US DoJ Cracks Down On Mass-Marketing Fraud

by Glen Shapiro, LawAndTax-News.com, New York

25 May 2006

The US Department Of Justice announced on Tuesday that more than 565 people in North and South America and Europe have been arrested as part of 'Operation Global Con'– the largest and most far-reaching multinational enforcement operation ever directed at mass-marketing fraud schemes.

The ongoing action began on March 1, 2005, and targeted mass-marketing schemes that were international in scope and impact, were conducted by criminal groups, and generated significant proceeds.

The schemes in question were carried out through various methods, such as telemarketing, the Internet and mass mailings. The wide variety of schemes uncovered during the operation included: so-called “419" advance-fee schemes; foreign currency trading; bogus lottery, prize and sweepstakes schemes; offers of nonexistent investments; bogus offers of “pre-approved” credit cards or credit-card protection; and tax fraud schemes.

The 96 separate U.S. investigations in this operation led to the discovery of more than 2.8 million victims, who suffered losses totaling more than $1 billion.

“Mass-marketing fraudsters think they can use modern technology to operate from anywhere in the world with impunity,” said Attorney General Alberto R. Gonzales. “The virtual task forces that we have built with Canada, Costa Rica and the Netherlands provide a new model for us to bring these international con artists to justice.”

The operation resulted in the arrest of 139 individuals in the United States, and an additional 426 arrests in Canada, Costa Rica, the Netherlands and Spain. Authorities executed 447 search warrants in the five countries as part of the operation, and 61 individuals have been convicted in the United States to date. In addition, the Federal Trade Commission brought 20 civil actions against 140 defendants in illegal fraud schemes.

According to the Department of Justice, as part of Operation Global Con, Costa Rican agents, acting in cooperation with U.S. Postal Inspectors and agents of U.S. Immigration and Customs Enforcement and the Department of Commerce Inspector General, just last week conducted a series of arrests and searches in Costa Rica that targeted significant mass-marketing fraud “boiler room” operations.

These operations used Internet-based telephony and mobile phones to contact prospective victims in the United States, purporting to be from nonexistent organizations such as the “Sweepstakes Security Commission,” to offer nonexistent sweepstakes winnings of as much as $4.5 million. Victims were expected, in return, to pay “insurance fees” for the alleged “benefit” of Lloyds of London. Some victims who made the payments would then be recontacted by participants in the schemes, who pretended to be Costa Rican or U.S. customs authorities demanding payment of additional “customs fees” or taxes.

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