Phone Scams' Canadian Connection

A Harmonica Player With a Mission in Montreal

Ralph Leroy Lewis Sr. is an 81-year-old harmonica player from Enid, Okla., who outsmarted a Canadian telemarketer. When a woman from Montreal called every day for more than a week to say he and his wife, Thelma, had won $850,000 that was sitting in the "Bank of Cue-bec," Lewis was reluctant to part with the two-per-cent fee for customs duties they demanded. "They had me make a cashier's cheque for 4,000 and somethin' dollars," said Lewis, who spent 42 years working on the railroad in Louisiana and "shrimped till I was wore out" on his boat on weekends. "They said, 'If you was up here, all you'd have to do is sign the cheque, and that's all there'd be to it.' By golly, I called around to the airports and me and the wife got on the airplane on Friday. We had people checking around, and couldn't find nobody that they said to mail that letter to."

RCMP Cpl. Chris Knight of Project Colt, the special Montreal-based task force fighting telemarketing fraud, says police encounter people like the Lewises about once a month in Montreal. They fall into two categories: those who want to see who they're dealing with before they send any money, and others who have sent the funds and show up "banging on doors and demanding their money back." In most cases, Knight says, they "get off in Montreal, hail a cab to an address. Next thing you know, they're in front of a run-down apartment building, which is nothing more than a mail drop. They contact us. They're faced with the reality of 'Hey, I've been had.' "

Luckily, Lewis and his wife were members of the first group. With his cashier's cheque still in hand, Lewis says he and Thelma approached customs at Montreal's Dorval Airport for help in locating their windfall. The customs agents put them on to Project Colt. The RCMP officers, said Lewis, "were awful nice. They took us downtown where we could get a hotel. On Saturday, we just messed around. It's a big town - didn't know there was that many million people."

Knight, who has been working on telemarketing fraud for three years, says it is all too easy to get scammed. The victims, he notes, are "what society should be: good, law-abiding people, coming from an era when such a thing wasn't done. They're real prey for these scammers." As for Lewis, a talented harmonica player who performed on country legend BoxCar Willie's show this past summer, he played at police headquarters as a token of his appreciation. "We showed them around Montreal a little bit," Knight says. "At least they can go home and say not all Canadians are bad."

Phone Scams' Canadian Connection

As a child, Gloria Vettor watched her grandmother win blankets and tea kettles at bingo. She was also told she had inherited her grandmother's luck - and when she grew up, she also won regularly, taking home bingo jackpots as high as $3,500. So, in early 1997, she was not surprised when a Montreal company phoned to say she had won $50,000 in a sweepstakes she could not remember entering. All she had to do was send in $2,140 to cover fees. Vettor did not have that kind of money. But as a bookkeeper for a Guelph, Ont., builder, she "borrowed" from her employer by forging cheques to herself in his name. Over the next 10 months, as an ever-widening circle of new telephone friends called to say she had won a total of $2.7 million, Vettor continued to embezzle funds to pay other "charges." Vettor says she fully intended to pay the money back, but in the end there were no winnings - only a two-year prison sentence on three counts of fraud. "She'll never see that pot of gold," her lawyer, Tom Brock of Kitchener, Ont., told the court in September, "and neither will anyone else."

Vettor's case may seem extreme. But the 57-year-old is only one of the latest victims of what one RCMP officer calls an "epidemic" of telephone fraud. The underground world of fraudulent telemarketers is mushrooming in Vancouver, Toronto and Montreal, offering customers loans or credit cards, a chance to invest in dubious foreign lottery tickets or "priceless" gems, or convincing them they have won a sweepstakes. For the most part, these companies prey on elderly Americans - although Canadians are increasingly becoming targets - taking advantage of institutions such as the phone companies and Canada Post to ply their trade in a country that is years behind the United States in toughening laws against deceptive telemarketing. Justice officials estimate these fraud artists cheat their victims of at least $460 million a year - while some individual victims have been duped for more than $1 million. And Anthony Pratkanis, a psychologist at the University of California at Santa Cruz who specializes in persuasion, warns that many intelligent, sophisticated people have been duped by telephone con artists. "When you think you're smart enough not to get taken, you'll likely be the first person."

What the fraudulent telemarketers prey on is a person's Achilles heel. In Vettor's case, it was vulnerability: in October, 1996, she was recovering at home from two serious operations when she unwittingly introduced herself to telemarketers by buying 10 pen-and-pencil sets for $500 from a firm called Home and Business. The company, say police, was working both ends of the telemarketing fraud business - misrepresenting the value of pens they were selling, and then returning to those victims a few months later to say they had won a sweepstakes. Home and Business asked Vettor to send in fees and a photograph of herself so they could trumpet her as the "Sweepstakes Queen," and within days of sending in her payment, Vettor was receiving new calls - either from the same people using a different company name, or others who had bought her name on a "sucker" list.

No winnings ever arrived. For 10 months, Vettor fell for the most amazing excuses - the money was being held in a New York City bank account, was stopped at customs, or was in a Brink's truck that was "on its way" - from con artists who used names like Diana Ross, Howard Stern and Phil Hartman. Meanwhile, she continued to pay other charges - legal fees, U.S. duties, Canadian duties, award tax, capital gains tax, whatever the telemarketers could dream up. She gave one company, operating under names such as Columbia Group or Consumer's Group, $433,000. Looking over her list of the Montreal telemarketers she talked to, Vettor told Maclean's in an interview before going to prison: "I can't believe how stupid I was not to recognize the celebrity names."

In total, Vettor embezzled $768,000 from her employer, of which some $500,000 went to no fewer than 11 Montreal-based companies. Vettor can't explain why she was so gullible. "All I can say is that when you get down and depressed, like I was coming out of hospital, you believe more than you should," she says. "I can kick myself now. I was so excited - it seemed that when they phoned I was in another world." She was also, she says, under the spell of a psychic who, Vettor claims, guaranteed the arrival of her winnings - in exchange for large sums of money. (In an interview with Maclean's, the psychic denied receiving large sums of money from Vettor and said she had no connection to telemarketers.)

In November, a Montreal branch of Canada Trust became suspicious that an Ontario woman had sent 20 $2,500 money orders in one week to one of their clients. It contacted Vettor's bank in Guelph, which froze her account and contacted her employer. She was soon fired from her job and the police showed up at her door wanting to know about 104 forged cheques. "I lost a real good job, I've ruined my name and my credit, and for what?" said Vettor before being sentenced on Sept. 9 to serve a two-year term at the Grand Valley Institution for Women in Kitchener. "None of the money has arrived."

It never does. Officials at Project Phonebusters, an Ontario Provincial Police-run centre in North Bay, Ont., for information and complaints about telemarketing scams, say that over the past three years they have heard from almost 10,000 victims. About 600 of them have reported losing a total of $3.2 million to the same companies that deceived Vettor. But all that does is underscore the difficulty in apprehending the con artists and prosecuting them. Some of those companies have been raided by police, but charges have yet to be laid. In many cases, the same fraud artists are involved time after time, but they constantly change their own and their company names and the locations of their "boiler rooms" - places where the telemarketers make their calls.

According to RCMP Staff Sgt. Laurier Quesnel, the addresses to which cheques are sent are only postal boxes, and the phone numbers nothing but voice mail "with not even their real voice on there. Try doing a court case with that." Quesnel is head of Project Colt, a 13-person unit formed in April by officers from the RCMP, Quebec provincial police and city of Montreal police to stem the rise of telemarketing fraud in Montreal. The only combined forces effort of its kind in Canada, it has raided nine boiler rooms in the past six months and anticipates laying charges against 50 people by early next year. But Project Colt has only touched the surface of the problem. "In the beginning, you had certain families doing it," says Quesnel. "But now, everyone is trying to get in on the act. There's dancers and prostitutes doing the phone lines, and a lot of young people. The managers are your motorcycle gangs and street gangs. There's so much money to be made, tax-free, you can't scare them away."

The Canada-U.S. border helps. With most of the victims in the United States, Canadian police are generally reluctant to tackle the growing telemarketing fraud problem because of the cost of tapping phone lines and bringing in witnesses from great distances, especially in an era of tight policing budgets. They also know that when two justice systems are involved, investigations are more lengthy and complicated. And, most frustrating to police, perpetrators know the Canadian judicial system has traditionally given lenient sentences for that kind of fraud. Quesnel says judges have to be convinced that fraudulent telemarketing is not a minor crime - "They're putting senior citizens out on the street with nothing left. The day a judge's father gets done by a telemarketer, he'll understand what effect it has."

When Canadian police raid boiler rooms, crooks are quick to ask if they face criminal charges in the United States. Since 1994, Americans have treated telemarketing fraud as a serious crime, with judges empowered to boost standard five-year fraud sentences by five to 10 years when the scams target American seniors. But in Canada, the average sentence is two to six months - and all too often the criminals are not even charged, much less successfully prosecuted. For two months in 1995, Montreal police collected thousands of tapes of evidence, through wiretaps and video and physical surveillance, on eight telemarketers. But after police laid charges, the Crown entered into an agreement: the telemarketers pleaded guilty in exchange for paying restitution totalling $212,000 and doing community work.

The story of Boaz Moshe Langman, who organized prize scams in Montreal, is another case in point. Langman's telemarketers told victims they would win one of five prizes if they sent in a fee. OPP from Phonebusters charged him in the spring of 1995 with fraud and conspiracy to commit fraud against Ontario residents. But the Crown dropped the charges in February, 1996. U.S. prosecutors, on the other hand, did not hesitate to go after Langman. On Sept. 14, he and his three top sellers pleaded guilty to wire fraud in Wilmington, N.C., and because their pitches targeted elderly Americans, now face up to 20 years each in jail (they will be sentenced in December).

The United States takes telemarketing fraud seriously, in part because of efforts by the Washington-based American Association of Retired Persons, which showed lawmakers how extensive the problem is. "Telemarketing fraud isn't about money, it's about the human suffering it causes - it's life-altering," says Anita O'Riordan, who heads the anti-telemarketing fraud team at the association. O'Riordan, who has dealt with hundreds of victims, adds: "It makes lonely people afraid to pick up the phone. It makes them afraid to tell their children about it, in case they feel the parent was so stupid they should be committed. To me, it's just as abusive as a mugging - with the phone as a weapon."

The Canadian who has been wielding the most weapons is Vancouver-based James Blair Down, 55. Born in rural Manitoba near Brandon, he was regarded as a local boy made good, with race horses and a seaside mansion in Barbados. Down ran telemarketing boiler rooms in Vancouver, Kelowna, B.C., and Toronto that sold mostly foreign lottery tickets and grossed $107 million a year. Victims thought they were purchasing, with other players, packages of tickets in the Australian, Spanish and other state lotteries. Unknown to them, Down's companies took a huge slice of the money as fees, and bought only a few tickets, sometimes giving the players phoney ticket numbers. Many victims also accused Down's companies of making unauthorized charges on their credit cards, and if they ever did win anything they were pressured to "reinvest" the funds. The entire scheme was illegal, violating U.S. anti-gambling law.

U.S. postal inspectors have been investigating Down's activities since 1992. They learned that Down's companies mailed thousands of solicitations to the United States - the "openers" by which, when the people wrote back, they developed sucker lists of people to phone. Typical of Down's victims is Lavigna Maier, a 96-year-old widow from Portland, Ore. In 1993, she sent $12 to Lucky 500, a Down company that guaranteed her a $10,000 lottery prize in 30 days. She didn't win. Instead, Down's telemarketers phoned, encouraging her to get involved in various other lottery schemes. As she sent in money, she was twice told she had won more than $20,000, but never received a cent. The telemarketers convinced her to empty her bank account of $153,000. In 1996, when she told them she had run up $92,000 in credit-card debt playing their schemes, they finally left her alone. But she continued to be harassed by other lottery ticket sellers who had bought a sucker list with her name and phone number on it.

In early 1996, a grand jury in Seattle began to hear evidence against Down. A survey of 880 of his victims, including Maier, showed that their average age was 74, and that some had lost up to $500,000. In July, 1996, the U.S. attorney asked Canadian authorities, under the Mutual Legal Assistance Treaty, to raid Down's Vancouver offices. The RCMP seized 72 boxes of business records and downloaded computer files detailing the extent of the lottery schemes, but Down's Canadian lawyers successfully fought to have the evidence sealed. In August, the United States issued a secret warrant for Down's arrest, and in September the RCMP charged Down under a statute on foreign lottery sales. But 11 months later - and the day after Down was publicly indicted in the United States - a British Columbia judge ruled that Canadian charges against Down would be dropped because the statute was "vague" and therefore unconstitutional.

In October, 1997, the RCMP tipped off U.S. investigators that Down was about to flee Canada to Barbados, a country that had indicated it would not extradite Down for financial crimes. While Down was on a western hunting trip that month, the RCMP arrested him in Saskatchewan at the request of U.S. authorities, who started extradition proceedings. But Down's lawyers managed to delay those, and on Aug. 19 of this year, frustrated by the deaths of 38 elderly potential witnesses and the prospect of further delays, the U.S. attorney in Seattle entered into an agreement with Down under which he would plead guilty to conspiring to violate American anti-gambling law.

The deal also calls for Down to forfeit $18 million investigators had seized at a Bellevue, Wash., brokerage house, and spend six months in jail. "Justice delayed is justice denied," said Peter Mueller, an assistant U.S. attorney in Seattle. "In exchange for a slight sentence of imprisonment, Down agreed to stop resisting extradition and to stop stringing this process out. The value of it to the United States is that our citizens will get a chance for some restitution - the victims will not be dead by the time we get Down out of Canada."

But the agreement does not sit well with some critics. "Six months - if I could kill him and get away with it, I would," says Valerie MacLean, executive director of British Columbia's Better Business Bureau, whose Vancouver office has received hundreds of complaints from Americans duped by Down's companies. "It just makes me sick when I think of the people he has destroyed. I know he probably has 10 times the amount of money he forfeited to the victims of his crime for restitution."

Those who fall prey to telemarketing con artists are nothing but suckers - that, say experts, is the conventional, albeit misguided, wisdom. But Pratkanis suggests looking at these people through the prism of vulnerability. "Suppose I can make you so wealthy, you'll never be an imposition to any of your relatives - would you like that?" he asks. "You can leave this earth with peace of mind and never be a burden - are you interested?" A good telemarketer, he explains, adapts to each situation. If the person called wants to feel superior, the telemarketer will treat them like kings. If the person feels lonely, the caller will take away their blues.

Studies show that three out of five victims are seniors. Experts say seniors have several traits fraud artists look for, among them disposable income and accessibility (they are home to answer the phone). "Whether it's loneliness, death of a spouse, or the fact they're depressed about something or just aging," says Sgt. Barry Elliott of Phonebusters, "people become particularly vulnerable at 60 and older."

The most common trait among victims is an inability to hang up the phone - the need for human contact is often the key. "One telemarketer picked up on the fact that an elderly person wanted her grandchildren to visit more often," recalls Pratkanis, who has listened to hours of FBI tapes of fraudulent telemarketers at work. "He'd send her a present on her birthday or on a special occasion. He'd call her two days later and she would thank him. Then he'd say, 'What else did you get?' - knowing the answer would be nothing. When he needs money, do you think that woman will be able to turn him down? That's one of the more nasty ones. It attacks the intimacy of relationships."

As well, people want to believe they have been lucky. Drusilla Aden, an 85-year-old from suburban Chicago, was told she had won $13 million in a Canadian lottery, but had to pay a $1.8-million tax because she was a U.S. resident. Within days Aden cashed in stocks and sent a cheque worth $1,377,000 in Canadian funds. Over the following few months, she sent several other cheques, continuing to believe she had won. When investigators intervened, they had to repeatedly show her the facts before she would admit to being scammed. But it was too late to retrieve most of Aden's money - it had already been transferred from Toronto to a bank on a Caribbean island. In that case, Toronto police have charged Reed Nichols, 29, a former employee of Blair Down, with fraud (Nichols refused to comment when contacted by Maclean's). The Illinois attorney general has charged him with four counts of theft. His fraud trial is scheduled for November in Toronto.

Greed motivates some victims, but there are scams to meet any desires. One of the newest involves approaching people who have been rejected for credit cards and bank loans. Victims are told that, for a processing fee, they too can get the credit card they've longed for. Alternatively, fraud artists offer loans to people who promise to pay the $500 "service fees" up front. The fraudulent telemarketers, in this case known as "bottom feeders," take the money and are never heard from again.

Telemarketing gem scams, like those perpetrated by Royal International Collectables Inc. of Toronto, have also been hot. From 1986 until Jan. 22, 1997, when the RCMP raided its Yonge Street office, the company passed off, over the phone, low-grade rubies, emeralds and sapphires to Americans as rare and valuable gems. According to records seized by police, the company says it earned $50 million over a 10-year period. In July, the four accused, Alan Obront, Allen Himelfarb, Daniel Brainin and David Vengroff, each pleaded guilty to a single count of fraud on the public. Brainin, Himelfarb and Vengroff were sentenced to a conditional sentence of two years and three years probation. Obront, who controlled RIC and earned close to $1 million a year, will be sentenced on Oct. 30.

According to police, the lowest form of con artists participate in recovery scams - they promise to track down and return money lost by victims to other telemarketing fraud schemes. Crooks buy the sucker lists, and then call - pretending to be Canadian police, customs or tax investigators. They often assume the identities of real investigators known to be working on telemarketing fraud; in a raid by Montreal's Project Colt last month, police found their own names being used by the people they were arresting. "We have a videotape of telemarketers who washed $200,000 from an 82-year-old lady," says Det. Lieut. Serge-Daniel Randez of Montreal city police. "Later, they phoned the same woman to ask for $520 - they said they had found her money. Do you imagine what kind of people can do that? In French we say it is abject - it's vile, disgusting." Regardless of the language, it is a sentiment with which victims of telemarketing fraud can agree.

Two Days in a Boiler Room

Maclean's correspondent Shanda Deziel spent two days at a Toronto telemarketing operation that fraudulently promises credit cards to Americans with bad credit ratings - for a "processing fee" of $159 (U.S.). Her report:

After five hours of dead-end calls, I finally get a live one. When Vernon Henson Jr. answers his phone in Texas, I have finally found the kind of desperate person this operation targets. Henson has a bad credit rating, which means he has trouble getting credit cards. It takes me less than three minutes to pitch him a Visa card, convincing him that he actually needs the package I am offering. Although he had been taken by the same kind of scam only three years ago, he readily agrees to give me his banking information so the company can take the processing fee straight from his account by electronic transfer. By the time I hang up with this unsuspecting 56-year-old coal miner from Henderson, Tex., my co-workers and managers are aware of my success. They congratulate me with knowing looks and jokes on how easy it is to get vulnerable Americans to part with their small savings. Everyone in the room knows there will be no credit card.

To get this telemarketing job, I called Direct Marketing Services, one of hundreds of companies that have found a lucrative business in phone scams, after reading an ad in The Toronto Sun. DMS is located in downtown Toronto, on the fifth floor of a dirty, low-rent building. Twenty people of widely different backgrounds sit in suite 508, a large room with rows of desks and phones and cement-block walls decorated with motivational posters. The windows, covered by torn vinyl curtains, let in only small patches of sunlight. The carpet is filthy. The focal point of the room is the big board that keeps track of the day's sales. In my job interview I am given a script setting out the credit card pitch. It doesn't matter to the manager that I have no experience; during a mini-audition she and I act out a call. She stops me before I finish the five-minute script and says: "That's fine - just checking if you can read." It is the easiest interview I have ever experienced - for a job that will turn out to be the hardest to stomach.

On my first day at work, I am handed the script and sheets of rebuttals - tips on how to respond to typical customer concerns. The manager training me says: "You will learn to put the script into your own words." Almost immediately, I understand what she means. Instead of selling what is described in the script - a package of credit card application forms that falsely promise immediate acceptance - we do better by peddling an imaginary Visa card, with a credit limit of $2,500 and a 4.9-per-cent interest rate. We also provide a pin number, which is always 1292. We are told to identify ourselves as senior officers with a company called Consumer Credit Services. We pass calls on to our managers when we are having trouble closing a sale. We try to intimidate hesitant people who are wary of our legitimacy.

One successful tactic is to tell customers that you are following up on a card they applied for in the past. Everyone we phone has in fact done just that - DMS gets its customer list by acquiring the names of people who have unsuccessfully applied for credit cards. Although they were initially rejected, they are now told they are accepted and only need to pay a processing fee to receive their new card. I learn this from Louis, a sweet and reserved 20-year-old who has worked as a telemarketer for over a year and has been at DMS for two months. When I ask for selling advice, he tells me: "This particular sale of credit cards is different than regular telemarketing when you usually have to beg people to buy your product." He then says without a touch of shame: "With this sale you have to take control, be the boss and just tell them that this is the process."

DMS telemarketers are for the most part recent immigrants, university students who need money, uneducated teens and others desperate for work. Within the first few hours of the shift, I see workers of varying skills get viciously creative in order to make sales. Tyrone, a physically intimidating young man, asks for an extra, unconnected phone so he can use the keypad to simulate computer typing. He tells customers that he has their Visa card ready and is just doing the final approval. While pretending to type on the unplugged phone he says: "Hold while I process your card." At one point, he covers the mouthpiece of his working phone, unable to hold in his laughter, and announces to the room: "I am such a liar."

Everyone in the room, managers included, laugh along. Tyrone is a top seller, sometimes bagging 10 sales a day - the average is four - by straying further from the script than anyone else. His familiar tone is typical of a successful seller. He befriends lonely, housebound women happy for any contact with the outside world. He dazzles them with descriptions of Toronto and always asks about their locale. Once he takes their money and hangs up, he laughs at their gullibility. His lying and casual misrepresentation is encouraged by the managers - and presented as a model to others.

Tyrone is not malicious. He and the other workers are lured by the money - almost as desperate as their faceless victims. We make $8 an hour plus bonuses. Supervisors prey on the vulnerability of their workers while teaching them to prey on the customers. The two managers - both women - praise those having a good day, and yell out humiliating put-downs to those without a sale. We are pitted against each other in a competitive drive to cheat as many people as possible.

My second sale is just as easy as my first. After my initial pitch, Eric Milton of Tyler, Tex., admits he wants a Visa or a Mastercard. He is interested in the fact that I promise to send him a package from which he is guaranteed a card that best suits him. When it comes time to discuss payment, he is extremely uneasy about giving his chequing account number over the phone. I press on, using the tips from the rebuttal sheets. I assure him that American "federal banking laws" permit a one-time-only withdrawal from his account. I tell him that our own DMS security office will call him, tape his authorization and play it back to his bank. It is all nonsense. But Milton's fears are calmed, and he brings out his chequebook to read me his account number. Within an hour, I get another sale - also without pushing (Maclean's has contacted and undertaken to compensate the three individuals). With those successes on the board I am officially a part of the team, and the manager praises me to other operators and to the new applicants she is interviewing. It is a ploy designed to instil loyalty - a good seller receives attention, recognition and a sense of belonging.

After making the sale, callers and their targets never speak again. How and when the money is removed from bank accounts, what the customers are actually sent, who answers the customer service line and how complaints are handled remains in the hands of others. Workers are told that Paul and Liza, the couple who stop in once a day, are at the helm of the operation. But according to police, DMS is part of a corporate structure called Consumer Credit Services, run by Lloyd Prudenza and David Wells, who have been charged with fraud in both Canada and the United States.

Waterloo regional police and the RCMP carried out searches on three Ontario operations owned by Prudenza and Wells on May 29. Police laid two charges against the corporation and seven individuals, including Prudenza and Wells, for fraud over $5,000 and conspiracy to commit fraud. The two men, who also were indicted by a Pittsburgh, Pa., grand jury on mail fraud charges in July, have not yet entered a plea in either case; their next scheduled court appearance is in Kitchener, Ont., on Oct. 28.

On my second day at work, in a room adjacent to the one we sit in, DMS begins to sell Canadian lottery tickets to Americans. Companies selling lottery tickets offer customers a chance to join a pool of other buyers, supposedly increasing their chances to win. The fraud artists take $50 each from 100 people, but buy only - at most - 100 tickets at a dollar each, pocketing $4,900. Some companies never buy any tickets. The scam is aimed primarily at the elderly and often drain victims' bank accounts. Operators call the same customers over and over, making a personal connection while asking for ever-increasing amounts of money.

Only the best credit card seller, Jay, is asked to participate at DMS in this new enterprise. Jay is a silky-voiced man who believes his cool attitude wins over most of his customers. When I express my discomfort with selling a product that does not exist, Jay says with assured confidence: "Morality is not everything in this world." That attitude makes him perfect for the lottery scam, a sale so obviously fraudulent that even he says: "I keep wondering if we would even send them their winnings," and then laughs.

Intentionally, I do not make any more sales and leave early on my last day. Telemarketing companies are used to high turnover - some new employees disappear during their first break. When I do not return the next morning, no one calls to ask why. I know they will have no trouble filling my spot.

Maclean's October 19, 1998

A Harmonica Player With a Mission in Montreal

Ralph Leroy Lewis Sr. is an 81-year-old harmonica player from Enid, Okla., who outsmarted a Canadian telemarketer. When a woman from Montreal called every day for more than a week to say he and his wife, Thelma, had won $850,000 that was sitting in the "Bank of Cue-bec," Lewis was reluctant to part with the two-per-cent fee for customs duties they demanded. "They had me make a cashier's cheque for 4,000 and somethin' dollars," said Lewis, who spent 42 years working on the railroad in Louisiana and "shrimped till I was wore out" on his boat on weekends. "They said, 'If you was up here, all you'd have to do is sign the cheque, and that's all there'd be to it.' By golly, I called around to the airports and me and the wife got on the airplane on Friday. We had people checking around, and couldn't find nobody that they said to mail that letter to."

RCMP Cpl. Chris Knight of Project Colt, the special Montreal-based task force fighting telemarketing fraud, says police encounter people like the Lewises about once a month in Montreal. They fall into two categories: those who want to see who they're dealing with before they send any money, and others who have sent the funds and show up "banging on doors and demanding their money back." In most cases, Knight says, they "get off in Montreal, hail a cab to an address. Next thing you know, they're in front of a run-down apartment building, which is nothing more than a mail drop. They contact us. They're faced with the reality of 'Hey, I've been had.' "

Luckily, Lewis and his wife were members of the first group. With his cashier's cheque still in hand, Lewis says he and Thelma approached customs at Montreal's Dorval Airport for help in locating their windfall. The customs agents put them on to Project Colt. The RCMP officers, said Lewis, "were awful nice. They took us downtown where we could get a hotel. On Saturday, we just messed around. It's a big town - didn't know there was that many million people."

Knight, who has been working on telemarketing fraud for three years, says it is all too easy to get scammed. The victims, he notes, are "what society should be: good, law-abiding people, coming from an era when such a thing wasn't done. They're real prey for these scammers." As for Lewis, a talented harmonica player who performed on country legend BoxCar Willie's show this past summer, he played at police headquarters as a token of his appreciation. "We showed them around Montreal a little bit," Knight says. "At least they can go home and say not all Canadians are bad."

Two Days in a Boiler Room

Maclean's correspondent Shanda Deziel spent two days at a Toronto telemarketing operation that fraudulently promises credit cards to Americans with bad credit ratings - for a "processing fee" of $159 (U.S.). Her report:

After five hours of dead-end calls, I finally get a live one. When Vernon Henson Jr. answers his phone in Texas, I have finally found the kind of desperate person this operation targets. Henson has a bad credit rating, which means he has trouble getting credit cards. It takes me less than three minutes to pitch him a Visa card, convincing him that he actually needs the package I am offering. Although he had been taken by the same kind of scam only three years ago, he readily agrees to give me his banking information so the company can take the processing fee straight from his account by electronic transfer. By the time I hang up with this unsuspecting 56-year-old coal miner from Henderson, Tex., my co-workers and managers are aware of my success. They congratulate me with knowing looks and jokes on how easy it is to get vulnerable Americans to part with their small savings. Everyone in the room knows there will be no credit card.

To get this telemarketing job, I called Direct Marketing Services, one of hundreds of companies that have found a lucrative business in phone scams, after reading an ad in The Toronto Sun. DMS is located in downtown Toronto, on the fifth floor of a dirty, low-rent building. Twenty people of widely different backgrounds sit in suite 508, a large room with rows of desks and phones and cement-block walls decorated with motivational posters. The windows, covered by torn vinyl curtains, let in only small patches of sunlight. The carpet is filthy. The focal point of the room is the big board that keeps track of the day's sales. In my job interview I am given a script setting out the credit card pitch. It doesn't matter to the manager that I have no experience; during a mini-audition she and I act out a call. She stops me before I finish the five-minute script and says: "That's fine - just checking if you can read." It is the easiest interview I have ever experienced - for a job that will turn out to be the hardest to stomach.

On my first day at work, I am handed the script and sheets of rebuttals - tips on how to respond to typical customer concerns. The manager training me says: "You will learn to put the script into your own words." Almost immediately, I understand what she means. Instead of selling what is described in the script - a package of credit card application forms that falsely promise immediate acceptance - we do better by peddling an imaginary Visa card, with a credit limit of $2,500 and a 4.9-per-cent interest rate. We also provide a pin number, which is always 1292. We are told to identify ourselves as senior officers with a company called Consumer Credit Services. We pass calls on to our managers when we are having trouble closing a sale. We try to intimidate hesitant people who are wary of our legitimacy.

One successful tactic is to tell customers that you are following up on a card they applied for in the past. Everyone we phone has in fact done just that - DMS gets its customer list by acquiring the names of people who have unsuccessfully applied for credit cards. Although they were initially rejected, they are now told they are accepted and only need to pay a processing fee to receive their new card. I learn this from Louis, a sweet and reserved 20-year-old who has worked as a telemarketer for over a year and has been at DMS for two months. When I ask for selling advice, he tells me: "This particular sale of credit cards is different than regular telemarketing when you usually have to beg people to buy your product." He then says without a touch of shame: "With this sale you have to take control, be the boss and just tell them that this is the process."

DMS telemarketers are for the most part recent immigrants, university students who need money, uneducated teens and others desperate for work. Within the first few hours of the shift, I see workers of varying skills get viciously creative in order to make sales. Tyrone, a physically intimidating young man, asks for an extra, unconnected phone so he can use the keypad to simulate computer typing. He tells customers that he has their Visa card ready and is just doing the final approval. While pretending to type on the unplugged phone he says: "Hold while I process your card." At one point, he covers the mouthpiece of his working phone, unable to hold in his laughter, and announces to the room: "I am such a liar."

Everyone in the room, managers included, laugh along. Tyrone is a top seller, sometimes bagging 10 sales a day - the average is four - by straying further from the script than anyone else. His familiar tone is typical of a successful seller. He befriends lonely, housebound women happy for any contact with the outside world. He dazzles them with descriptions of Toronto and always asks about their locale. Once he takes their money and hangs up, he laughs at their gullibility. His lying and casual misrepresentation is encouraged by the managers - and presented as a model to others.

Tyrone is not malicious. He and the other workers are lured by the money - almost as desperate as their faceless victims. We make $8 an hour plus bonuses. Supervisors prey on the vulnerability of their workers while teaching them to prey on the customers. The two managers - both women - praise those having a good day, and yell out humiliating put-downs to those without a sale. We are pitted against each other in a competitive drive to cheat as many people as possible.

My second sale is just as easy as my first. After my initial pitch, Eric Milton of Tyler, Tex., admits he wants a Visa or a Mastercard. He is interested in the fact that I promise to send him a package from which he is guaranteed a card that best suits him. When it comes time to discuss payment, he is extremely uneasy about giving his chequing account number over the phone. I press on, using the tips from the rebuttal sheets. I assure him that American "federal banking laws" permit a one-time-only withdrawal from his account. I tell him that our own DMS security office will call him, tape his authorization and play it back to his bank. It is all nonsense. But Milton's fears are calmed, and he brings out his chequebook to read me his account number. Within an hour, I get another sale - also without pushing (Maclean's has contacted and undertaken to compensate the three individuals). With those successes on the board I am officially a part of the team, and the manager praises me to other operators and to the new applicants she is interviewing. It is a ploy designed to instil loyalty - a good seller receives attention, recognition and a sense of belonging.

After making the sale, callers and their targets never speak again. How and when the money is removed from bank accounts, what the customers are actually sent, who answers the customer service line and how complaints are handled remains in the hands of others. Workers are told that Paul and Liza, the couple who stop in once a day, are at the helm of the operation. But according to police, DMS is part of a corporate structure called Consumer Credit Services, run by Lloyd Prudenza and David Wells, who have been charged with fraud in both Canada and the United States.

Waterloo regional police and the RCMP carried out searches on three Ontario operations owned by Prudenza and Wells on May 29. Police laid two charges against the corporation and seven individuals, including Prudenza and Wells, for fraud over $5,000 and conspiracy to commit fraud. The two men, who also were indicted by a Pittsburgh, Pa., grand jury on mail fraud charges in July, have not yet entered a plea in either case; their next scheduled court appearance is in Kitchener, Ont., on Oct. 28.

On my second day at work, in a room adjacent to the one we sit in, DMS begins to sell Canadian lottery tickets to Americans. Companies selling lottery tickets offer customers a chance to join a pool of other buyers, supposedly increasing their chances to win. The fraud artists take $50 each from 100 people, but buy only - at most - 100 tickets at a dollar each, pocketing $4,900. Some companies never buy any tickets. The scam is aimed primarily at the elderly and often drain victims' bank accounts. Operators call the same customers over and over, making a personal connection while asking for ever-increasing amounts of money.

Only the best credit card seller, Jay, is asked to participate at DMS in this new enterprise. Jay is a silky-voiced man who believes his cool attitude wins over most of his customers. When I express my discomfort with selling a product that does not exist, Jay says with assured confidence: "Morality is not everything in this world." That attitude makes him perfect for the lottery scam, a sale so obviously fraudulent that even he says: "I keep wondering if we would even send them their winnings," and then laughs.

Intentionally, I do not make any more sales and leave early on my last day. Telemarketing companies are used to high turnover - some new employees disappear during their first break. When I do not return the next morning, no one calls to ask why. I know they will have no trouble filling my spot.

Maclean's October 19, 1998