60 charged in $300M phone scam targeting elderly victims
MINNEAPOLIS — Sixty people have been charged in a widespread magazine telemarketing scam that authorities say netted $300 million from more than 150,000 elderly and vulnerable people nationwide, the U.S. attorney's office in Minnesota announced Wednesday.
U.S. Attorney Erica MacDonald called the scam the largest elder fraud scheme in the country.
MacDonald said the 60 defendants face a host of charges, including conspiracy, mail fraud, wire fraud, and violating the Senior Citizens Against Marketing Scams Act of 1994. The defendants are from 14 states and two Canadian provinces.
"Unfortunately, we live in a world where fraudsters are willing to take advantage of seniors, who are often trusting and polite. It's my hope that this prosecution is a call for vigilance and caution," MacDonald said in a statement.
The indictments and other court documents say that over the last 20 years, the defendants used a network of dozens of fraudulent magazine sales companies and telemarketing call centers to carry out the scam. Employees allegedly used deceptive sales scripts to trick people into making large or repeat payments to the companies.
The indictments allege that many of the defendants used a fraudulent "renewal" script in which the telemarketers falsely claimed to be calling from the victim's existing magazine subscription company with a phony offer to reduce monthly subscription costs.
In reality, the callers had no existing relationship with victims and signed them up for expensive, new magazine subscriptions. As a result, consumers ended up having multiple subscriptions with fraudulent magazine companies.
"Using a tactic like telemarketing magazine sales, these deceitful scam artists bilk hard earned money from their aging victims – leaving so many financially devastated in their retirement years and without recourse for recovery," Michael Paul, the FBI's special agent in charge in Minneapolis, said.
Some of the defendants are also accused of using a "cancellation" script that targeted people who had been previous victims. According to the indictments, these defendants took advantage of victims' desperation to make the subscriptions stop and offered to consolidate and cancel existing subscriptions and pay off an alleged "outstanding balance" in exchange for a large lump sum payment. In reality, victims owed no money.
The indictments charge defendants at all levels of the alleged conspiracies, including people who allegedly led the scheme, company owners, call center managers, telemarketers and others. Those who led the scheme provided the companies software programs that tracked orders, sales, and other customer information.
The U.S. attorney's office says the fraudulent companies were operating in Minnesota, Florida, Georgia, Mississippi, California, Iowa, Kansas, Missouri, Illinois, Colorado, Arizona, New Mexico, North Carolina, and Arkansas.