Phone scam artists fleeing LV for Canada

Friday, Jan. 16, 1998 | 10:40 a.m.

Telephone scam artists are moving their operations across the border into Canada and are targeting Americans, especially Nevadans.

Federal authorities report Quebec is replacing Miami and Las Vegas as the hot spot for telemarketing fraud.

"Our No. 1 source of complaint is Quebec," said Eileen Harrington, associate director for marketing practices at the Federal Trade Commission, the federal agency that tracks fraudulent sales practices.

Richard Linstrom, Nevada's senior deputy attorney general, says his office has noticed more phone scam activity from Canada.

"We have seen an increase in Canadian telemarketing over the last nine to 12 months," he said. "We got one complaint just yesterday. Some of the key players we put out of operation here have relocated their operations to Canada."

The latest scam, Linstrom says, involves a telemarketer from Canada who says he is running a contest for the Nevada Department of Motor Vehicles. He tells the victim he just won a car and gives him a phone number to the DMV so that he can verify it.

However, that number generally is busy or leads to a DMV recording. Also, if the victim looks up the number in the phone book, he sees it is a legitimate DMV line and assumes that the contest is on the up-and-up, Linstrom said.

The victim then is told by the Canadian telemarketer that all he needs to do is send the money to pay the shipping charges and the taxes and the car is his, Linstrom said. A car is never sent.

Linstrom said the Las Vegas Telemarketing Task Force, comprised of several agencies including the attorney general's office, FBI, Internal Revenue Service and U.S. Customs, has "active investigations" going on several Canadian telemarketing firms.

The irony is that "when these people were operating here, they were not hitting Las Vegas -- that would have made it too easy to prosecute them," Linstrom said.

Linstrom said that by moving to Canada, scam artists know that it will take the cooperation of two countries going through a maze of red tape to prosecute them.

He said it is more difficult to get search warrants under Canadian law because of enhanced privacy rights for businesses. Also, a number of hurdles must be negotiated to extradite them to the United States, Linstrom said.

Three Canadian provinces -- Quebec, Ontario and British Columbia -- rank in the top 10 for fraud complaints, a major change from only two years ago when Quebec was ranked 25 on the list of problem regions.

Harrington said increased Justice Department crackdowns on fraudulent operations in the United States is one reason for the flight across the border. She agrees that loopholes in Canadian laws make it more difficult to prosecute people for fraud.

The Canadian government agreed last year to change its laws to tackle the problem, but the changed laws have not yet gone into effect.

Harrington said she doesn't want to criticize Canada, because it wasn't too long ago that federal prosecutors put time-consuming white-collar crime the back-burner, leaving it to the states to deal with the "boiler rooms" or phone banks that proliferated in California, Nevada and Florida.

"This is payback time for stepped up enforcement in the United States," said Shirley Rooker of Call for Action, a nonprofit group that tracks consumer frauds.

She said the shift of telemarketing scam artists to Canadian operations could be temporary, and noted some fraudulent telemarketing operations now are based in the Caribbean as well. "The technology makes it so easy, you could be based anywhere now."

The U.S. Justice Department estimates telemarketing fraud costs consumers $40 billion a year and is "one of the most pervasive forms of white-collar crime" in the United States and Canada.

Ted Bubrow, a spokesman for the American Association of Retired Persons, said surveys have found that more than half of the victims of telephone fraud schemes are more than 50 years old.

Harrington said there are few new wrinkles in the way the frauds operate.

"It's all the same old stuff, but these guys are really good," she said.

Among common telephone fraud scams:

"There is a legitimate telemarketing industry," he said. "Ask the caller to send written material about his company along with references. And, don't ever be pressured. If it is a good deal today, it will be a good deal tomorrow if the company is reputable."

SCRIPPS HOWARD News Service reporter Lance Gay and SUN reporter Ed Koch contributed to this report.