root of the problem.

As an example, let me tell you a story about an elderly widower; let’s call him Grandpa Larry.  His children are grown and live out of state.  It’s been years since he experienced true companionship.  But as with so many like Larry, he is able to connect to his family – and others – via the Internet.  While on an online dating app for seniors, he meets a wonderful woman who is attentive to him and interested in what he shares of his daily life.

This relationship seemingly deepens over a number of weeks.  But then the woman online needs a favor.  She wants to visit him, but she has to clear some debts and her family won’t help her.

Larry sends her money once, then again, and again in ever increasing amounts, and months later, he finds himself with little savings. Worse than losing his money, however, is the shame and embarrassment of being the victim of a romance scam and not telling his grown children he needs help.

Or, consider an elderly woman we’ll call Aunt Sally who is incredibly proud of her family, especially her youngest niece, who is the first in the family to attend college.  One day Aunt Sally receives an e-mail message from her niece who is studying abroad for a semester in Paris.  The message says that she’s been arrested during a trip to Spain.  Aunt Sally didn’t know about the trip, but given that her niece is studying abroad, the trip isn’t unusual.

The niece asks Aunt Sally to purchase gift cards from a local grocery store and to read those numbers from the back of the cards over the phone to the “police.” Sally’s niece says time is of the essence so she can get back to school in Paris, and it’s the quickest way to have American dollars converted into the foreign currency.  Of course, in reality, her niece isn’t in Spain, and there is no jail.  But Aunt Sally goes to her local CVS, buys $500 in gift cards, and gives it all away over the phone.

When we hear the phrase “elder fraud,” we tend to think of a single victim, Sally or Larry, who is taken advantage of by a single bad actor.  We see the victims.  We see the fraud techniques.  What we do not see … until we dig below the surface … are the true culprits.

Yes, there are a number of cases in which a caretaker steals a checkbook from a client and forges checks.  But what I’m asking you to envision is a much larger, better funded, and much more organized, form of elder fraud.  These international fraud rings are the root systems of the weed; they are the great threat on the other end of the phone or that email.  They are what is driving elder fraud in America today.

Consider the broader picture.  The Consumer Financial Protection Bureau recently released a report after reviewing 180,000 Suspicious Activity Reports – or SARs – of elder financial exploitation filed between 2013 and 2017.  The total losses? $6 billion.  The FBI’s Internet Crime Complaint Center issued a report just a few months ago noting that, in 2019, 68,031 complaints from victims over 60 were filed with reported losses of $835 million.  That’s a single year and only based on what’s reported to the IC3.

But we need to go deeper.  The CFPB estimates that 3.5 million elder financial crimes occur annually, and the average loss per crime is between $45,000 and $50,000.  Tens of billions of dollars each year in theft are not penny-ante profits; it’s drug cartel-level profits.

The Department of Justice under Attorney General Barr has taken strong action against these fraudsters and their despicable crimes.  As the Attorney General has noted, “Fraud against the elderly is a massive problem, and one that is often perpetrated by transnational criminal organizations.  And due to the victims’ stage in life, the cost is especially high and the losses frequently catastrophic and irreversible.”

We are doing our part in Texas.  Earlier this year the Eastern District of Texas took down a multi-defendant international fraud and money laundering ring that predominantly targeted the elderly.

This alleged scheme targeted more than four thousand victims, and ultimately siphoned off more than $3.2 million dollars in ill-gotten wire transfers that were laundered through India and the United Arab Emirates. While this takedown was a big win for the Eastern District, it barely scratches the surface of what we must do to combat these crime networks.

Last year the Justice Department conducted an international elder fraud sweep.  It was the largest in our nation’s history, netting 260 defendants.  This sweep included schemes of every stripe: technical support fraud, mass-mailing fraud, false loan fraud, sweepstakes fraud, even fraud involving psychics, affected more than two million Americans and accounted for approximately $750 million dollars in losses.

The size and scope of this takedown revealed several common attributes amongst these fraud rings.

First, these schemes are what we like to call “commodity neutral” … meaning that these criminal enterprises seek ill-gotten gains any way they can, whether by garden-variety identify theft, stealing taxpayer money through COVID-19 stimulus fraud or unemployment insurance fraud.

While these criminal syndicates’ tactics are diverse, their targets are focused on seniors.  Why? Not to oversimplify, but the fraudsters know that what makes our elders great citizens also makes them ripe to be conned.  They tend to be more respectful of legitimate authority, more trusting and willing to listen, and less likely to immediately hang up on a stranger.  They also are perhaps less tech savvy than younger generations, making them susceptible to impostors who may appear to be helpful with a computer or mobile phone issue but are really steering them toward a scam.

Second, the sheer breadth and depth of some of these criminal fraud schemes is remarkable.  While a victim may interact with a single fraudster over the phone, the grifter is actually part of multi-layered fraud operations. In the background, there are call centers that flood land line and mobile phone accounts with spam calls to find those trusting individuals who won’t immediately hang up.  There are other boots on the ground for these criminal conspiracies.  These fraud rings also utilize domestic “money mules:” persons who receive ill-gotten proceeds directly from victims and forward funds to the conspiracy leaders.

These mules – sometimes unwitting, sometimes eager participants – are integral of these fraud schemes, and their ranks are not insignificant.  Over the past two months, U.S. law enforcement agencies took action in just about all 50 states against more than 2,300 individuals identified as money mules.

These multi-tiered organizations aren’t even the most complex when you also consider the fraudulent shell corporations, “prize promotion” companies, and phony websites, all launched for the sole purpose of ripping off our nation’s seniors.

Third, beyond the scope and complexity is the global nature of these threats; most of the roots of these scammers stretch overseas.  Large-scale call centers operate from India to Canada, while a constellation of smaller operations can be found running out of internet cafes in Lagos, Nigeria, or Tbilisi, Georgia.  As a result, federal law enforcement teams with overseas partners, both public and private, to identify fraud and to share intelligence.

I’ve told my office, the Eastern District of Texas, that they really are uniquely equipped to take these fraud syndicates on.  Our district has long been the tip of the spear in fighting international drug cartels.  We have identified and extradited the leadership classes of drug cartels from Colombia and Central America, on the premise that if we tear a weed’s roots out whole it is less likely to grow back.

In response to the unique harm posed to our nation’s seniors, I have asked my team to reimagine our fight against elder fraud and to use the same tactics and tools we use to root out transnational drug cartels to decimate the criminal transnational syndicates preying on our seniors.  That means leveraging the same organizational strategies, borrowed from our OCDETF toolkit, to follow the money, identify the network, and build a case against those pulling the strings overseas.

I want us to find these foreign criminals, extradite them to meet our local judges and have them experience East Texas justice up close and personal. In doing so, we will create a greater deterrence, and most importantly, get the money back for our victimized seniors.

By the way, this is more than just talk.  Our District has taken concrete steps to target and prosecute these fraudsters.  We launched a dedicated Elder Fraud Initiative, and I have appointed Camelia Lopez, on my senior leadership team to head it up—you’ll hear from her shortly.  Although the Initiative is only a few months old, we have already made great strides and we’re starting to see our efforts bear fruit.

The District has established three separate Financial Investigation Groups (or “FIGs”) where we partner with law enforcement to conduct an expansive review of Suspicious Activity Reports, which have identified financial transactions that might be related to criminal activity.

Against that backdrop, we’ve established an open, working dialogue with some of the world’s biggest banks so that we can share information and foster better referrals.  Through these partnerships we can better recognize fraud in real time, cut it off at the source, and trace any ill-gotten funds to accounts overseas.

Our District also participated in the Department of Justice’s Money Mule Initiative with great results.  As I mentioned earlier, money mules are the lifeblood of these international fraud rings, and the Eastern District is punching back against these enablers.  In the past two months, with the assistance of the FBI and IRS, our District identified and disrupted at least 13 money mules through interviews, warning letters, and criminal charges.

Enforcement, however, is but one facet of the money mule fight.  We’re also working with Texas retailers and grocers on what to look for when they suspect a large gift card purchase is being used to facilitate money laundering.

Finally, we have established great partnerships in the public sphere, teaming with the Consumer Protection Branch and the Criminal Division at Main Justice, as well as the Federal Trade Commission.  Less than two months ago, based on referrals from one of these new partners, our District, along with the Secret Service, dismantled a phony Amazon Alexa tech support fraud ring, seizing six websites in the process.  In other cases, our District obtained four asset seizures leading to the recovery of nearly $150,000 in ill-gotten proceeds.  These are all shining examples of what we can accomplish through coordination and cooperation and there is more – a lot more – to come.

At the risk of stating the obvious, this is not a battle we can fight alone, it is not a battle we can win alone.  It will take everyone.  And I don’t just mean cooperation between federal and state law enforcement – although that will, of course, be essential.  I also mean cooperation between the public and private spheres.  Working with our nation’s financial institutions – as well as foreign banks, and the emerging money transfer businesses used for mobile banking – to identify suspicious transactions, identify accounts tainted with fraud proceeds, and to name the account holders, will allow us to take the fight to where these fraud syndicates operate, seize their ill-gotten gains, and bring closure and relief to our citizens.

America owes its elders a great debt.  In the past century they have defended our nation abroad and protected our streets at home.  They have built businesses large and small, enduring and innovative.  They have raised families and educated them.  Today’s opportunities we take for granted are the result of our elders’ decades-long toil to create them for us.  It is fitting then, that we work to ensure a more secure present for those who endowed the life we lead.  We can and must come together – all of us – to protect our seniors from this unique threat.  For in serving them, we will put in place protections for future generations, including ours.

I thank you for your time today and invite you to join me in this worthy fight.”

SOURCE: USDOJ.Today

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