Earlier this month, police in India detained hundreds of employees in three different call centers for allegedly proliferating a scam that involved calling unsuspecting consumers masquerading as employees with the Internal Revenue Service and threatening to arrest if the person didn’t pay up. This week, federal authorities in the U.S. followed up on the case, ending a three-year investigation by arresting dozens of people in the U.S. and India for allegedly scamming tens of thousands of consumers out of millions of dollars through the sophisticated call center scheme.
The Department of Justice, along with several other state and federal agencies, announced the joint enforcement effort Thursday, unsealing an indictment that charged a total of 61 people and entities for their alleged involvement in the transnational criminal organization.
According to the indictment [PDF] — which covers 20 individuals in the U.S. and 32 people and five call centers in India — since about 2012 the defendants used information obtained from data brokers and other sources to call potential victims impersonating officers from the IRS or U.S. Citizenship and Immigration Services.
To give the calls an air of authenticity, the organization was able to “spoof” phone numbers, making the calls appear to have really come from a federal agency. The callers would then allegedly threaten potential victims with arrest, imprisonment, fines, or deportation if they did not pay supposed taxes or penalties to the government.
In instances when the victims agreed to pay, the DOJ claims that the call centers would instruct them to go to banks or ATMs to withdraw money, use the funds to purchase prepaid stored value cards from retail stores, and then provide the unique serial number to the caller.
At this point, the operations U.S.-based counterparts would use the serial numbers to transfer the funds to prepaid reloadable cards. The cards would then be used to purchase money orders that were transferred into U.S. bank accounts of individuals or businesses.
To make matters worse, the indictment claims that the prepaid debit cards were often registered using personal information of thousands of identity theft victims, and the wire transfers were directed by the organizations using fake names and fraudulent identifications.
The operation would then use “hawalas” — a system in which money is transferred internationally outside of the formal banking system — to direct the pilfered funds to accounts belonging to U.S.-based individuals.
In one specific case, the indictment claims that a victim in Hayward, CA, lost as much as $136,000 after receiving multiple calls from a supposed IRS agent demanding payment for tax violations over a 20-day period.
During the call, the victim was directed to purchase 276 stored value cards that were transferred by the schemers to reloadable prepaid cards.
In addition to impersonating IRS and immigration agents, the DOJ claims that the operators also dabbled in other schemes, offering customers small short-term loans or advise them that they were eligible for grants.
Once a target showed interest in the financial product, the conspirators would request a good-faith deposit to show the victims’ ability to pay back the loan, or payment of a fee to process the grant. The victims of the alleged scam never received any money after making the requested payment, according to the indictment.
Thursday’s indictment and arrests come less than a month after authorities in India were tipped off by a disgruntled call center employee that the centers in question were calling American phone numbers, claiming to be from the IRS and telling their victims that they had defaulted on their tax debt and must now pay. That call resulted in nearly 770 people being detained — about 70 that were actually charged and 630 “listed accused but not arrested yet.”
Police in the city of Thane said at the time that the call centers were bringing in anywhere from $150,000 to $225,000 each day, and that the operators of this scam brought in around $75 million in a little more than a year.
