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Undercover Retirees Help Arrest 400 in Phone Scam

By Sharon Walsh
The Washington Post

State and federal authorities arrested more than 400 telemarketing salespeople Thursday after an investigation that used retirees who volunteered to record allegedly fraudulent telephone sales pitches.

The arrests resulting from "Operation Senior Sentinel" took place in 14 states and included telemarketers who had sold everything from vitamins and water purifiers to vacations and sweepstakes packages.

The retirees who became undercover agents were recruited through the American Association of Retired Persons and trained by the FBI.

The elderly are often the targets of telemarketers, and in many cases have lost their life savings to them. Fraudulent telephone sales and contests cost all consumers more than $40 billion a year.

"It's a huge problem, and it's really hard for law enforcement to keep up with it," said Katie Sloan, manager of consumer affairs for the AARP.

Almost four out of five of the people targeted by telemarketers in Operation Senior Sentinel were elderly, according to the FBI. Some were virtual prisoners of the calls, receiving five or more a day.

Virtually all of the arrests being made Thursday were of the employees who actually make the telephone calls, rather than those who operate the businesses, according to law enforcement officials. As in major drug cases, the officials hope that lower level employees will identify and testify against those at the top of their organizations who come up with the ideas and recruit the callers.

The recruits for Operation Senior Sentinel taped conversations with telemarketers and then forwarded them to a tape library in San Diego, where they were catalogued for use in government prosecutions. The FBI declined to release the names of any of the retirees who were involved because they may be called as witnesses in future cases.

Law enforcement officials and regulators have been thwarted in the past by fraudulent telemarketers who use multiple aliases and complicated schemes, demand immediate payment and often slip away to strike in another location with a different scheme.

"What drives this whole operation is the recognition that we need a national strategy to go after telemarketing fraud," said Jonathan Rusch, senior litigation counsel in the Justice Department's criminal division. "The message is that there's no longer a safe state to call or to operate in."

Telemarketers often use what they call "mooch" lists of people who have fallen for phony telephone scams before. The caller becomes the victim's best friend, inquiring about a deceased spouse or the person's health.

Then, comes the pitch. It can be for any product, investment scheme or vacation.

"You've just won a valuable prize (usually cash, gold or a car.) But to secure your prize before someone else claims it, you must send us a check for $1,500 immediately," is a typical come-on.

Sometimes the money is for taxes on the prize. The caller can make it easy for the victim to make the payment by sending a messenger to pick up the check or taking credit card numbers over the phone.

Sometimes the victims do receive prizes -- or products -- but they are often worth much less than the price the telemarketer receives.

Those financially damaged in the schemes are often people like Fonta Mackie, an 81-year-old widow in Arkansas, who was, as she describes it, "well fixed" in 1990. She was not involved in Operation Senior Sentinel and was contacted through the AARP.

She had run her own title insurance company for many years and had her husband's pension as well. But about five years ago she began to get constant calls for "charitable" donations, products like vitamins or sweepstakes contests in which she had won a "prize."

Ultimately, Mackie said she lost about $250,000 through the various scams.

"I'm not a dumb person," she said. "I do learn."

So when she got a call from AARP earlier this year doing a survey of its members and telephone fraud, she became convinced that she had been misled. "I decided I had to quit," she said. "I haven't fooled with any of it for six to eight months."

In one case still under investigation by the FBI, a woman in her 70s told the FBI she had lost $60,000 to one telemarketer. Most of that was her husband's retirement, but it included $13,000 she had been convinced to take out in loans.

She was afraid to tell her husband about the losses and told investigators she had considered suicide, but feared there wouldn't be enough money to bury her.