It’s Good The Scammers Are Gone, But There’s No Message
October 28, 2016 (Fault Lines) — Twenty people were just arrested and many more charged for a scam that turned out to be surprisingly successful for its perpetrators:
On Thursday morning, federal authorities in Texas unsealed criminal charges against dozens of people who are accused of being part of a “transnational criminal organization” that allegedly victimized tens of thousands of people and yielded hundreds of millions of dollars in losses.
I hope that they just called tens of thousands of people and didn’t actually convince tens of thousands of people to pay them. I also hope the hundreds of millions of dollars in losses were the actual amounts people paid them, but some sort of fuzzy government or media math that counts the cost of the investigation and their apprehension and the impact on the economy too. Those are pretty amazing numbers for something not so amazing.
“Transnational criminal organization” sounds impressive, but given what they were actually doing, it gives the impression they were a lot more sophisticated than they really were:
The suspects are believed to have orchestrated an incredibly large series of phone-based scams that lasted for years. According to prosecutors, the suspects would call victims, impersonating Internal Revenue Service and United States Citizenship and Immigration Services officials, and would then demand payment through debit cards or wire transfers. If victims didn’t pay up, the callers threatened them with arrest, deportation, or heavier fines. There were also related scams involving fake payday loans and bogus US government grants, according to the criminal complaint.
If federal authorities are right, the suspects had clearly been busy. Their work ethic might be something impressive, but the scam itself wasn’t complicated at all. It amounted to someone with access to a phone pretending to be someone else and calling people demanding money. It’s transnational in that the people involved may be outside this county, but it wasn’t exactly the Sinaloa Cartel they were running.
If what they were doing was like a call I received a few weeks ago when someone with a thick accent and bad grammar told me he was “from A.R.S.” and that I would be “in big troubles” if I didn’t resolve an outstanding debt, I’m somewhat shocked it work. For me, it was mostly amusing, and if I’d had more time, I would’ve savored the conversation and seen how long I could’ve kept the guy on the phone.
Still, it worked with a lot of victims by any estimate, and it worked particularly well in some cases:
For example, one man, Suresh M. of Hayward, California, ended up paying $136,000 through 276 MoneyPak cards to people he believed were from the IRS and who claimed that he had outstanding tax violations.
Before you go judging Suresh, it might be a good idea to step back and think about the scam. The call I got was obviously fake, but with a better scammer on the other end, the call might not have been so funny. It was from a restricted number, and the sound quality was good. If everything about the call looked serious enough and the guy on the other end sold it, the situation could’ve been quite unnerving.
Furthermore, immigrants are generally a group with some extra incentive to follow the rules, and they may be less familiar with the policies and procedures of the IRS. They were the target of another part of what the suspects were doing. The IRS calls were probably targeting people likely to freak out and pay up quickly too.
If Suresh was a straightlaced, responsible guy who’d never had a run-in with the IRS before, him paying out doesn’t seem nearly as crazy. It also isn’t clear if he thought he was paying the IRS or a corrupt IRS agent. It wouldn’t be the first time a scammer took advantage of someone by exploiting the fact that they might’ve come from someplace where a government agent demanding a kickback isn’t the sort of thing people just can’t believe might happen.
The US Attorney is going to do its thing, of course:
“This indictment will serve to not only seek the conviction of those involved but will send a message around the world that no one is safe from prosecution for participating in such pervasive transnational fraud schemes,” US Attorney Kenneth Magidson said in a statement. “We are extremely vigilant when the names of US government agencies are used to perpetuate fraud for the purpose of victimizing so many innocent American citizens.”
The “no-one-is-safe-from-prosecution” line prosecutors love to use is one of their silliest. Do they think the only people doing this stuff know all of the other people who are doing this stuff? Or do they think they really, really keep up on current events? Authorities seem to perpetually operate under the assumption that everyone is remarkably well-informed.
Plus, these people apparently conned other people out of hundreds of millions of dollars before getting caught. No one is safe isn’t the same as everyone is caught. The arrested people allegedly broke the law, were tremendously successful at it, made a ton of money, and now the fun is over. Someone probably got away with it, though. Prosecute the ones you can catch because they committed a crime and should be prosecuted. Sending a message is tough when there are aspects of the facts at hand that might send the opposite message taking a holistic view of things.
The fact they’re “extremely vigilant when the names of US government agencies are used to perpetuate fraud for the purpose of victimizing so many innocent American citizens” is also bizarre. Are they just middle-of-the-road vigilant when the bad guys are pretending to be a credit card company? And what about when the purpose is victimizing innocent lawful permanent residents? Or innocent undocumented aliens? People say the stupidest things when reporters are around.
Really, the success of the scam is a product of the way things work in this country. The IRS does have a lot of power. They do aggressively collect debts. If we made sure that every citizen in the whole country knew the IRS would never call and demand payment, then the scammers would just start perfecting their forgery skills. They’d get better at putting up fake websites, or get some super convincing uniforms too. If people believe the government is in the business of debt collecting, someone with bad intentions is always going to use that to their advantage.
The IRS isn’t going away, of course. Neither are fraudsters. If the allegations are true, then it’s good this particular con is over. There will be others, messages from prosecutors around the country notwithstanding. It would be nice if we could quit encouraging prosecutors from thinking they’re in the business of preventing crime, especially when what actually happens is likely to encourage it for those who are really paying attention.