Montreal’s reputation as a hotbed for international telemarketing fraud was confirmed in early October when 140 people were arrested in massive raids.
The arrests, which saw scores of people hauled away in handcuffs in front of the media, were the result of a joint investigation by the RCMP and the federal Competition Bureau into eight telemarketing companies. It was just the latest in a long-running series of police operations against Montreal’s thriving telemarketing fraud industry.
Police allege the telemarketers have defrauded 1,500 small companies over three years using high-pressure tactics to sell them supplies at grossly inflated prices — 10 to 12 times their real retail value.
Despite the large number of busts in the operation, it represents only a tiny piece of the city’s telemarketing crime business. Police estimate there are 40 to 50 boiler rooms operating in the city at any given moment, raking in more than $60 million a year from victims.
Montreal has long been a hub of the industry. That’s why a joint Canada/U.S. task force against telemarketing fraud called “Project Colt” has its headquarters in the city. The project is a partnership between the RCMP, the Sûreté du Québec, the Montreal police, the Competition Bureau, the Federal Bureau of Investigation and other U.S. agencies. Since its inception in 1998, it has returned $24 million to victims of telemarketing fraud.
One of the most popular scams involves telling victims they’ve won a contest, lottery or vacation or are eligible for a loan. The victim is then enticed to purchase a product or send money to cover taxes or fees.
This type of fraud resulted in reports of $75.6 million in losses last year from more than 15,000 victims, mostly in Canada and the U.S., according to statistics from Phone Busters, an anti-fraud call centre operated by the Ontario Provincial Police and the RCMP.
The fraudsters frequently target senior citizens because they are at home during the day, have assets and tend to be lonely and polite to unknown callers. For example, Canadian telemarketers spent two years defrauding elderly Walter Blevins of Arkansas City, Kan., out of his US$300,000 life savings in a lottery scam, the Kansas City Star recently reported.
“It’s a pretty rotten deal,” Blevins, 78, says. “You think you’ve won the jackpot once in your life and they just clean you out. I kept sending them money like a damn fool.”
Criminals are drawn to the telemarketing fraud by large proceeds and relatively low risks of detection, prosecution and punishment, Phone Busters says. The advent of low-cost telecommunications has allowed the crooks to conduct massive frauds.
In May, Montreal businessman Michael Mouyal pleaded guilty to fraud and was fined $1 million for leading a vast telemarketing organization that fraudulently generated revenue of $136 million over six years.
As part of the scam, not-for-profit organizations, businesses and government agencies in Canada, the U.S. and Britain were contacted by telemarketers who claimed to be their regular supplier of office supplies or business directories and were calling to renew previous orders, the Competition Bureau says.
Police have also taken down three other large-scale rings in the last two years.
But while technology has made it easier to conduct the frauds, it has also made it harder to catch the scammers, who hide behind disposable cellphones, pay-as-you-go phone cards and computerized calling systems.
As well, a police spokeswoman noted after the recent arrests that breaking up a telemarketing ring can be a long and arduous process. “It takes time to build these cases,” said RCMP Cpl. Elaine Lavergne. “We want to collect as much evidence as possible. But the organizations are so sophisticated that it doesn’t happen overnight.” IE
Police fight long battle against telemarketers
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