Feds charge 56 in fraud scheme that siphoned $300M from 15,000 victims

WASHINGTON — Federal authorities unsealed an indictment Thursday, charging 56 people in a vast scheme in which suspects posed as Internal Revenue Service agents and immigration authorities to siphon more than $300 million from thousands of unwitting victims to clear fictitious deportation warrants and phony tax debts.

The scheme, which employed a network of telephone call centers based in India, relied on personal information obtained from data brokers to target at least 15,000 victims with threats of fines, deportation or imprisonment if they did not pay the demanded fees.

In the thousands of cases where victims did agree to settle the fictitious accounts, the money allegedly was laundered through groups of U.S. co-conspirators using wire transfers and debit cards.

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Twenty of the 24 U.S. suspects were arrested Thursday, officials said. One other is in immigration custody, arrests are pending against two more and a fourth, Jerry Norris, 46, of Oakland, Calif., is being sought by federal authorities. Thirty-two suspects were believed to be living in India, and the court documents also outlined charges against five call center operations. U.S. officials said that they would seek to prosecute the Indian suspects in the United States and that the Indian government was notified of the case after the charges were unsealed.

"This is a transnational problem and demonstrates that modern criminals target Americans both from inside our borders and from abroad,'' Assistant Attorney General Leslie Caldwell said of the alleged activity uncovered during a three-year investigation.

The co-conspirators, according to federal authorities, used so-called “hawala transfers” in which money is transferred internationally  outside of the formal banking system to direct extorted funds to accounts belonging to U.S.-based individuals.

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According to the indictment, the conspirators allegedly kept a percentage of the proceeds for themselves for taking part in the transfer.

In the case of a San Diego victim, prosecutors allege that a call center extorted $12,300 from the 85-year-old woman after threatening her with arrest if she did not settle phony tax violations. The same day that the payment was made, a U.S.-based suspect allegedly loaded a debit card in the amount of the payment to purchase money orders in Frisco, Texas.

Another California victim lost $136,000 to suspects posing as IRS agents demanding payment for fictitious tax charges. The suspects, according to court documents, contacted the victim multiple times during a period of 20 days. The money was then allegedly transferred to multiple debit cards.

In some cases, prosecutors allege, the conspirators requested "good-faith deposits'' from victims in exchange for the promise of phony grants and loans.

"To potential victims, our message today is simple,'' said Peter Edge, an executive associate director with Immigration and Customs Enforcement. "U.S. government agencies do not make these types of calls. And if you receive one, contact law enforcement ... before you make a payment.''

The Indian call centers were described in court documents as akin to high-octane boiler-room enterprises, which maintained daily attendance sheets for workers and distributed "lead lists'' identifying potential targets for callers.

Some call center operators were literally invested in their work, maintaining "equity shares'' in their businesses.

All five of the call centers charged in the case were located in Ahmedabad, Gujarat, India, according to court documents.

"During the course of the conspiracy, the call center conglomerates often acted together to effect the scheme to include: sharing call scripts and lists of potential victims, processing payments for each other and liquidating victim scammed funds,'' prosecutors asserted.

"The defendants have perpetrated an enormous and complex fraud scheme that resulted in hundreds of millions of dollars in victim losses derived from persons located throughout the United States,'' the court documents stated. "The design of the scheme and the rapid movement of victim funds often resulted in victims being unable to report the fraud in time for their funds to be recovered.''

In addition to the estimated 15,000 people who lost money, the identities of up to 50,000 others were stolen to allegedly facilitate the movement of extorted funds.

Indian authorities separately conducted early October raids on calling centers near Mumbai and elsewhere, said Timothy Camus, deputy inspector general for investigations at the Treasury Inspector General for Tax Administration. Those centers are believed to have partly overlapped with those identified in the indictment, he said.

Although the volume of suspected scam calls around the U.S. dropped after the India raids, additional victims continued to be identified, he said, warning that the threat is not over.

“We feared all along there were multiple call centers responsible for this activity,” said Camus.

Contributing: Kevin McCoy