Ten arrested in telemarketing crackdown

Jace Radke

Friday, Dec. 18, 1998 | 11:50 a.m.

State and federal agents served a search warrant Thursday at M.J. Marketing and arrested 10 people as part of a nationwide sweep against telemarketing scams.

Among those arrested was the company's owner, Dale Lenard.

The search warrant, issued by the Attorney General's Office, alleged that M.J. Marketing had obtained money under false pretenses, failed to register as a telephone solicitor with the Nevada Consumer Affairs Division and failed to provide Workers Compensation insurance.

According to an investigation by the Las Vegas Telemarketing Task Force, representatives of M.J. Marketing claimed to be from the gift department of a publishing company and told people that they had won a free five-year bonus of magazine subscriptions.

The telemarketers would allegedly ask for a handling fee of $2.99 a week for five years. Consumers would later discover that the handling fee was charged in a lump sum of over $500 on their credit cards, and they had no phone number to call to question the charge, the task force said.

"A prize winner should never need to send money to cover shipping, taxes or any other kind of fee in order to collect winnings," Attorney General Frankie Sue Del Papa said. "This kind of solicitation is illegal."

The arrests coincide with Operation Double Barrel, a national 2 1/2 -year undercover investigation to expose and convict fraudulent telemarketers. Nevada joined with 37 other states, the Department of Justice and the FBI.

Operation Double Barrel was "the most extensive operation ever directed at dishonest telemarketing," Attorney General Janet Reno told a news conference.

More than 40 telemarketers were arrested and more than 20 sites searched by agents on Thursday alone.

FBI agents, retired agents and older people recruited by the American Association of Retired Persons posed as previous telemarketing victims, who frequently are contacted again by crooks in "reload" scams. More than 12,000 calls were recorded for evidence.

"Now each time a telemarketer picks up the phone, they are taking a risk. When telemarketers call, we have often answered," Reno said. "But we cannot become complacent. We've got to see what they get into next."

Since Double Barrel began in July 1996, 795 people have been charged with federal crimes like wire and mail fraud, money laundering and racketeering. Prison sentences have ranged as high as 20 years.

State lawmen have charged 194 others, and another 394 people have been sued in civil actions.

The operation grew out of a smaller effort, Operation Senior Sentinel, which ended in 1995. Senior Sentinel, the first undercover probe of telemarketing fraud, investigated 180 telemarketing "boiler rooms" concentrated in Buffalo, N.Y., Chattanooga, Tenn., and Las Vegas and convicted 598 individuals.

Jonathan Rusch, Justice Department special counsel for fraud prevention, explained that "those who were not arrested then moved into smaller scale, more mobile operations, like investment scams and 'recovery rooms."'

"Recovery room" operations tell victims of previous scams they can obtain refunds if they pay a fee. Often these crooks pose as FBI, IRS or Customs agents.

Reno described one in which a telemarketer called a previous victim pretending to be an FBI agent trying to catch the earlier telemarketer. The counterfeit agent mailed a phony court order to the victim purporting to authorize a wiretap of the victim's telephone.

Next, the crook called back using a different voice and promised to recover the victim's loss for a 10 percent fee, Reno said.

In a third call, the crook again posed as an FBI agent and urged the victim to send the money so the telemarketer could be caught red-handed.

"Anyone who calls you, tells you they're from the FBI and asks you to pay a fee so they can get your money back is lying," Reno said. "No federal or state law enforcement agency will ever charge fraud victims a dime when they try to get money back for victims."

AARP president-elect Tess Canja said 56 percent of telemarketing victims are elderly, often active, outgoing and well-educated. "They are very trusting," Canja said.

People who are victims of fraudulent credit card charges should contest the charge in writing with the credit card company, Del Papa said. Anyone with information regarding possible telemarketing fraud are asked to call the Attorney General's fraud hot line at 486-3777 or 1-800-992-0900.

------The Associated Press contributed to this report