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Phone-marketing frauds claiming more victims


CHICAGO -- It was Tim MacGyver from Publisher's Clearinghouse on the telephone with thrilling news for Leona, a bright, well-spoken woman in her 70s who lives alone in Evanston, Ill.

As nice a name as it is, Leona is also a name more common to an earlier generation, and for the man on the telephone, the woman was just the type he was looking for -- older, perhaps more gullible, more trusting than someone of a more modern sensitivity.

He told her she had won second prize -- a check for $100,000 -- and Ed McMahon would show up on her doorstep with the money in three weeks. He was telling her in advance, he said, because he didn't want her to have a heart attack. Mr. MacGyver advised her to dress casual, act surprised when Mr. McMahon comes calling, and, above all, don't tell anyone else.

And, he added casually, she could reduce the taxes on her winnings if she would just prepay the taxes by sending a cashier's check for $5,900 to Leland Industries, the accounting division for Publisher's Clearinghouse.

But, federal officials said, the whole thing was a scam. Tim MacGyver was really a man named John Weaver of Garden City, Mich., and Leland Industries was just a front for a fraudulent telemarketing scheme.

By the time federal authorities had caught onto the scam, dozens of mostly elderly victims from across the country had been fleeced.

Deceptive pitches to consumers by telephone are a growing national problem, with losses totaling at least several billion dollars a year, and possibly far more, experts say.

In the recent federal trial, many of the victims had already been fleeced before. In making arrests, the FBI recovered a large stack of notecards containing names and telephone numbers of the repeat victims and the date and amount they had been bilked each time.

But this operation went higher-tech than sucker lists. By computer, they searched a packet of CD-ROMs containing a national telephone directory, available at stores for under $90. And, they targeted first names popular with an older generation -- such as Mabel, Estelle and Leona -- figuring most would be elderly.

In a bid to try to do something more about it, the Federal Trade Commission recently approved several changes designed to make life tougher for dishonest telemarketers.

Under the new rule, which takes effect at the end of the year, telemarketers must promptly disclose that it's a sales pitch, the identity of the seller, the nature of the goods being offered and, if it's a prize promotion, the odds of winning and that no purchase is necessary to win.

For the first time, the FTC will have the authority to seek fines of up to $10,000 for each violation.

Often stymied by boiler-room operations located out of state, attorneys general of each of the 50 states will have authority to sue in federal court to seek nationwide injunctions shutting down corrupt telemarketers.

Telemarketing fraud "is a bit of an invisible problem in a way because a lot of the victims blame themselves and don't complain," said C. Steven Baker, director of the FTC's regional office in Chicago.

Many elderly victims fear if they admit to being conned they might be considered mentally incompetent to continue to handle their financial affairs, according to Mr. Baker.

What people need to realize, he said, is that they're not gullible victims, but have been taken advantage of by professional confidence artists who "sound very believable."

Indeed, at John Weaver's trial last month in federal court in Chicago for the bogus Publisher's Clearinghouse sweepstakes scam, victim after victim testified how persuasive he had been, convincing with detail and a sincere voice.

"If it could happen to these victims, it could happen to anyone," said Assistant U.S. Attorney Christopher Cook, who prosecuted the case, which resulted in the convictions of Weaver and 12 others.

To gain trust, some crooked salesmen employ patience and guile, befriending the elderly by calling over a several-day period, learning the names of their grandchildren and building a rapport before ripping them off.

Others are aggressive from the start. One salesman pitching vitamins over the telephone tried to lure a credit card number xTC from a Peoria grandfather, the recent victim of a stroke. On learning the man's wife had taken away his credit cards, the salesman snapped, "You've got to be more assertive." The wife hung up the phone, but more calls came.

Once victimized, they are ripe to be a continuing target. Called "loaders" for trying to load up victims with more offers, conmen try a different storyline to entice victims to buy in again.

Once the lead runs dry, they'll sell the names of vulnerable victims to other boiler rooms, and the con begins all over again.

A veritable cottage industry has formed in buying and selling leads on previous victims, known as "sucker" lists. The more times someone has been victimized, the more valuable -- and expensive -- the lead.

Mr. Cook, the prosecutor, expressed surprise at how many of the victims endorsed over Social Security checks or used retirement savings in the vain attempt to collect their Publisher's Clearinghouse prize money.

In another federal criminal case in Chicago, a scam artist recontacted the same victims from his own earlier fraud and conned them again.

Posing as an FBI agent, Manuel Veiga, of Port St. Lucie, Fla., convinced them that the ringleaders from the earlier scam had been caught, convicted and ordered to repay victims, according to charges filed early this year.

Mr. Veiga is alleged to have promised to wire the restitution funds as soon as the victims sent him a fee that usually amounted to more than $700.

Several dozen people fell victim to Mr. Veiga's phony pitch for a second time, according to the government.

As the Veiga case illustrates, the variety of schemes is limited only by imagination.

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