With the huge financial potential, there is an increasing trend for organized crime to become involved in telemarketing frauds. Not only does this provide these criminals with a lucrative cash flow, but it also allows organized crime to fund other criminal activity such as narcotics, prostitution, and gunrunning.
The traditional role of the police is to carry out their duties, such as detecting and solving crime, patrolling the streets in their vehicles or on foot, enforce traffic regulations, and so on. These duties are generally confined to legislated jurisdictional areas, such as municipal, regional, provincial, or federal boundaries. Although there are protocols and agreements in place to allow police officers to operate outside their jurisdiction, this often becomes time consuming and an administrative burden. However, with the ever-shrinking world through the Internet, cellular phones, and rapid transit, the role of the police had to dramatically change to keep up with the criminal element.
Interpol’s definition of organized crime is: “Any enterprise or group of persons engaged in a continuing illegal activity, which has, as its primary purpose, the generation of profits regardless of national boundaries.”1This emphasizes the transitional cross-border concept that police services in Canada are now only learning to face. Up to now, municipal police agencies have confined their efforts and resources to their jurisdictional boundaries as defined within their respective Police Acts.
The Alberta Police Act, for example, authorizes a municipal officer authority within the municipality and within the Province of Alberta. However, it does provide for circumstances should a police member be required to leave the province. Generally, this provision grants the status of special constable during the period of time that the officer is outside the province.
The RCMP, due to their status as a federal policing agency, does not have these inter-provincial restrictions. The problems of traditional policing response for municipal police and the RCMP only become compounded when faced with international borders.
Illegal telemarketing that crosses borders and targets Canadian and American citizens has required the Canadian and United States governments and agencies within these countries to develop a multi-faceted response. Canada and the United States have implemented significant changes in their laws on money laundering and proceeds of crime, as well as bolstering existing laws. Such changes allow agencies to seize proceeds of crime based upon reasonable grounds that they were obtained through the commission of a criminal act.
Law enforcement agencies have begun to adapt innovative strategies to combat the increase in telemarketing fraud by establishing Mutual Legal Assistance Treaties (MLATs) that allow cross-jurisdictional cooperation. A MLAT provides a legal framework that allows law enforcement agencies in other countries to share information regarding investigations and to obtain statements and evidence that would be admissible in a court proceeding. Multi-agency task forces and strategic partnerships such as Project COLT in Quebec, Project EMPTOR in Vancouver, and the FBI’s Operation Canadian Eagle work to target mass-marketing fraud, share intelligence, and coordinate investigation and enforcement.
In Canada, there are seven partnerships whose primary function is to address cross-border fraud. Partnership make-up consists of the municipal police agencies within the province, the Royal Canadian Mounted Police, the Ontario Provincial Police or the Sûreté du Québec, the Competition Bureau of Industry Canada, Provincial Fair Trade or Government Services Departments, the United States Postal Inspection Service, and the United States Fair Trade Commission.
As an example, the Alberta Partnership Against Cross-Border Fraud consists of investigators from the RCMP, Calgary and Edmonton Police Services, Service Alberta, the United States Fair Trade Commission, and the United States Postal Inspection Service. The Partnership meets formally quarterly to review current cases, share information, and determine whether an investigation falls within their mandate to investigate, based upon a predetermined formula.
Once the Partnership decides to investigate a case as a partnership file, then the appropriate resources are allotted to the case. These resources can take several forms, such as funds to pay informants or establish surveillance, interview victims in different provinces or states, or track and freeze assets in the culprit’s possession.
Other organizations, such as PhoneBusters, a joint venture between the Ontario Provincial Police Anti-Racketeering Squad and the Royal Canadian Mounted Police, the United States Consumer Sentinel, and NW3C (National White Collar Crime Center), serve as a focal point for intelligence gathering, tracking of trends, information resource, and public awareness. Finally, public advisories about telemarketing frauds and media releases on special task forces and high-profile arrests combine to educate the public.
When reporting a fraudulent occurrence, most local municipal police services have a dedicated commercial crime and fraud or economic crimes unit. The members of these units are trained in forensic accounting and have an expertise in financial investigations, to which most regular members are not exposed. Sadly, these specialized investigators and units are too often underfunded and undermanned. The amount of time and money required to train a fraud investigator can be prohibitive to law enforcement agencies for the return that they would get on their investment. Investigators would leave after a period of three to five years to pursue other opportunities that would lead to recognition and promotion.
Commercial crime or fraud units are often described within the policing community as the “poor step-sister” of a major crimes division of a police service. The facts of the matter are that auditing bank statements and processing boxes of paper does not have the pizzazz of other high-profile or violent crimes. Televised news coverage of a police SWAT team breaking down a door to seize drugs or weapons captivates audiences. Gang shootings and homicides attract the attention of the public and the administrations responsible for determining budgets and allocating finances to combat crime. Stories dealing with frauds, unless the frauds are in the millions of dollars or involve a prominent figure, are too often treated as public service announcements and consumer advisories.
An average convenience store robbery, although frightening and traumatic to the victim of the robbery, would net the culprit $50 to $100, plus some merchandise such as cigarettes. Police units would be dispatched immediately to the scene, a canine unit would likely attend, and then the crime scene investigators would also attend to take photographs and fingerprints. Other police units would be assigned to patrol the area and check any vehicles or pedestrians in the area, while still others would canvass the area to locate and interview witnesses. All of these things, and perhaps more, are necessary to investigate the crime, apprehend the culprit, and bring the case to trial. As for the robbery victim, the money may not be theirs if they do not own the store, and with some counselling, the victim can often resume their life as before.
An average fraud, on the other hand, will steal $5,000 to $10,000 from a victim. This loss is seldom covered by a person’s insurance and may take the victim years to recoup the loss. To report the fraud, the victim would have to travel to a police office where the initial report would be taken and then forwarded to the fraud investigators. At the fraud office, the case is reviewed to determine if it meets established criteria for the fraud unit to investigate. Some of these criteria would include the possibility of identifying a suspect, the reliability of the victim, and the actual amount of the fraud. Some police agencies will not investigate a fraud if the amount the victim has lost is less than $10,000. If the case does pass the criteria for investigation, it will be assigned to an investigator who will add it to his or her active case files. It is a sad state of affairs that the majority of fraud investigators have over one hundred active case files at any given time. This regularly means that a fraud file will not even be looked at for up to eighteen months after it has been reported. A large number of those files will never be investigated further and the file inactivated.
Although this reality paints a depressing picture for a victim of fraud, you should still report the occurrence to your police department. Because of the natural makeup of frauds and the characteristics of both the schemes and the criminals carrying out these frauds, often schemes will overlap and tie into other investigations. Sometimes it might take one seemingly unrelated file to put all of the pieces in a larger file together, which may lead to charges and a conviction.
Because of the restraints involved in investigating frauds and the unlikelihood that fraud victims will recover any of their money you have to be aware of these schemes and know how to avoid them. The following are precautions you can take to protect yourself or to limit your risk of becoming a victim, whether the fraudster uses the Internet, the telephone, or newspaper ads:
• Wait before you commit to sending any money. A twenty-four or forty-eight hour period to rethink things is not unreasonable. Remember, the fraudster will try to put pressure on you to send the money right away. Do not give in to this pressure; after all, it is your money.
• While not giving in to the pressure, take the time to do some research. Search the Internet and ask to speak to other people in the company. Call the Better Business Bureau and your police department. Fraud investigators generally are aware of current schemes and may have heard of a similar occurrence. Most investigators will provide you with as much information as they can, keeping in mind the various privacy legislations. However, from their point of view, it is much easier to prevent a fraud from happening than to investigate a file months after the incident.
• Look into the possibility of protection through insurance. Several companies now offer insurance to help protect your identity, property title, and loss due to criminal activity. A number of insurance companies also provide financial assistance to cover the costs of legal fees associated with recovery.
There are many opportunities for you to profit in a small business, find your perfect vacation, or that item you have been searching for. After all of the research is done and you have enjoyed the fruits of your labour, the feeling can be just like receiving a special present on Christmas. Just remember to watch out for the Grinches.