Friday 8 June 2012

TELEMARKETERS: Their crimes and punishments

Being a telemarketer is not illegal. However, many telemarketing firms are not really representing legitimate businesses. Their real purposes for calling you is to get personal information from you when they send someone to your home so that when you fall for their scams, it is because you have inadvertently filled out a contract with a representative of the telemarketer in which you have given him all kinds of personal information such as your date of birth, your credit card numbers and/or your bank particulars along with your signature. Once they have that information, they can get credit cards in your name and write cheques on your bank account.

Canada has a law that makes it an offence for a telemarketer to call anyone whose phone number is on the No-Call list. Anyone in Canada who has a land line can ask the CRTC (which governs transmissions of all kinds) to list their phone number on the No-Call list. A legitimate telemarketer will be licenced and will have a list of the many thousands of Canadians whose phone numbers are on the No-Call list. If you get a call from a telemarketer, you can be sure that he is not licenced because if he was, he would know that your phone number is on the No-Call list.  The penalties given to telemarketers who call those numbers can be very high. What follows are two of the telemarketer calls I received and the penalties given to some of the telemarketers who made calls on phones that were listed on the No-Call list.

Generally, the most common kinds of telemarketing calls I get every week are from people claiming to be from duct cleaning businesses. On March 8th 2012, I received a call from a man with a foreign accent who said that he was with a firm called, Duct Home Cleaning Services. The number that showed up on my call display was 647-259-8808. He said that he was a salesman working for the duct cleaning company. When I asked him what firm he was representing, he hung up his phone. The phone number that showed up isn’t listed with Bell Canada which means that it is an unlisted number. A legitimate business wouldn’t have their phone unlisted because if it was, customers couldn’t call them. Telemarketers’ phones are unlisted for obvious reasons. They don’t want their phones to be traced.

On March 9th, I got another call in which the caller (who didn’t have a foreign-sounding voice this time) said that he was the sales manager from Duct Home Cleaning Services and was calling in response to the call that was made to me the day before. The number that showed up on my call display was 416-301-0075. That number is also not listed with Bell Canada.

The so-called sales manager then told me that his firm is in North York, which is a suburb of Toronto. I have a list of all duct cleaning firms in the Greater Toronto Area so I looked at the list and this telemarketer’s so-called firm wasn’t on the list and I told him that. He said that we could find his company in the Internet. He said that the Internet address was I told him that he could call me back after 6:00 in the afternoon when my wife gets home. He didn’t call me back.

I checked out the website he had given me. It exists but it belongs to a real duct cleaning firm in North York and the manager of that firm told me that he never heard of a firm called, Duct Home Cleaning Service. Obviously the two men who called me who claimed that they were from that so-called duct cleaning firm where scammers.

The CRTC has told me that many of these scammers are actually calling from India. They have phones numbers in which they are directly connected with the ones that are unlisted in Toronto.

Melanie Aitken, Commissioner of Competition said; “Fraudulent telemarketing is a serious crime that can have severe consequences for victims that are both businesses and consumers. The Bureau continues to work with other law enforcement agencies to crack down on this and other types of fraudulent operations.”

Now I will give you information about what happened to some of these scammers when the Competition Bureau authorities in Canada (which is a government law enforcement agency that contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.) caught them and charged them and upon conviction, punished them.

The Competition Bureau announced on September 22, 2011 that criminal charges had been laid against five individuals and four Montreal-based companies, involved in the Bureau's IT Data Direct case, a complex fraudulent telemarketing operation that generated over $172 million in gross sales.

The accused individuals, charged with deceptive telemarketing and misleading representations under the Competition Act, and fraud under the Criminal Code of Canada, were Georges Haligua, a Montreal-area businessman responsible for the complex telemarketing operation, and Amalia Di Falco, senior manager and partner. The other individuals charged are Éric Chenail, Carl Rubat-Du-Mérac, and Lawrence Vitas, senior managers of the companies.

The four accused companies are Mega Byte Information Inc., Express Transaction Services Inc., International Business Logistics Inc., and Comexco Management Inc.

The Bureau's investigation uncovered a widespread scheme that marketed directories, subscriptions to online directories, office supplies and medical kits at inflated prices. These products and services were promoted primarily to businesses across Canada, the United States, Europe and Central America.

For example, what they would do was to send a CD to the victim’s business and an employee of the victim’s business would sign for it at the Post Office. Inside the CD was a business directory with the victim’s business listed in the CD. Then they would get telephone calls demanding $400 saying that someone from the victim’s business asked that their company name be listed in the CD. Of course it was a scam and thousands of businesses paid, thinking that they ready did ask that their firm be listed in the CD.

The Competition Bureau announced on August 30, 2011 that five individuals were sentenced by an Alberta court for their involvement in Ambus Registry Inc., a cross-border deceptive telemarketing scheme promoting business directories.

The Bureau's investigation found that, over a three-year period, Ambus telemarketers used an ‘assumed sale’ technique to defraud over 10,000 businesses, government agencies, educational institutions and not-for-profit agencies in the United States. The technique involved a sales pitch that led telephone recipients to believe that a sale had already taken place, and that their business was legally obliged to complete the purchase. It was estimated that the company's fraudulent operations amounted to over $3.75 million in losses for the victim businesses.

Ambus Registry Inc. in Calgary, Alberta made the mistake in April 2001 of trying to collect $299 US from a Denver, Colorado leasing company after it supposedly had agreed to be listed in the company’s business directory. Then the scammer said, “Pay up.” To which the company’s president wrote back: “Any claim by your representative that we requested to be listed in any directory is totally false. You see, our company is in liquidation and will not be operating after May 1.”

The individuals Ambus Registry Inc were convicted of deceptive telemarketing under the Competition Act and of committing fraud over $5,000 under the Criminal Code of Canada. The names of the individuals convicted and their respective sentences are:

Garther Cheung and Sukhraj Singh Chana, who were the co-founders of the company, were each sentenced to one year imprisonment for each of three counts of deceptive telemarketing and to two years imprisonment. They served their sentences in a federal penitentiary for committing fraud over $5,000, all the period of imprisonment was served concurrently so in effect, they served two-thirds of two years in prison.  

Pritpal Chana and Ranjit Sangha, both managers of the company, were each sentenced to 16 months for each of three counts of deceptive telemarketing and 16 months for committing fraud over $5,000, all time to be served concurrently. The first eight months were served as house arrest and the remaining eight months on probation.

Andrea Kyweriga, also a manager, was given a suspended sentence and placed on two years probation after being convicted of two counts of deceptive telemarketing and one count of fraud over $5,000.

The five individuals are also prohibited from doing any act or thing that would be directed toward the deceptive telemarketing offence being committed or repeated for the next 10 years. A sixth individual, Sarah Schaefer, pleaded guilty in 2007 and received a $15,000 fine.

The Competition Bureau announced on April 12, 2012 that criminal charges were laid against three Montreal brothers and six companies allegedly involved in deceptive telemarketing activities related to business directory scams.

The brothers, Gordon Frank (53), Theodore Frank (49) and Sean Frank (43), were accused of having operated a telemarketing operation that targeted businesses and not-for-profit organizations in the United States, France and the United Kingdom.

The Bureau conducted an investigation into criminal deceptive telemarketing by a group of corporations led by the Frank brothers, collectively known as Infotel. They operated their shady telemarketing offices in Toronto, St. John's and Montreal. These activities were estimated to have generated approximately $60 million in revenue between 1999 and 2004.

The Competition Bureau alleged that the Frank brothers' companies contacted businesses and not-for-profit organizations misrepresenting themselves as the victims' regular supplier of business directories. The Bureau also alleged that Infotel telemarketers also failed to disclose pertinent information when they contacted the victim-businesses, including the real purpose of their calls.

The Frank brothers conducted the alleged deceptive telemarketing activities under the following names: Infotel Directories Inc., Infotel Publications, Infotel Directories-Toronto, Metropolitan Media, Metropolitan Press and Infotel Canada.

I don’t think they have their trials yet.

The Competition Bureau made an announcement on July 27, 2009 that a Toronto man had received a two-year sentence in a federal penitentiary and the maximum period of probation of three years for his involvement in a fraudulent telemarketing scheme that had generated an estimated $158 million over a 10-year period.

Bernard Fromstein, 57, the founder and former President of DataCom Marketing Inc., had pled guilty in the Ontario Superior Court of Justice to five criminal charges under the deceptive telemarketing provisions of the Competition Act for his part in a business directory scheme. In addition to his jail sentence, Mr. Fromstein was also prohibited from engaging in any form of telemarketing for 10 years.

This kind of sentencing should send a strong message to scammers who deliberately cause harm to businesses and consumers through deceptive telemarketing Mr. Fromstein had participated in a scheme in which DataCom telemarketers contacted many victim businesses in Canada and the United States, all the time claiming that DataCom was updating information in their business directory listings. The telemarketers implied that the businesses had ordered a listing in the past and that someone in the company had already authorized such an order. By using this "assumed sale" technique, which led customers to believe that they had already ordered a listing when in fact they had not, the company had successfully deceived many of the victim businesses that had become victims of such DataCom’s scam.

The telemarketers had failed to disclose the name of the company they represented, the price of the product, the terms and conditions to return it, the purpose of the call and the nature of the product, as required by the telemarketing provisions of the Competition Act. Customers subsequently received a business directory, which they supposedly ordered based on this fraudulent representation.

Charges were laid against others charged in connection with this scheme, including: Judy Neinstein, 65, of Toronto, Ontario, and James Sharo, 59 and George Pavlopoulos, 38, both of St-Hubert, Quebec, as well as two companies: DataCom Marketing Inc. and DataCom Direct Inc. Paul Barnard, 57, who has already received a two-year conditional sentence for his role in the scam and has been prohibited from engaging in telemarketing activities for life.

This investigation was conducted with the assistance of the U.S. Federal Trade Commission, the Toronto Strategic Partnership, PhoneBusters and the Service de Police de la Ville de Montréal. Members of the Toronto Strategic Partnership include the Competition Bureau, the Toronto Police Service, the Ontario Provincial Police, the RCMP, Ontario's Ministry of Government and Consumer Services, the U.S. Federal Trade Commission, the U.S. Postal Inspection Service, and the U.K. Office of Fair Trading.

On June 16, 2009,  four companies─Infogroup Data Inc., Allegiance Publishing Inc., 2957647 Canada Inc. and 3433587 Canada Inc) pleaded guilty to deceptive telemarketing charges involving the sale of business directories and were fined $725,000.

In addition, the Superior Court of Quebec, Criminal Division, prohibited Bianca Rosa Pazzano, the individual who operated these four companies, from engaging in telemarketing activities related to business directories for a period of five years. The consent prohibition orders were issued under the Competition Act. As well, both individuals were required to inform the Bureau of any future activities related to representations made to the public.

"The Bureau is dedicated to eliminating deceptive telemarketing activities," said Andrea Rosen, Deputy Commissioner of Competition. "This type of telemarketing is illegal and punishable under the Act, and the Bureau's ongoing efforts to crack down on any company or person involved in deceptive telemarketing scams remain a priority."

On June 2, 2009 the Competition Bureau announced that it is taking action against 50 organizations and individuals in the Montreal area, including executing 10 search warrants, as part of Operation Mirage, a campaign to combat fraudulent telemarketing operations.

Deceptive telemarketers are defrauding businesses and consumers alike of hundreds of millions of dollars in already difficult economic times. Through Operation Mirage, conducted by the Competition Bureau, the government is cracking down on this kind of criminal activity with both enforcement and public education.

This criminal investigation is being conducted under the newly amended Competition Act, which allows for significantly higher penalties for those convicted of criminal telemarketing offences.

The Competition Bureau’s campaign is targeting fraudsters who use illegal techniques to market phony business directories to businesses and not-for-profit organizations. It is the largest-ever Bureau sweep against deceptive telemarketing and one of the largest ever in Canada.

Recognizing the seriousness of deceptive telemarketing, the Bureau had launched Operation Mirage, a campaign designed to combat business directories scams that had targeted 50 locations in the greater Montreal area. This action was conducted under the newly amended Competition Act, which allows for significantly higher penalties for those convicted of criminal telemarketing offences.

This campaign is named Operation Mirage in order to reflect the deceptive nature of practices used by criminal telemarketers to victimize businesses and hire unsuspecting staff. Yes. Some of the employees they hire are not aware that they are actually working for a scam artist.

The operation benefited from the assistance of partnership with the Royal Canadian Mounted Police, Sûreté du Québec, City of Montreal Police Service, Canada Border Services Agency, U.S. Federal Trade Commission, Federal Bureau of Investigation, Department of Homeland Security, and U.S. Postal Inspection Service. Fraudulent telemarketers often target victims in other countries in an effort to avoid detection. Cross-border collaboration is key to ensuring fraudsters cannot hide from authorities in any jurisdiction.

The Competition Bureau is warning businesses and not-for-profit organizations across the country to be wary of faxed order forms offering advertising opportunities in online business directories. These order forms may cause businesses to conclude that they originate from a well-known supplier of online directory advertising.

The faxes include a logo that closely resembles the Yellow Pages Group's walking fingers logo and names similar to If the business completes the form and provides an authorized signature, it will be invoiced for a two-year listing in an online directory. The form does not clearly and conspicuously indicate the material terms and, in particular, the service charge, which has been, in some cases, as high as $2,800, or the cancellation policy which I suppose some gullible victims have paid.

Scams targeting businesses and not-for-profit organizations often succeed because the victims are under the impression they are really dealing with a professional reputable business.

Before responding to these kinds of scams, businesses should verify with whom they are dealing with and understand what it is they are agreeing to. Here are a few things to consider:

Read the fine print to understand what you are agreeing to.

If you really believe that you have received an order form (via fax or other means) from a particularly well-known company, you should look up its number in the phone book or online and contact the company to confirm whether they actually sent the offer; and

When reviewing bills or invoices you receive, confirm that you actually agreed to purchase the product or service involved before paying the bill.

Also if you really did order goods or services from legitimate businesses, there will be a record of the contracts in your company’s files. If no such documents are not in your files, then be wary of the invoice. Insist on seeing the signature of the person who allegedly signed for the goods or services. 

An Ontario Court of Appeal decision on February 19, 2009 should have sent a warning to marketers who make false and misleading representations but as we all know, scammers never seem to learn the lesson that crime does not pay.

The Court of Appeal had ruled that those who make false and misleading representations to the public can be prosecuted in Canada even if they make the representations only to people outside the country. A lower court had earlier ruled that prosecution in Canada was possible only if some of the victims were located in Canada. Many Canadian-based mass marketing fraud operations target foreigners, especially Americans. Now that particular ruling doesn’t apply anymore.

The Court of Appeal also ruled that an accused cannot rely on legal advice as a defence. Those engaged in fraudulent marketing practices often ask lawyers to approve their promotions or telemarketing scripts. According to this decision, such legal advice cannot be used to excuse illegal activity.

David Stucky, a resident of Ontario, was accused of marketing lottery programs, under names such as International Monetary Funding and Canadian Lottery Buyers Association that were alleged to have greatly exaggerated what consumers could win and falsely misled consumers to believe that the promotions were affiliated with government. He was also accused of marketing sweepstakes offers to 200 countries that alleged to have provided recipients the false impression that they were to receive a $5,000 or £3000 cash prize, or some other valuable prize. In reality, nearly every respondent received a predetermined prize of an inexpensive piece of jewellery.

I am sure that many people including myself received these kinds of offers in our emails.

The Competition Bureau announced on December 18, 2008 that Lloyd Prudenza (a Canadian citizen) who was extradited to the United States was sentenced to 15 years in jail by a U.S. court for his part in a cross-border deceptive telemarketing scheme that defrauded close to 40,000 consumers. Prudenza, along with David Dalglish and Leslie Anderson, (other Canadians) operated a deceptive telemarketing scheme based in Toronto, which purported to offer credit cards to Americans for a fee but never delivered the cards. Earlier that year, Dalglish was sentenced to 19 years and seven months in prison, and Anderson was sentenced to 23 years and four months, for their roles in this scheme. The U.S. Federal Court in the Southern District of Illinois explained, in sentencing Prudenza, the more lenient penalty was due to health problems. All three individuals were jointly ordered to pay over $5 million U.S. in restitution to the victims. The Americans don’t pussy-foot around when it comes to punishing wrongdoers.

Andrea Rosen, Deputy Commissioner of Competition announced, “Our cross border efforts have succeeded in bringing the last individual involved in a scam that defrauded many consumers to justice.” Then she added, “The severity of these sentences should serve as a warning that deceptive telemarketing is treated seriously on both sides of the border.”

Prudenza, Dalglish and Anderson were the principal operators behind First Capital Consumers Group, which defrauded close to 40,000 vulnerable American consumers who had poor credit histories. Working out of boiler rooms in Toronto in 2001-2002, these three crooked telemarketers targeted U.S. residents, claiming they had been approved for a MasterCard or Visa credit card. The victims were required to pay a one-time processing fee (approximately $200 U.S.) prior to receiving one or both cards, but they never received a valid credit card. This deceptive telemarketing operation generated approximately $8 million in U.S funds.

Prudenza, Dalglish and Anderson were arrested following an investigation led by the Competition Bureau. They were charged with offences under the Competition Act and the Criminal Code, including: deceptive telemarketing; conspiracy to commit an indictable offence; fraud; and possession of property obtained by crime. Following a formal request by the U.S. Department of Justice, Prudenza, Dalglish and Anderson were extradited to stand trial in the U.S.

The Competition Bureau acknowledges the substantial efforts of all its partners in Canada and the United States, in particular, the United States Attorney's Office in the Southern District of Illinois, the Canadian and U.S Departments of Justice, the United States Postal Inspection Service in St. Louis, and the Federal Trade Commission, Midwest Region, in Chicago.

The Bureau worked on the investigation with its partners in the Toronto Strategic Partnership, which also included the Ontario Provincial Police, the Toronto Police Service, the RCMP, Ontario's Ministry of Small Business and Consumer Services, the Canadian Anti-fraud Call Centre (PhoneBusters), the U.S. Federal Trade Commission, the U.S. Postal Inspection Service and the UK's Office of Fair Trading. The partnership is a multi-law enforcement agency task force formed to combat cross-border fraudulent mass marketing.

This particular case is interesting because it proves that Canadian telemarketers who scam their victims in the United States can be extradited to the US and if convicted, will be given much more severe sentences than what Canada would give them.

You may wonder why the telemarketers who are saying they are with duct cleaning companies haven’t been charged yet. The reason is that Competition Bureau is gradually building a case against them. They aren’t going to act on just a few complaints.

Now the fact that they have called a phone number which is on the No-Call list is proof that they are unlicensed and that makes them rogue telemarketers.  They generally hang up right after that but a few die-hards have tried to convince me that they are licenced but if they were licenced, they wouldn’t have called me because they would have the phone listings on the No-Call list and know that our number is on the No-Call list and that we are not to be called. 

Play with them if you have the time. Here are some ways you can amuse yourself when these scammers call you. I often play with these firms when they call. If they say that they are calling on behalf of duct cleaning firms, I say to them— “We don’t have any ducks in our home but we do have a chicken. Do you also clean chickens? We would like someone to clean our chicken so that we can put in the oven.

If they are calling for some other reason, I say to them—“We charge five dollars a minute to listen to telemarketers with a ten-minute minimum so if you will give me your name and credit card number, I process your card and then I will be pleased to
listen to whatever you wish to say to men for as long as you wish.”

One day one of the telemarketers after hearing me make that statement said, “I’m sorry also because I don’t have authority to charge my credit card that way. Another said, “Oh, I like that reply. It’s great.” 

Another response I give them is as follows. “I’m sorry but I don’t choose to have any dealings with rogue telemarketers who are unlicensed by the CRTC.”

Íf a man calls and they are generally men who call─

“Oh, Matilda. How nice of you to call. You will have to speak up, dear. I can’t hear you. Speak louder. I still can’t hear you. LOUDER!” Then hand up. Here is another one.

“Hi Jennifer. Thanks for returning my call. Speak up dear. You know I am hard of hearing. Now you don’t have to bring your bathing suit with you as you know, we all swim nude in our pool. Don’t worry about the neighbours. We have gotten used to them and their friends staring at everyone who is swimming nude in our pool. See you later, dear.” Then hang up.

When the telemarketers hear any of these two responses from me, they realize that I am not going to be caught in their trap so they hang up.

There is no need for me to give you other examples. I am convinced you have also have a vivid imagination.

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