[Senate Hearing 113-806]
[From the U.S. Government Publishing Office]








                                                        S. Hrg. 113-806

            876	SCAM: JAMAICAN PHONE FRAUD TARGETING SENIORS

=======================================================================

                                HEARING

                               BEFORE THE

                       SPECIAL COMMITTEE ON AGING

                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS


                             FIRST SESSION

                               __________

                             WASHINGTON, DC

                               __________

                       WEDNESDAY, MARCH 13, 2013

                               __________

                            Serial No. 113-2

         Printed for the use of the Special Committee on Aging


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



         Available via the World Wide Web: http://www.fdsys.gov
         
         
                                  ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

81-474 PDF                     WASHINGTON : 2016 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001         
         
         
         
         
         
         
         
         
         
         
         
         
         
                       SPECIAL COMMITTEE ON AGING

                     BILL NELSON, Florida, Chairman

RON WYDEN, Oregon                    SUSAN M. COLLINS, Maine
ROBERT P. CASEY JR, Pennsylvania     BOB CORKER, Tennessee
CLAIRE McCASKILL, Missouri           ORRIN HATCH, Utah
SHELDON WHITEHOUSE, Rhode Island     MARK KIRK, Illinois
KIRSTEN E. GILLIBRAND, New York      DEAN HELLER, Nevada
JOE MANCHIN III, West Virginia       JEFF FLAKE, Arizona
RICHARD BLUMENTHAL, Connecticut      KELLY AYOTTE, New Hampshire
TAMMY BALDWIN, Wisconsin             TIM SCOTT, South Carolina
JOE DONNELLY Indiana                 TED CRUZ, Texas
ELIZABETH WARREN, Massachusetts
                              ----------                              
                  Kim Lipsky, Majority Staff Director
               Priscilla Hanley, Minority Staff Director
               
               
               
               
               
               
               
               
               
               
               
               
               
               
                                CONTENTS

                              ----------                              

                                                                   Page

Opening Statement of Ranking Member Susan M. Collins.............     1
Statement of Chairman Bill Nelson................................     3

                           PANEL OF WITNESSES
                                Panel 1

Kim Nichols, Daughter of Jamaican Phone Scam Victim..............     5
Sonia Ellis, Daughter of Jamaican Phone Scam Victim..............    16
William L. King, Jr., Chief Deputy, York County, Maine, Sheriff 
  Office.........................................................    23
Robert G. Romasco, President, AARP; Accompanied by Doug Shadel, 
  Washington State Director......................................    35

                                Panel 2

Shawn Tiller, Deputy Chief Inspector, U.S. Postal Inspection 
  Service........................................................    56
Vance R. Callender, Operations Chief for Mexico & Canada, U.S. 
  Immigration and Customs Enforcement Homeland Security 
  Investigations, Department of Homeland Security................    75
Phil Hopkins, Vice President of Global Security, The Western 
  Union Company..................................................    83

                                APPENDIX
                      Prepared Witness Statements

Kim Nichols, Daughter of Jamaican Phone Scam Victim..............     9
Sonia Ellis, Daughter of Jamaican Phone Scam Victim..............    19
William L. King, Jr., Chief Deputy, York County, Maine, Sheriff 
  Office.........................................................    25
Robert G. Romasco, President, AARP; Accompanied by Doug Shadel, 
  Washington State Director......................................    38
Shawn Tiller, Deputy Chief Inspector, U.S. Postal Inspection 
  Service........................................................    59
Vance R. Callender, Operations Chief for Mexico & Canada, U.S. 
  Immigration and Customs Enforcement Homeland Security 
  Investigations, Department of Homeland Security................    77
Phil Hopkins, Vice President of Global Security, The Western 
  Union Company..................................................    85
Letter dated March 4, 2013, from John Ricci to Chairman Nelson...   100

                  ADDITIONAL STATEMENTS FOR THE RECORD

Government of Jamaica Statement to the Special Committee on Aging   106
Statement by the Hon. Peter Bunting M.P., Minister of National 
  Security (Jamaica) on the presentation to Parliament of the Law 
  Reform (fraudulent transactions) (special provisions) Act, 2013   111
The Law Reform (fraudulent transactions) (special provisions) Act   121
The Law Reform (fraudulent transactions) (special provisions) 
  Act, full text.................................................   123
Government of Jamaica Anti-Lottery Scamming Activities Brief 
  2012-2013......................................................   137
 
            876-SCAM: JAMAICAN PHONE FRAUD TARGETING SENIORS

                              ----------                              


                       WEDNESDAY, MARCH 13, 2013

                                       U.S. Senate,
                                Special Committee on Aging,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:14 p.m., in 
Room 562, Dirksen Senate Office Building, Hon. Bill Nelson, 
Chairman of the Committee, presiding.
    Present: Senators Nelson, Blumenthal, Donnelly, Warren, 
Collins, and Ayotte.
    Chairman Nelson. The meeting will come to order. I am going 
to break all tradition and have our Ranking Member give the 
first opening statement.

         OPENING STATEMENT OF SENATOR SUSAN M. COLLINS

    Senator Collins. Thank you very much, Mr. Chairman. That is 
typically gracious of you, and let me start by thanking you for 
holding this very important hearing. It has been a wonderful 
partnership that we already have and I think that this hearing 
is really important.
    I also want to begin my remarks by thanking all of our 
witnesses who are here today, not only for appearing before our 
committee, but also for the assistance that you have provided 
to us in understanding the scope of the Jamaican phone scam and 
what could be done to combat it.
    Two of the witnesses have made the journey from Maine to 
tell their stories, Kim Nichols, who knows firsthand the 
heartbreak of this sophisticated scam because her own father 
fell victim to it, and Chief Deputy Sheriff Bill King from York 
County, Maine, who is the leading expert in the law enforcement 
community and has worked nonstop to shut down this scam.
    I also see in the audience representatives of FairPoint 
Communications, including the Maine State President, Mike Reed. 
FairPoint deserves much credit for bringing the Jamaican phone 
scam to my attention. I also want to salute the company for 
their efforts to alert the public.
    But, most of all, I want to thank the Chairman for agreeing 
to hold this hearing. This committee has a great history of 
working together in a bipartisan fashion to bring to light the 
scams and swindles targeting our nation's senior citizens. I 
suspect that the Jamaican phone scam is one of the worst.
    To most Americans, Jamaica is a tropical paradise, an 
island of lush green mountains and white sand beaches set in 
the clear blue waters of the Caribbean Sea. We have all seen 
those ads, full of gorgeous scenery and upbeat music, calling 
Americans to come and feel the spirit of Jamaica. Millions of 
Americans have accepted that call, including 1.2 million last 
year alone. These tourists spend billions of dollars annually, 
money that is critical to the Jamaican economy, in pursuit of 
their dream vacations.
    But beneath the Jamaica of those enticing ads and the 
tourist dreams lurks another Jamaica, one that brings 
nightmares to elderly Americans targeted by Jamaican criminals 
intent on swindling them out of their life savings. Every day, 
sophisticated Jamaican con artists place an estimated 30,000 
phone calls to the United States in pursuit of their elderly 
victims.
    The swindle usually goes like this. The scammer calls to 
tell the victim that he or she has just won millions in a 
lottery or a sweepstakes or a brand new car and all they have 
to do is to wire a few hundred dollars in up-front processing 
fees or taxes and their winnings will be delivered. Often, the 
criminals will tell their elderly victims not to share the good 
news with anyone so that it will come as a surprise when the 
family finds out.
    Well, of course, no such winnings are ever delivered 
because no such winnings exist. The elderly winners get nothing 
but more phone calls, sometimes 50 to 100 calls per day, from 
scammers demanding more and more money. Behind those calls is 
an organized and sophisticated criminal enterprise overseeing 
boiler room operations in Jamaica. Indeed, the money scammed 
from the victims helps to fund organized crime in that island 
nation. Criminals once involved in narco-trafficking have found 
that these phone scams are both more lucrative and safer.
    Expensive lead lists identify potential victims. Satellite 
maps are used to locate and describe their homes to make it 
appear that the caller is familiar with the community. 
Elaborate networks for the transfer of funds are established to 
evade the anti-fraud systems of financial institutions.
    To keep the money coming in ever-increasing amounts, 
oftentimes, the impostors adopt a variety of identities. Some 
spend hours on the phone convincing the seniors that they truly 
care for them, that, indeed, they are in love with them. 
Victims who resist their entreaties begin receiving calls from 
Jamaicans posing as American government officials, including 
local law enforcement, the FBI, the Social Security 
Administration, and the Department of Homeland Security. They 
ask for personal data and bank account numbers so that they can 
solve the crime. These Jamaican scammers are masters of 
manipulation, playing to their victims' fears and emotions 
until they have drained them of every dime.
    Some of my own constituents have lost more than $100,000 to 
these scams. Others have lost their homes, their cars, their 
financial independence, not to mention their security and their 
dignity. Even then, the con artists continue to pursue their 
prey with a heartlessness that is difficult, if not impossible, 
to comprehend.
    Just listen to this actual recording of a Jamaican phone 
scammer and an elderly Maine victim available to us courtesy of 
FairPoint Communications.
    [An audio recording was played.]
    That is what we are talking about. That is how bad this 
scam is. That is how heartless the perpetrators are. And that 
is just one phone call to one victim. It is the tiniest tip of 
a giant iceberg that ought to scandalize the people of Jamaica.
    Incredibly, though, some in Jamaica embrace this scamming 
culture and even celebrate it. Last year, two of Jamaica's 
leading rap artists released a song with lyrics saying that the 
scammers are stars and the money they steal is reparations.
    The new government in Jamaica has finally passed some new 
laws targeting the scammers, but I am deeply troubled that it 
has taken Jamaica so long--years--before getting serious about 
this problem. For far too long, Jamaican authorities turned a 
blind eye to this fraud, which was illegally bringing an 
estimated $300 million annually to their economy.
    I am also troubled by the lack of an aggressive and 
coordinated effort on the part of U.S. Federal law enforcement 
officials to protect our nation's most vulnerable senior 
citizens. Our parents and grandparents worked hard their entire 
lives and saved for retirement. They should not be targeted by 
criminals who want to rob them of their hard-earned savings.
    While I believe that our Senate hearings will increase 
public awareness of these schemes, it is also critical that 
governments at all levels and across international boundaries 
work together to shut down these con artists before their 
sophisticated scams exploit yet another trusting senior 
citizen.
    Again, Mr. Chairman, I want to thank you so much for 
holding this important hearing.

       OPENING STATEMENT OF SENATOR BILL NELSON, CHAIRMAN

    Chairman Nelson. Well, there you have it. That is an 
excellent summary. I participated in one of those conversations 
yesterday and heard the relentless schmoozing that went on, and 
then the schmoozing turned into aggressiveness, and that is 
what happens to vulnerable seniors.
    I have talked to the Jamaican Ambassador. One of the things 
that we want to do--and I will be visiting with the Attorney 
General--we want to see somebody indicted, and then, when I 
pressed the Jamaican Ambassador, we want to see them extradited 
to the United States. That will have a chilling effect on a 
number of these people who think that they are bulletproof.
    What Senator Collins said is true, and this is just one 
type of scam. Often, we find where scams are going on, the 
street crime actually goes down. The drug trade actually goes 
down. We had a similar--another type of scam, not necessarily 
targeted at seniors, that was in Tampa and Miami, stealing 
people's identity and filing false income tax returns to get 
the income tax refunds. The local police department said, it is 
incredible how all the B&Es went way down, the other street 
crimes, because they had found that they can use a laptop 
instead of a crowbar.
    Here, we have the use of technology, getting these lists so 
that they have a target list of calling vulnerable seniors and 
then preying on that vulnerability. There is an obligation in 
society that we have to take care of the young and the old and 
we have the responsibility here in this committee to elevate 
this issue and to try to do something about it.
    Now, there are an increasing number of complaints that are 
coming to the fore. This is just going to increase. No telling 
how many billions of dollars. The FTC believes that up to 90 
percent of the scams are never reported because the victims are 
embarrassed or they are afraid.
    And so these tragic stories that you will hear today--you 
will hear stories like Stuart Childers, a Central Florida 
resident whose mother ended up on an FBI watch list for money 
laundering because she wired nearly $300,000 over an 18-month 
period in an attempt to claim her prize. That is so sad.
    And Neal Hines of Gainesville, his father lost $100,000 in 
an effort to receive what was reported to be the prize. They 
use the same number, Senator Collins, two-and-a-half million 
dollars. That is what happened to the constituent in 
Gainesville. That is what happened on this call that I 
participated in yesterday.
    Last week, in Miami, I talked to a financial planner, David 
Treece. He had to sue his own client in order to get a 
guardianship that could stand in the place of her because she 
was so vulnerable to this attack after she had already spent 
$400,000 in fees in Jamaica, and she had been seduced to think 
she was going to get $7 million of winnings. And we have on the 
panel Sonia Ellis to tell about her mother, a Siesta Key 
resident, who lost over $64,000 to these fraudsters.
    And so what makes these lottery scams different from other 
fraudulent schemes that are targeting the elderly? Well, they 
target the most vulnerable and then they are relentless. You 
should have heard on the phone yesterday. I am sitting there 
participating in this call. The call is hung up and the phone 
is ringing again, and again, and again.
    One elderly victim was called 59 times in a single day by 
the same scammer. But the harassment does not stop there. These 
are con artists. They threaten. Susan told you about posing as 
law enforcement, in one case, even posing as the FBI. By the 
way, there is an indictable crime right there, and I will be 
visiting with the Attorney General about that.
    And so this kind of sophisticated scam needs to be put out 
into the open and we need to see if we cannot limit it.
    So we have got this Joint Task Force that is going on. We 
want to go beyond that Jamaican-U.S. Task Force, and we will 
hear about that today. So we have got this star-studded panel.
    First, we are going to hear from Kim Nichols. She will 
share the story of her father, a retired airline pilot from New 
Hampshire.
    Then we are going to hear from Sonia Ellis. She is going to 
share the story of her mother, who sent many thousands of 
dollars to the fraudsters.
    We are going to hear from the sheriff, Sheriff King from 
York County, Maine. He spent 26 years in Federal law 
enforcement. He has become an expert on the Jamaican lottery 
scam and he has been on dozens of cases.
    And then we are going to hear from Robert Romasco, 
President of AARP. He served on the board since 2006 and he is 
accompanied by Doug Shadel. Dr. Shadel is the State Director of 
Washington's AARP and is a leading expert.
    So, Ms. Nichols, let us start with you. And, each of you, 
your full statements are put in the record. If you will give us 
about five minutes, we are going to go right on down the line, 
and then we will open it up to questions. Ms. Nichols.

   STATEMENT OF KIM NICHOLS, DAUGHTER OF JAMAICAN PHONE SCAM 
                             VICTIM

    Ms. Nichols. Good afternoon, and thank you, members of the 
Senate Committee on Aging, Chairman Nelson, and Senator 
Collins, for making it possible for me to be here today to tell 
my dad's story.
    My name is Kim Nichols and I am from Maine. I am a mother 
of twin 14-year-old boys. I am the wife of a military pilot. 
And I am the daughter to my father, Bill, from New Hampshire, 
who I never thought I would tell you was a victim of a scam. 
But I sit here today and he is a victim.
    He is a retired Navy and commercial airline pilot who lost 
over $85,000 to the Jamaican lottery scam. It began with a 
phone call from an 876 area code and ended with a pair of 
scissors and two police officers standing in his living room. 
If you think that sounds crazy, it is because it is.
    For my dad, he received a call from someone saying they 
were from Publishers Clearinghouse, the promise of a new car 
and a large amount of money, and the chance to help the people 
that he loved. All he had to do was send a $500 transfer fee. 
The one scammer quickly became more: The reassuring people from 
the Lottery Commissioner's Board, Better Business Bureau 
representatives, Customs agents, IRS, and FBI agents who 
provided local job descriptions and even badge numbers.
    Of course, there was Diane, the secretary, who was the 
company secretary from MegaBuck who was supposed to be the one, 
the company that handled the prizes. She spent lots of time 
getting to know my dad on the phone, getting him to trust her 
and taking advantage of his kind and generous nature. Her phone 
calls would reassure him in between all the phone calls that 
came from the other male callers, who pressured, harassed, 
yelled at, and scared my dad into sending checks to various 
people all over the country.
    They instructed him to withdraw cash and purchase GreenDot 
cards from the local Wal-Mart. He would load the cards with 
cash and then call into a phone number and scratch the PIN 
number off the back and read the card, or the PIN number for 
them to access the money. I found $40,000 worth of GreenDot 
cards so far.
    They would yell at him while he was on the phone standing 
in the bank in line, on his cell phone, as one of the bank 
managers told me later. She said, he would be shaking so 
violently from head to toe, he could barely fill out the 
withdrawal slip. The cash would then be sent to a scammer or 
another victim who was unwittingly becoming an accomplice in 
the scam.
    We knew nothing of it as first, as the scammers convinced 
my dad to keep it a secret, as Susan Collins said, and let it 
be a surprise. I knew at one point that he had gotten a phone 
call and a promise of a car, but he reassured me that he had 
gotten his deposit check of $500 back.
    I did not know how bad it was until in April, when he was 
supposed to have some surgery. I was getting ready to go down 
to take him to the hospital, and two days before I got there, 
his phone number had been changed. I could not reach him. He 
called, horrified that his phone number had been changed 
without his knowledge.
    I called FairPoint Communications, who handles his phone 
service, and they explained to me that this is how the scam 
works. I remember thinking it could not be as bad as they 
possibly said that it was until I got down there, and after we 
got him home from the hospital. His phone would ring off the 
hook with him. They would be harassing and yelling at him. He 
was begging and pleading with them that he was in pain, he had 
just had surgery, and he could not possibly drive anywhere to 
go get the money to send them.
    I begged and pleaded with him not to talk to them anymore 
or to Diane. He said to them that he only wanted to talk to 
Diane and he told me that she was not like them. He trusted 
her. He would end his phone call saying, ``I love you,'' not in 
a romantic way but more of a companionship way, because he 
lived alone.
    They seemed to have a strange hold on him. It was not 
really my dad anymore. It almost seemed like he was 
brainwashed.
    Chairman Nelson. Mm-hmm.
    Ms. Nichols. I left without being able to help him at that 
point, and I could not get him to promise that he would stop 
talking to them, and especially Diane, and I really did not 
know how much money he had lost.
    In late May, at my sister's wedding in Cape Cod, I saw how 
awful my dad looked. He had lost 20 pounds since I saw him in 
April. He was still yelling at people on his cell phone. He was 
barely eating, and he was very confused.
    I ended up at his house in New Hampshire and collected 
everything I could find having to do with the scam--the 
GreenDot cards, the mail receipts, the letters that they had 
written to him trying to get him to make good on checks that 
they supposedly never received. I found lots of pieces of paper 
with names and numbers and addresses scrawled on them.
    A scammer from Jamaica contacted FairPoint and tried once 
again to have his phone number changed. He impersonated my dad, 
and FairPoint was able to route that call to Chief Deputy Bill 
King's office, and they recorded it. The scammer was posing as 
my dad. He had his Social Security number and his personal 
information, his date of birth, to try to isolate him further. 
Just like Senator Collins said, they stop at nothing.
    I filed a self-neglect report on my dad with DHHS because I 
was afraid we would have to try to get conservancy, but I was 
told from lawyers that it would take months to do that. So I 
ended up having to call the police on my father. He refused--I 
wanted him to come to Maine, but he refused to leave. I called 
the police and asked them to come help me convince him to go.
    As he reached--he decided he wanted to try to call Diane 
one more time, and I begged him not to. As he reached to plug 
the phone in, because he had it unplugged at that time because 
his phone was ringing between 85 to 100 times a day--he reached 
to try to plug the phone back in and I cut it with a pair of 
scissors. And then the police showed up and told my dad that he 
needed to either come and go get in the car with me and come to 
Bangor, Maine, or they would take him to the hospital to have a 
psychiatric evaluation done. That is how we got it to stop 
then.
    He decided to come with me, and at my kitchen table that 
night, we added up all of the receipts and went through all the 
paperwork. I handed my dad a calculator and he added up his 
lost amount, $85,000. He was stunned and silent. He really had 
no idea how much he had sent.
    We had an intervention the next day with the only people 
that gave me any help at the time, FairPoint Communications 
security team and Chief Deputy Bill King of the York County, 
Maine Sheriff's Office. Even with that, the next day, my dad--I 
brought him home and he picked up the phone and called Diane 
and told her that if this was real, she would meet him at the 
post office with a check at noon. He went and waited and waited 
and then nothing. He returned home and called FairPoint with 
the final phone number, the contact information for Diane.
    Since then, my dad has lost two Social Security checks. 
They have called the local police department and the Post 
Office, trying to pose as a nephew trying to get back in touch 
with my dad. They are arrogant and they are clearly--they 
clearly know that they can continue without consequence.
    Throughout those six months, I made over 100 phone calls 
trying to get help from local police to Postal Inspectors. I 
called the FTC. I called the Immigration and Customs 
Enforcement Office. I called the IRS and the FBI and the 
Attorney General's Office. The responses were always the same. 
I got diverted to a prevention Web site or was told, ``We do 
not handle those cases. We do not have jurisdiction in 
Jamaica,'' or ``There are just too many of them,'' and ``Just 
get your dad to stop sending the money,'' or ``Tell him to hang 
up the phone.''
    No one would help. It was incredibly lonely, watching my 
dad's life and everything he saved for unravel right before my 
eyes. I could not find anyone to help except his phone company 
and a Maine Sheriff's officer. That just seemed ridiculous to 
me.
    This is not just a typical scam and it is not only the 
responsibility of the Jamaican government. It is our 
responsibility. Someone besides the phone company has to take 
this on. We have to investigate, prosecute, extradite, and be 
there for the victims and their families. Please do something, 
I beg you.
    You have no idea how horrible this is. Sonia and I 
understand, because we have been under that roof, and we 
understand. We have seen it and we have lived it and we know 
exactly how that feels.
    I am speaking on behalf of the thousands of people whose 
lives are ruined by this. These are our parents and our 
grandparents. We would never let this happen to our children. 
They are vulnerable and they need our help. I pray that you 
will not just give this lip service today. And please know that 
this has been going on unchecked for years. Nothing has been 
done on the ground and on the Federal level for the victims and 
their families to stop this or to help them. That is why I am 
here.
    On behalf of my family, thank you for taking the time to 
hear my testimony and for giving this the careful consideration 
and action that this deserves. Thank you.
    [The prepared statement of Ms. Nichols follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
     
    Chairman Nelson. And we are going to do everything in our 
power to make sure that there is action.
    And, unfortunately, a similar story from Ms. Ellis.

   STATEMENT OF SONIA ELLIS, DAUGHTER OF JAMAICAN PHONE SCAM 
                             VICTIM

    Ms. Ellis. Good afternoon. I would like to thank Chairman 
Nelson, Ranking Member Collins, and the Senate Special 
Committee on Aging for inviting me to speak at your hearing on 
Jamaican lottery scams. It is a privilege to be here.
    My mother's story began on December the 8th, 2008, when she 
was randomly called and told she had won $4.5 million in a Las 
Vegas lottery. My mother was very excited, and she told her 
friends, who told her it was a scam. Luckily, they reported it 
to the property manager of where she lives. The next day, my 
mother sent $300 via Western Union.
    Over the next 13 days, my mother sent $25,500. I was made 
aware of this by the manager at Peppertree. I tried to stop a 
$3,000 transfer to Indiana, but could not, from the Bank of 
America. The largest amount my mother ever sent was $19,500. 
However, I was able to get this back. From January the 5th to 
the 17th, 2009, my mother sent away another $10,850.
    I realized then that my mother was going to keep sending 
money, regardless of who spoke to her, so I flew down to 
Florida--I live near Toronto--on January 31, 2009. While 
staying with my mother, she continued to talk to the 
fraudsters. One day, she went to the bank, and she withdrew 
$8,000 from Bank of America, then deposited it into her 
Wachovia account. The bank manager saw her leave with all this 
cash and became very worried about her safety, so followed her 
to the Bank of Wachovia.
    I happened to be at the Peppertree office, and we got the 
call from the bank manager to the property manager saying, 
``Mrs. Goodwin has gone with $8,000 cash,'' and so I was taken 
to Wachovia Bank. There, I met her in the bank manager's 
office, and she had just deposited the $8,000 and then was 
proceeding to try and transfer that money. I then realized that 
I must take action, so I called the guardianship lawyer, and I 
set up an emergency--and I met him the next day--sorry--and he 
set up an emergency court hearing for a few days later, and the 
$8,000, I had prevented that from being sent.
    I delayed my return to Canada so I could attend an 
emergency Sarasota court hearing. I presented evidence of my 
mother's involvement of the Jamaican scam and was granted a 
temporary 30-day guardianship. My mother was assigned a lawyer, 
but she refused to see him, so did not attend the hearing. The 
final financial guardianship was approved on March the 13th, 
2009, four years ago today.
    My mother had previously revoked my Power of Attorney. 
Therefore, a legal guardianship, U.S. guardianship, was the 
only option I had to gain control over her financial affairs. 
The guardianship helped my mother send the very large amounts 
of monies that she had just been sending [sic].
    The Jamaican fraudsters are extremely convincing, as Kim 
said and as you have seen on videos. One calling himself John 
Kent talked to my mother several times a day for at least three 
years. My mother looked forward to his calls and felt a very 
special bond with him, and I would say that she felt she loved 
him. She even told him she looked forward to meeting him. These 
ruthless people would call my mother and tell her to expect 
calls at nine o'clock in the morning and four o'clock in the 
afternoon. So she delayed going out, or if she did go out in 
the afternoon, she would say to her friends, ``I have to come 
back because I have a very important call,'' and this went on 
for years. My mother stayed at home too--I said. Okay. The 
fraudsters isolated my mother this way, which is very common.
    They also coached my mother into believing, of course, that 
it was because of the guardianship that I had taken--and, of 
course, I was not in her good books--for not receiving the 
millions, and there were so many lies. There have been many 
difficult conversations, and I would not even want to tell you 
what we said over those times, but they were very, very 
difficult and hard to take.
    It took me until April 2009 before I could get control of 
my mother's Canadian bank accounts, as they would not recognize 
the U.S. guardianship. As a result of this, my mother was able 
to send money to the fraudsters. Before returning to Canada, my 
mother gave the fraudsters her Canadian number because she was 
really determined to get her millions. If they did not call 
when she expected them to call, she would call them in Jamaica, 
and one monthly bill totaled $450.
    From December 2008 to July 2012, I estimate my mother tried 
to give--tried to give away--$92,000, but estimate the actual 
amount was $64,500 because I got some of that little bit of 
money back and was able to stop the transfer. So I estimate 
that.
    But then, even though I had the guardianship in place, I 
estimate that between February 2009 and July of last year, she 
was still able to send $47,000 away, and this happened because 
it was difficult to get the telephone companies, both in Canada 
and the U.S., to block calls from certain companies and certain 
area codes, because the only way I could block international 
calls was to block all international calls, and, of course, she 
was calling me in Canada and vice-versa, and so--and England. 
You know, we are English.
    She was also able to draw money from her bank accounts even 
though they had a limit on them, and so this was a very 
difficult situation. I would call the banks. I would say, ``How 
can this happen?'' Well, because she was in good standing with 
the bank over many, many years, the bank account was allowed to 
be overdrawn. I eventually had to stop her checking account and 
give her only a savings account, which could not be overdrawn. 
So I would put $100 in. She would take it out. I would put 
another $100 in so she could have money to spend.
    Another thing that she was able to spend money on was she 
was able to withdraw cash on her canceled Visa card, and this 
happened for a few months. And then, in the meantime, 
unbeknownst to me, she was actually sent a new Visa card, and 
so she all of a sudden had access to another Visa card, which I 
was not aware of.
    So, as you can appreciate, I found the last four-and-a-half 
years very difficult. I have contacted, like Kim, all those 
people she mentioned and anybody that I felt could give me any 
help. It was very difficult. I often gleaned a lot of 
information from her friends, who she did not realize I was 
talking to, and I would try and get the information from them, 
because my mother would continue to tell me she was not sending 
any money, although I had evidence, because I had control of 
her bank accounts.
    So I guess, finally, the last thing I would like to bring 
to your attention is to the impact and stress that my mother's 
involvement with the Jamaican lottery scam has had on our 
family. This situation has impacted not only my mother and 
myself, but my mother and her family and my mother and her 
grandchildren. Unless you have ever had to deal with this type 
of situation, you cannot imagine how hard it is to watch your 
loved one fall victim to the cruelty of these unknown 
individuals who really do not appear--as we know, they do not 
have any remorse for taking advantage of society's most 
vulnerable people.
    For the four years, I watched my mother willingly give away 
part of her life's savings and be convinced that those who have 
the love for her the most want nothing more than to love and to 
protect her, and this has just continued. To this day, I would 
say that my mother still really believes that if it was not for 
me and the guardianship, she would have her money, her 
millions.
    So the $4.5 million was the first check. The next one, I 
think, was maybe $17.5 million. I think there were three times, 
and three separate groups of people. And as we know, they get 
on the sucker list. Once Mr. John Kent stopped with her, then 
you would have another person picking up the pieces and trying 
to get a little bit of money, and so she was able to send small 
amounts of $100 and $500. Eventually, I had to even get Publix 
cards so she would not have too much cash, but she could not 
say she did not have any money for food. So, anyway.
    And I guess that is about it, then. Thank you for listening 
and being interested in my mother's story, and I am really 
happy to be part of this and hope that my mother's story and my 
continual involvement in this will help. I am going to 
certainly be communicating a lot of this with my Canadian 
friends and seeing what I can do. As my friends said, ``You are 
a crusader, Sonia, so carry on with the show.'' I will do my 
best. Thank you very much.
    [The prepared statement of Ms. Ellis follows:]
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
    
  
    
    Chairman Nelson. Thank you.
    Dan Rather is airing a piece where he has interviewed some 
of these fraudsters, and he says they act with the ultimate of 
arrogance. They laugh at their victims. And they laugh as they 
say that they will never be brought to justice. I discussed 
that with the Ambassador from Jamaica yesterday and he 
confirmed.
    Okay, Sheriff, tell us how you intersected with all of 
this. Tell us what you did.

 STATEMENT OF WILLIAM L. KING, JR., CHIEF DEPUTY SHERIFF, YORK 
              COUNTY, MAINE, SHERIFF'S DEPARTMENT

    Mr. King. Certainly. Thank you. In late August 2011, the 
Sheriff's Office received a complaint of an elderly woman in 
our community who had paid $100,000 in fees to collect a 
lottery. This case introduced us to the complex world of the 
Jamaican lottery scams.
    We found several criminals working in unison, using various 
techniques like friendship, religion, romance, and threats, 
with the sole purpose of separating her from her life savings. 
We traced the payments and found that most were made to people 
in the United States, some of whom were victims themselves and 
became unwitting facilitators of the crime, and others were 
complicit. Ultimately, we identified six people in Jamaica who 
received her money. One of those scammers was returned to 
Jamaica after serving time in Minnesota State Prison for 
murder. Each case we have encountered was similarly complex.
    It is easy to dismiss this crime because most people would 
not fall for it. Some question even if it rates as a crime at 
all, because people are willingly giving away their money. 
Others mock the victims for falling for it.
    I am told cognitive reasoning ability diminishes with age. 
I met a retired businessman who graduated from Yale who was 
actively involved in the scam. He lost his life savings and his 
house, but still waits every day for the oversize check and the 
balloons attached to a brand new BMW to appear while his wife 
lives in despair.
    Years ago, United States telemarketing companies set up 
shop in Jamaica to take advantage of the inexpensive labor 
rate. They conducted training sessions, teaching Jamaicans how 
to make cold calls, establish rapport, keep the person on the 
telephone, overcome objections, and create a fantasy. The newly 
trained telemarketers found fertile territory with seniors who 
grew up in a time when it was impolite to hang up on a caller. 
That, coupled with a national crackdown on drugs by Jamaican 
authorities, steered many criminal gangs toward lottery 
scamming. Also, the young Jamaican culture justifies scamming 
as reparations from the United States for perceived past 
misdeeds.
    The scam is convincing. When a wealthy doctor was skeptical 
after receiving a call, the scammer directed him to a Web site 
where he found his name blinking beside an unclaimed $2.5 
million lottery prize. And the fees seem plausible. Prepaid 
taxes, processing fees, lawyer fees are the most common 
examples. Embarrassment is the scammer's greatest ally because 
it silences victims. Some scammers profess love for the victims 
to ensure the money keeps coming. A widow in Maine handed over 
$600,000 to a scammer who we believe feigned a romantic 
interest.
    During my research, I found a headline that read, ``The Sun 
May Be Setting on the Jamaican Lottery Scams.'' The article 
quoted an ICE agent who stated he had cases from Hawaii to 
Maine and estimated the losses at $30 million. The article 
reported that U.S. authorities are now involved and would put a 
stop to the scamming. That article was published in May 2009. 
Today, the estimates of losses are tenfold, $300,000 [sic], and 
the sun does not seem to be setting on the scams.
    In a seven-month period of time, FairPoint Communications, 
our local telephone provider, identified 186 victims. A local 
news station did a three-part series on the scams. The last day 
of the series allowed viewers to call in to report scams. We 
received 38 calls during the 30-minute segment. Unfortunately, 
105 calls went unanswered at the end of the show because they 
were terminated.
    FairPoint organized news conferences, shot a Public Service 
Announcement, launched a Web site that provides information. As 
a result of Web site contacts, I have spoken to dozens of 
victims and their families from approximately 20 different 
States. All feel abandoned by law enforcement.
    We cannot place the blame of this scourge solely on 
Jamaica's doorstep. Yes, the scams originate from Jamaica, but 
there are hundreds, if not thousands, of facilities operating 
and profiting within our own borders.
    And this is not just a financial crime. The stress caused 
by the scam accelerates a victim's demise. I recently tried to 
contact some victims and was saddened to find that two had 
passed away, while others who were vibrant before the 
exploitation are now experiencing medical issues impeding their 
quality of life.
    And this will continue until these cases are investigated 
here and in Jamaica and laws are enforced and our extradition 
treaty is applied. I fear that when the national spotlight is 
off, the status quo will return, and the victims will continue 
to go unprotected.
    And I want to thank FairPoint for their continued support, 
the Stephen and Tabitha King Foundation, who have donated money 
toward this effort, and also the many store and banking 
employees who have thwarted scamming before it actually started 
by contacting family members of potential victims. One of those 
victims happens to be my father, who was trying to send money 
to keep my son out of jail. My son was safe in Florida.
    And thank you, Chairman Nelson and Senator Collins and the 
rest of the committee for having this hearing today.
    [The prepared statement of Mr. King follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Chairman Nelson. Thanks, Sheriff.
    Okay. The AARP is trying to do something about it. They 
have sent with the U.S. Postal Service this kind of flyer out. 
It says, ``If you have to send $250 to claim your prize, odds 
are it is a scam. Don't risk it.'' And we send out notices. 
They send out notices. The U.S. Postal Service is trying to get 
the word out. Do not answer the phone. When you answer the 
phone, hang up. But you have just heard the stories.
    Okay, Mr. Romasco. You are the head of the AARP. What do 
you think we ought to do?

STATEMENT OF ROBERT G. ROMASCO, PRESIDENT, AARP; ACCOMPANIED BY 
             DOUG SHADEL, WASHINGTON STATE DIRECTOR

    Mr. Romasco. Chairman Nelson, Ranking Member Collins, 
Senators Donnelly and Warren, thank you very much for having us 
here today, and most importantly, thank you for raising the 
profile of this heinous operation. As Senator Nelson indicated, 
my name is Rob Romasco, and I am the President of AARP.
    We have been involved in this issue of financial 
exploitation of our older population for years. AARP and the 
AARP Foundation has been deeply involved in fraud prevention 
dating back to the mid-1990s.
    Since 2003, AARP and its research partners have completed 
five studies of lottery fraud victims. The most recent effort 
was in 2011, the National Victim Profiling Study, that surveyed 
1,500 consumers from the general public and 700 fraud victims. 
This study showed that while consumer fraud can happen to 
anyone, some people are more likely to be taken in than others. 
Lottery fraud victims, for example, are more likely to be women 
who are over the age of 70, divorced or widowed, have less 
formal education, less income, and they may have more cognitive 
impairment than others their age.
    From a behavioral standpoint, our research has shown that 
lottery fraud victims are more likely to listen to sales 
pitches over the phone from unknown callers, read advertising 
solicitations that come through the mail and e-mail and are 
less likely to be signed up for the National Do Not Call List.
    AARP and its research partners have pursued three research 
questions. First, what persuasion tactics are used by these 
criminals to successfully scam the victims?
    Second, what is going on psychologically with victims that 
makes them vulnerable?
    And, third, is cognitive impairment a factor in fraud 
victimization?
    The research shows that specific persuasion tactics have 
been most frequently used, and we have heard dramatic testimony 
today that underscores that. They offer enormous wealth, using 
scarcity to create urgency, and fear to frighten the victims. 
And, as we have seen with the Jamaican lottery scam, fear has 
been used over and over again to literally scare older victims 
into handing over their money.
    AARP and Stanford have pursued research that tested the 
application of positivity theory to fraud. Positivity theory 
says that as we age, we tend to focus on the positive events 
and ignore the negative events as a coping strategy.
    We also looked at cognitive impairment, and again, it is no 
secret that as we age, some of us experience diminished 
cognitive capacity. In 2009, AARP hired skilled geriatric 
social workers to go into the homes of lottery victims and give 
them a series of cognitive tests. Close to 80 percent were 
found to have some cognitive loss, which is a much higher rate 
than others of the same age.
    I want to emphasize, Mr. Chairman, that all three of these 
areas of research are in the early stages, and much more needs 
to be done to definitively determine why older people fall prey 
to fraud.
    While it is true that anyone can be taken in by this scam, 
profiling research has taught us that some people are more 
likely to be taken in than others. These profiles enable fraud 
prevention practitioners to direct information to those being 
targeted by the con artists. You have heard today; these are 
very sophisticated operations. This is not a one-off. They use 
computer technology, lists, and all the technology of direct 
marketing and contacts and persuasion.
    One example, however, is we have set up Fraud Fighter Call 
Centers operated by the AARP Foundation. There are currently 
centers in Seattle, Denver, and Charleston, West Virginia. In 
each center, older volunteers offer support, peer counseling, 
and referral information to individuals who have been 
victimized or who meet the profile of the vulnerable consumer.
    There have been two major studies of this program. The most 
recent was done in 2010 by Stanford University. The subjects of 
that study were lottery victims like those we have been 
discussing today. The researchers found that victims who have 
been counseled by Fraud Fighter volunteers were significantly 
more likely to resist future fraud attempts compared to those 
who did not have the counseling.
    Mr. Chairman, the impact of AARP's prevention and 
counseling efforts would be greatly enhanced with increased 
funding and access to those lead lists the scammers have put 
together and law enforcement has been confiscating. Criminals 
are most successful targeting the most vulnerable when they use 
what is commonly known as these lead or target lists. The most 
vulnerable category of individuals are those who have been 
previously victimized and/or who have been targeted by 
scammers. We could dramatically increase our impact on this 
problem if we could reach 200,000 of the most vulnerable 
population by accessing the lists that the law enforcement 
agencies have been seizing.
    Also very promising is our recent partnership with the 
United States Postal Inspection Service, which sends out 
millions of foreign lottery fraud warnings to older persons 
across the country. This month, the month of March, the Postal 
Service and AARP have launched an effort to warn millions of 
older Americans about foreign lottery fraud. The Postal Service 
is mailing 25 million postcards to Americans age 45 to 65. 
These cards have the AARP logo and the U.S. Postal Inspection 
Service logo on them. In addition, brochures will be in every 
one of 33,000 Post Offices around the country, and several 
television PSAs will air on the topic throughout the month of 
March. Also, our Foundation's Fraud Fighter Call Center's phone 
number is on every card being mailed in Washington State as a 
pilot project. Already, thousands of caregivers and victims who 
have been targeted by fraud are calling in.
    And, finally, even AARP has had to contend with this 
misrepresentation and exploitation. In Maine, our State office 
received information from local law enforcement concerning 
fraudulent telephone calls being made to residents by people 
claiming to be our representatives. What they were trying to do 
was use the AARP as a representation of getting Social Security 
information, which they could then toss into the mix. Our Maine 
State Office responded with a full press blitz, warning 
residents who received telephone calls from someone claiming to 
be from AARP or any other entity that asked for sensitive 
information they should contact their local police department 
immediately to report the incident. Would they be so lucky to 
get Sheriff King's department as somebody to partner.
    In conclusion, consumer fraud has been and continues to be 
a significant problem. A study a couple years ago estimated the 
number is approaching $3 billion. Intervention, prevention, and 
tough enforcement at both the Federal, State, and local level 
are needed to combat these ruthless--I will not use the word 
``con artists,'' they are just criminals.
    Our belief is, after a lifetime of doing all the right 
things to prepare for a comfortable and dignified retirement, 
too many older Americans are having their retirement security 
threatened by these financial predators. AARP will continue to 
work with all partners, Congress, and across all levels of law 
enforcement, to inform Americans about these scams and to 
prevent more tragedies like the ones that have been shared with 
us here today.
    Thank you very much.
    [The prepared statement of Mr. Romasco follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
     
    Chairman Nelson. Mr. Romasco, to what degree do you think 
that the prepaid money cards--this is one example, it is a 
money pack. You load money onto it and then you can transfer 
the money by the PIN number. To what degree do they have a 
responsibility, in your opinion--speaking for AARP--to help 
crack down on this scam?
    Mr. Romasco. Senator, I think that we have to look at the 
entire financial system. I think these are participants, and we 
heard the names of respected--the Visa card, the whole credit 
card industry, bank wire transfers, every vehicle. These guys 
will use any vehicle to get money. So I would not limit myself 
to prepaid cards. They have an equal responsibility, but I look 
at the whole financial money system. This is money laundering. 
This is fraud. And these guys understand the rules and they get 
the money. So I think each one of these organizations should be 
required to cooperate and be transparent to any investigation 
that we would launch.
    Chairman Nelson. In the case of some other scams, it is 
hard to find some of the criminals because of the money loaded 
onto the prepaid card--for example, the IRS tax refund--and it 
is hard to go after the criminal because there are no 
identities there.
    Mr. Romasco. Mm-hmm.
    Chairman Nelson. Okay. Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Sheriff King, I was struck by the experience of Ms. Nichols 
and Ms. Ellis in trying to get help. Ms. Nichols talked about 
making dozens of phone calls to the State Attorney General's 
Office, to the FBI, to the Postal Inspector, just over and over 
again, trying to find help, until FairPoint and you both came 
to the rescue. So that raises questions in my mind about the 
effectiveness of Federal, State, and local law enforcement's 
efforts to shut down these scams.
    I totally agree with our Chairman that the best thing we 
could do would be to extradite some of those criminals from 
Jamaica and prosecute them here in American courts. But short 
of that--and we will be pushing on that front, I can assure 
you--could you give us your analysis of the effort at the 
Federal level, because that is what we have jurisdiction over, 
to shut down these scams. And in particular, I would be 
interested in your evaluation of Project JOLT, which is the law 
enforcement task force at the Federal level.
    Mr. King. What I found in the Federal level is a culture of 
indifference. I have not found a lot of interest in doing these 
scams and doing these cases.
    Back in August 2011, we knew--we investigated this and I 
could not get any Federal agency to help me. As recent as 
January, a couple of months ago, we had another case that came 
in from Aroostook County, and the Aroostook County detective 
called me because the Aroostook County victim was sending money 
to a person in Lebanon, Maine, in Southern Maine, and that 
person was a past victim who was facilitating the scam, sending 
the money to Jamaica.
    And it just so happened that that victim in Lebanon, who 
was the facilitator, developed a friendship with the scammer 
and she had sent things to him. So we had a real address and we 
actually had a true name of the scammer. So I immediately 
contacted JOLT and said, ``Let us get on this,'' and I even 
used one of my contacts that I met in Jamaica when I went to a 
conference just to ascertain, is that address a true address.
    So I had a true name and I had a true address and the only 
response I got from JOLT was, ``Are you working with any 
Federal agencies?'' No. No. None want to do this. But, please, 
we can take care of this. My idea was to send a watch or 
something--she had sent him jewelry before--and put some scam 
money in it and watch it go in. They were not--I did not 
receive any response. My e-mails went unanswered.
    A couple weeks later, a news station went and they 
interviewed this woman and said, ``Gee, tell the scammer that 
you have a girlfriend coming to town.'' They did, and they met 
the scammer in a cafe, and it was featured last night on World 
News.
    So these cases are complicated, but they are not that 
complicated. What we need to do is put our egos aside and work 
on these cases. Federal, local, county agencies can all work 
together and we can get these cases solved, and I think you and 
Chairman Nelson are absolutely right. Extradite a couple of 
these criminals and we will send a very clear message that we 
mean business.
    Senator Collins. It is extraordinary to me that here you 
had a case all developed. You are delivering it on a silver 
platter to the officials. And yet, still no action was taken. I 
can assure you that the Chairman and I are going to pursue this 
vigorously. This is just wrong, and we will show a chart later 
in the hearing that shows the number of these cases has just 
exploded, which is what happens when there is no prosecution, 
when there is no penalty that is being paid by these scammers.
    Dr. Shadel, I understand that you are the coauthor of two 
critical studies on fraud and that you found that the con 
artists rely on three techniques in particular. Could you just 
briefly explain to the committee the three techniques, because 
that might help alert families and victims of what to be aware 
of.
    Mr. Shadel. Yes. Thank you, Senator Collins. Well, the 
first one you have heard described here, which is--we call it 
phantom wealth dangling. A phantom is something that you want, 
but you cannot have, and all con artists do this. The Jamaicans 
do it, as well. So that is what the $8.1 million lottery 
winnings, or $2.5 million is.
    And what happens, when we interview these con men, they 
say, what we are trying to do is get people under the ether. 
Ether is a heightened emotional state where you get so excited 
about this phantom wealth that you stop thinking rationally and 
you are just thinking in terms of, all I can think about is 
what this will buy, what it will do for my family. So I would 
say the first one is dangling that phantom wealth.
    The second one is really about just urgency, getting people 
to act quickly. If you do not spend $2,000 for the taxes now, 
someone else will get the winnings. That is just a strategy for 
getting people to move. But it is all designed to get people 
into this heightened emotional state, and the heightened 
emotional state explains why retired physicians, doctors, 
lawyers can do this, because they are not engaged--their 
cognitive capacity is not engaged. It is being bypassed because 
they are in this ether.
    And the final one, which we have seen done most with the 
Jamaicans, is just plain fear, people threatening to--you know, 
``Do you want me to come and burn your house down?'' which we 
saw on the news the other day. And that is what makes this 
Jamaican scam different than other scams we have investigated 
before, is just the relentlessness of it, just calling hundreds 
of times. Most con artists will follow the path of least 
resistance. If you say no, they will move on because there is 
always somebody else. Not with the Jamaicans.
    Senator Collins. Thank you.
    Mr. Chairman, I would note that these criminals from 
Jamaica are so brazen that they have actually called Sheriff 
King, too, when they have been in search of a victim that they 
lost contact with. It is just extraordinary, how brazen they 
are. Thank you very much.
    Chairman Nelson. They have called me with the answer on the 
phone, ``Senate Aging Committee.'' Indeed.
    Okay. Senator Warren.
    Senator Warren. Thank you very much. Thank you very much, 
Mr. Chairman, and thank you, Ranking Member Collins, for 
holding this hearing. It is so important, what you bring out 
here. And I want to thank every one of you for showing up.
    I also want to thank Senator Collins, in particular. We 
hear down in Massachusetts about the education programs that 
you have run on this and trying to help warn people and we are 
trying to learn from it.
    I want a chance to publicly acknowledge the Massachusetts 
Association of Retired Federal Employees. We are about to send 
a mailing from our office, a warning from our office. They are 
going to send out a mailing to 10,000 of their members about 
this. We are trying to learn what we can to try to be helpful 
on the educational front, and I am grateful for every idea 
here.
    I want to say, this has been covered some in the 
Massachusetts papers. We have been trying to follow this. And I 
read a piece in a Massachusetts paper reporting that the 
Federal Bureau of Investigation will not get involved in a 
fraud unless there is more than a million dollars at stake. I 
have not been able to verify this, but I would just like to 
know, Sheriff King, have you heard anything about this and do 
you have any comment on that?
    Mr. King. No, I do not know about that. I know they have 
oftentimes high-dollar figures, that they only want to work on 
the most impactful crimes. But I have just not--I have gone to 
the FBI. I just have not--it just seems to be that culture of 
indifference that they do not want to work on these types of 
cases.
    Senator Warren. Well, I am really struck, too, particularly 
in this case, because, Ms. Nichols, I think you were saying, 
and I think you were, too, Ms. Ellis, it does not start at 
$100,000 or $600,000. It starts--how much, Ms. Nichols?
    Ms. Nichols. Five hundred, in the case of my dad.
    Senator Warren. That is right, which sounds too small for 
Federal involvement. I very much take the point around this 
that perhaps our Federal agencies need to rethink how they 
evaluate this sort of stepped-in scam that can involve 
thousands of dollars, hundreds of thousands of dollars, and the 
independence of an individual, the self-worth of an individual, 
which I think is a very serious part. And I appreciate your 
bringing a real sense of what is going on there. Thank you for 
coming forward and doing this.
    I want to ask one other question, though. Mr. Romasco, you 
described--and in the question, I think Dr. Shadel did, too--
about the question about the money cards. Since the whole 
financial system--and you referred to this as money laundering, 
effectively, which made my ears perk up.
    We had a money laundering hearing just last week and the 
conversation about money laundering was around drugs and around 
moving money out of countries where we have economic sanctions, 
such as Iran, and part of our national security policy is to 
make sure that we are not bringing in money from those 
countries, not trading. And we hold financial institutions 
responsible. At least on paper, we hold them responsible for 
money laundering. I think there is a serious question about 
enforcement there, as well.
    But I want to ask you the question about whether or not 
these scams either currently fit within the laws of money 
laundering or should be fitted into the laws of money 
laundering.
    Mr. Romasco. Well, I am a little cautious about being a 
legal expert----
    Senator Warren. Fair enough.
    Mr. Romasco [continuing]. But one of the things that is 
great about people is we learn from others.
    Senator Warren. Mm-hmm.
    Mr. Romasco. And my speculation is that these scammers have 
learned. If, as we have heard, they were in the drug business, 
the drug business is pretty smart about laundering money. Gee, 
you think they might have applied the same techniques of moving 
cash from point A to point B to the scamming business? That is 
just speculation on my part.
    So, again, from our perspective, we are about consumer 
education, prevention, and just arming our members and the 
people over 50 with the tools to say no and protect themselves. 
At the same time, we would advocate consistent aggressive law 
enforcement, and the reason I said it is the whole financial 
system is not because I have unique knowledge about it, but as 
a businessman, you look at all the ways to achieve your 
objective, and that is what these criminals are doing. If they 
learned how to move money to buy drugs and all that kind of 
stuff, they probably know the ins and outs of the financial 
system and how to move money from Manhattan to Colombia to 
Jamaica, and I would suggest that it is the entire--we have to 
look at that.
    And I think you make an extraordinarily important point. 
Because you do not start out at $10,000 or a million dollars, 
but if in collective it impacts tens of thousands of our senior 
citizens, and if the Met Life study is even remotely close, $3 
billion? If someone showed up here and said, ``I am going to 
steal $3 billion from seniors in America,'' I think there would 
be a lot of people pretty upset about it.
    Senator Warren. That is right. I think we could probably--
--
    Mr. Romasco. But if it happens gradually----
    Senator Warren [continuing]. Get the police to respond.
    Mr. Romasco. If it is gradually, under the radar and 
offshore, it does not have the visibility and the powerful 
impact.
    Senator Warren. Uh-huh. Thank you. That is a very important 
point.
    Dr. Shadel, did you want to add? I am just about over--I am 
over time, but----
    Mr. Shadel. I think he said it very well. The only thing I 
would point out that is--I do not want to necessarily defend 
law enforcement, although I was an investigator for a lot of 
years, and I gave up trying to catch con men because they were 
always one step ahead. Now, with technology and with this 
Jamaican thing, where they are having victims send money to 
each other, it is really, really challenging to try and figure 
out where the money is going, so----
    Senator Warren. Well, thank you very much, but I am quite 
sure that if we do not try, we will never figure it out, and 
that cannot be the right answer. I hope there is a special 
circle of hell for the people who prey on our seniors in this 
way.
    Chairman Nelson. Amen.
    Senator Warren. Thank you.
    Chairman Nelson. Senator Ayotte.
    Senator Ayotte. First of all, I want to thank Chairman 
Nelson and Ranking Member Collins for holding this important 
hearing and for your leadership on this issue.
    And thank you, Sheriff King, for obviously being so 
dedicated to pursuing these cases. I appreciated the time that 
you came to explain them to me. And also, Kim, I am so sorry 
about what your father has gone through, but so glad that you 
have taken on this advocacy to explain this issue so that we 
can prevent other seniors from being victims of this. There is 
a special place in hell--I agree with Senator Warren on that--
for the people that do this.
    I was curious in listening to the experience, Sheriff, that 
you said you had with, I believe, the JOLT Task Force within 
ICE, and it struck me that ICE seemed an odd place to put this. 
I understand, obviously, the connection with Jamaica, but for 
other crimes--for example, when we want to focus on crimes 
against children, we have an Internet Crimes Against Children. 
Whether it is gun crimes, the DOJ will do a Gun Task Force.
    So what do you think about the idea, and what do you think 
would be best on a law enforcement model? The Department of 
Justice strikes me as a better place for this, and also to make 
it a priority to create some kind of dedicated task force, 
given the billions of dollars we are talking about as a loss. 
So I just wanted to get your thoughts of what you thought the 
best path forward, and if we are really serious about 
enforcement, how do we dedicate people that are really going to 
take this seriously, and that is their mission, to dismantle 
the people who are committing this fraudulent scheme?
    Mr. King. Well, I think the FBI has the infrastructure 
currently available to handle this and I would like to see task 
forces similar to the JTTF, the Joint Terrorism Task Forces, 
that are all over the country and they have a specific area and 
they can take ownership of that. I think Chairman Nelson 
mentioned earlier that he knew of a case where somebody was 
sending $300 million and they were on the FBI Watchlist. Those 
watchlists are available. In fact, I have had a victim of mine 
on the watchlist and I said, why did you not tell us, and they 
did not tell us. So it is very frustrating from the boots-on-
the-ground law enforcement not to have the whole picture when 
we are investigating these cases. We are the ones that 
typically get the first information about that.
    But I think, you know, a system similar to JTTFs throughout 
the country, where somebody takes ownership and there is 
someplace to go. The dozens of victims and their families that 
I have spoken to throughout the country as a result of the 
FairPoint Web site, everybody expressed that. There is just no 
place to go to report these crimes.
    Senator Ayotte. So when you say a JTTF model, you are 
thinking about the collaboration with local, State, and 
Federal, maybe led by DOJ with dedicated coordination efforts?
    Mr. King. Absolutely. I think that is the perfect model to 
have.
    Senator Ayotte. Okay. I appreciate that. Thank you for 
that.
    And what else--I mean, I know that Senator Collins said, 
and I fully agree with her that we should do everything we can 
to extradite these criminals from Jamaica. I just wanted to get 
your thoughts on what efforts we are undertaking with respect 
to putting pressure on Jamaica and the Jamaican government and 
partners. Is there more that we can do at the Congressional 
level to help those efforts?
    Mr. King. Well, I know that the Jamaican officials--I 
forget the name of the organization, but they had a conference 
here on February 22, and Jamaica does have a concerted 
strategy. You know, they are going to do it with increased 
operations, education, and legislation. I would at least like 
to see us have a similar strategy, and perhaps we do not need 
the legislation, but at least have a strategic plan in place of 
how we are going to collaborate with the Jamaicans to get the 
information in a timely fashion.
    I think studies are wonderful and they certainly tell us 
stuff, but, I mean, here we are, how many years later, and we 
are still being victimized. And a study sometimes is not--that 
is one of the flaws with intelligence. It is not timely and it 
is not--you cannot use it operationally, because by the time a 
study comes out, it has already passed a couple years.
    So I think that is what--I just think we need to be 
operational quicker so that when we get a phone number in 
Jamaica, we have some Jamaican collaboration and we find out 
where that number is going.
    Senator Ayotte. Well, you know, when we see a problem and 
we put together a task force of JTTF, my experience when I was 
Attorney General, we can get things together quickly if we want 
to, and hopefully with the backing, obviously, of the people 
who are here to try to get the right task force and action. And 
I agree with you. This is too critical. We cannot just study 
this. We have got to move on this right away.
    So I really appreciate all the witnesses here, your 
testimony, your advice, and we appreciate receiving your advice 
going forward on how we can address this and stop these 
horrible crimes. Thank you.
    Chairman Nelson. And we want to thank the first panel, and 
as we are going to the second panel, I will indicate to you 
that we have a new Pope. It is Cardinal Jorge Mario Bergoglio 
of Argentina.
    [Exclamations of surprise.]
    Mr. Romasco. That was quick. See, things can happen 
quickly. You are right, Senator.
    Chairman Nelson. That is right.
    [Laughter.]
    Okay. Thank you again.
    Now, we are going to hear from some additional folks with a 
different perspective. We are going to hear from Shawn Tiller, 
Deputy Chief Inspector of the U.S. Postal Inspection Service. 
Mr. Tiller oversees the Inspection Service Criminal 
Investigations Group, Forensic Laboratory Services Unit, 
Management, Analysis, and Planning Group, and Career 
Development Unit. He also serves as the Postal Inspection 
Service's designee on the Elder Justice Coordinating Council, a 
multi-agency group that advises on the prevention of abuse, 
neglect, and exploitation.
    And then we are going to hear from Vance Callender. He is 
the Operations Chief in charge of Homeland Security 
Investigation Offices in both Mexico and Canada. He opened the 
first Homeland Security Investigation Office at the U.S. 
Embassy in Kingston, Jamaica, and was the country attache. 
While in Jamaica, Mr. Callender also created Project JOLT, 
which we have spoken about, the Jamaican Operations Link to 
Telemarketing. It is an international task force which targets 
Jamaican-based advance fee fraud, which you have heard about.
    And then we are going to hear from Phil Hopkins, who is the 
Vice President of Global Security for Western Union Financial 
Services. He formerly served 20 years in the U.S. Secret 
Service, completing his career as the Assistant Special Agent 
in Charge of the Houston Field Office.
    And so before we proceed, we are going to have a video that 
the U.S. Postal Inspection Service prepared to share with the 
committee. The woman shown is Ms. Ellis' mother.
    [A videotape was played.]
    Does that not tell you how vulnerable this population is?
    Okay. Mr. Tiller.

  STATEMENT OF SHAWN S. TILLER, DEPUTY CHIEF INSPECTOR, U.S. 
                   POSTAL INSPECTION SERVICE

    Mr. Tiller. Good afternoon. Chairman Nelson, Ranking Member 
Collins, and the members of the Special Committee, I am Shawn 
Tiller, Deputy Chief Postal Inspector of the United States 
Postal Inspection Service. On behalf of our agency, I 
appreciate the opportunity to provide this statement in support 
of this hearing on Jamaican phone fraud targeting seniors.
    The Postal Inspection Service has a long, proud, and 
successful history of fighting crime against those who attack 
our nation's Postal system and misuse it to defraud, endanger, 
or otherwise threaten the American public. My testimony will 
describe our experiences investigating Jamaican lottery fraud 
and how we work to protect U.S. consumers, particularly in the 
areas of enforcement, education, and partnerships.
    International lottery and prize scams are not new. They are 
a variation of traditional advance fee scams promising 
guaranteed wins. They require victims to send a fee to redeem 
their prize. Consumers send money to these crooks but never 
receive a prize. Instead, they are relentlessly coerced into 
sending more of their hard-earned money.
    Evolving technologies allows criminals to easily cross 
international borders quickly and anonymously. They prey on 
Americans from countries overseas and out of reach of U.S. 
jurisdiction, which is why we term them cross-border. 
Disposable cell phones and Voice Over Internet Protocol extend 
the overseas criminals' reach into the American household. The 
number of countries housing predators who target Americans 
continues to rise, as do the number of victims.
    The use of the mail to commit these crimes provides the 
Postal Inspection Service investigative jurisdiction. In 
traditional foreign lottery scams, the mail nexus commonly 
occurs in solicitations sent to consumers. The Jamaican scam 
differs, however, in that victims are more often solicited by 
phone and the Internet and may use the mail to send money to 
the scammer. Jamaican lottery fraud is a growing problem for 
Americans, but it has not involved the use of the mail to the 
extent of more traditional advance fee scams.
    Consumer complaint data received through the Postal 
Inspection Service's Complaint Hotline since September 2008 
ranks Jamaica 16th as a source country for foreign lottery and 
sweepstakes complaints. They trend significantly behind Canada, 
Australia, and the Netherlands.
    The potential for fraud is infinite and we believe it is 
under-reported due to a number of factors. Victims do not know 
where to report fraud or they are embarrassed to do so. 
Cognitive issues may also play a role. Despite the low number 
of complaints we received, our investigative efforts have 
identified more than 1,000 victims who have suffered nearly $17 
million in losses from fiscal year 2009 to 2012. These 
investigations were conducted under the Jamaican Operations 
Linked to Telemarketing Task Force, also known as Project JOLT. 
To date, we count 20 indictments, 92 arrests, and 18 
convictions amongst our successes. We have returned $1.4 
million to these victims.
    We combat these crimes most effectively through cross-
border task forces. Prior to JOLT, we have experienced 
successes as part of the Center of Operations Linked to 
Telemarketing Fraud, or COLT, and several other Canadian and 
international partnerships.
    In a little more than three years, Project JOLT is making 
progress. Information sharing between agencies continues to 
increase as we learn how to better coordinate and facilitate 
its flow between countries. The Jamaican government is 
developing new laws to address strategy gaps. We embrace the 
advances made and adapt our enforcement efforts accordingly. 
But there is a great deal more to achieve.
    Law enforcement's deterrence factor in traditional advance 
fee schemes is diminished by the cross-border element. Arrests 
alone will not stop these crimes as law enforcement is not the 
first line of defense. When consumers make the wrong decisions, 
law enforcement, consumer groups, and government leaders are 
called to action. Offenders are brought to justice through 
enforcement, and we might restore a portion of the victims' 
losses. But we are seldom able to repair the emotional damage 
caused by these crimes.
    Consumers can be empowered through education, preventing 
them from becoming a victim of fraud, halting their financial 
demise and avoiding the emotional toll. Education is clearly 
the first line of defense. We can help older Americans by 
alerting their caregivers about the warning signs of fraud and 
victimization. That is why we are committed to prevention and 
outreach efforts and seek innovative ways to deliver our 
message to the public.
    In recent years, we have launched consumer education 
initiatives targeting current and ongoing scams. We use print, 
broadcast, and social mediums to address the message to the 
public. We have participated in press events, including last 
week's press conference held by you, Mr. Chairman, in the great 
State of Florida, to help raise this awareness. We have 
leveraged public and private sector partnerships to expand our 
outreach, creating crime alerts which air in 90 media markets 
three times each week in more than three million homes.
    And we have partnered with AARP to educate consumers, 
caregivers, and older Americans. Together, we placed foreign 
lottery fraud prevention materials in more than 30,000 Post 
Offices across the country and sent a mailing to 25 million 
American households directing at-risk consumers to fraud 
prevention resources. I brought an example of these materials, 
which were cosponsored by AARP, and I hope they are in your 
packet, and they should be in the back of the room.
    We at the Postal Inspection Service commend the members of 
this committee for focusing attention on this significant and 
troubling issue and thank you very much for inviting us to 
testify today and contribute our experiences.
    [The prepared statement of Mr. Tiller follows:]
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
 
    Chairman Nelson. Thank you.
    Mr. Callender.

 STATEMENT OF VANCE R. CALLENDER, OPERATIONS CHIEF FOR MEXICO 
AND CANADA, HOMELAND SECURITY INVESTIGATIONS, U.S. IMMIGRATION 
 AND CUSTOMS ENFORCEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY

    Mr. Callender. Chairman Nelson, Ranking Member Collins, and 
distinguished members of the committee, on behalf of Secretary 
Napolitano and Director Morton I would like to thank you for 
the opportunity to appear before you today to discuss the 
efforts of U.S. Immigration and Customs Enforcement and how we 
combat cross-border financial crime, such as telemarketing 
fraud.
    ICE has the most expansive investigative authority and the 
largest force of criminal investigators in the Department of 
Homeland Security. With more than 20,000 employees and a budget 
of nearly $6 billion, ICE has nearly 7,000 special agents 
assigned to more than 200 cities throughout the United States 
and 74 offices in 48 countries around the world. Working with 
other Federal agencies and international partners, ICE disrupts 
and dismantles transnational criminal networks by targeting the 
illicit pathways and organizations that engage in cross-border 
crime.
    As you know, telemarketing fraud schemes, including bogus 
lottery and sweepstakes schemes, phony investment pitches, 
business opportunities, tax fraud schemes, and others have 
grown increasingly sophisticated and international in scope. 
According to the U.S. Federal Trade Commission, consumers lose 
hundreds of millions of dollars annually to cross-border 
financial crime, such as telemarketing fraud, often leading to 
devastating consequences. In many cases, a loss represents the 
victim's entire life savings and, of course, probably into 
debt.
    Perpetrators of this fraud prey on consumers of all ages, 
backgrounds, income levels, but sadly, it is the elderly who 
are disproportionately targeted. Scammers take advantage of the 
fact that elderly Americans may have cash reserves or other 
assets to spend on these deceptive offers. Elderly Americans 
may also be reluctant to report the incident for fear of losing 
financial independence should their families discover the 
fraud. Intimidation, confusion, and exhausted victims may yield 
to the telemarketers' demands.
    Over the past decade, U.S. complaints about telemarketing 
fraud originating from Jamaica have increased significantly. 
Fraudulent telemarketing has become a lucrative source of 
income for criminal organizations in Jamaica. According to 
Jamaican law enforcement, local gangs employ telemarketing 
fraud tactics to raise capital, which is often used to 
facilitate drug smuggling and weapons smuggling into and out of 
the United States.
    A lead list, or a list of potential victims, including the 
individual addresses and phone numbers, can be purchased by 
brokers for $3 to $7 per name. These lists can be ten to 15 
pages long and list hundreds of potential victims. Each name on 
this list represents a potential profit of tens of thousands of 
dollars.
    Violence related to telemarketing scams has grown 
significantly in Jamaica. The gangs and criminal organizations 
exchange gunfire over these lead lists and access to them. Some 
of the violence has spilled over into other countries, as well.
    As a result, in March 2009, ICE entered into an agreement 
with the Jamaican constabulary force to form the Project JOLT 
Task Force. Project JOLT stands for Jamaican Operations Linked 
to Telemarketing. Project JOLT focuses on identifying, 
disrupting, dismantling organizations perpetrating Jamaican-
based telemarketing fraud. Project JOLT also works to recover 
the money fraudulently obtained by the telemarketers and 
repatriates those funds back to the victims.
    In fact, you may be glad to hear that just yesterday, ICE 
returned $45,000 to an elderly woman in Raleigh, North 
Carolina, who had been defrauded by scammers in Jamaica, and 
she had lost almost a quarter-of-a-million dollars.
    In the U.S., Project JOLT collaborates with private 
companies like Western Union as well as other Federal agencies, 
such as the Department of Justice, U.S. Federal Trade 
Commission, U.S. Postal Inspection Service, and the Federal 
Bureau of Investigations. The ICE-led JOLT Task Force continues 
to meet regularly with our Jamaican counterparts. We discuss 
ongoing trends and share information. ICE is also assisting 
Jamaican law enforcement by providing training and guidance 
concerning financial crimes.
    Since its inception, Project JOLT has initiated 450 
investigations in Jamaica resulting in 149 arrests, ten 
indictments, six convictions. In addition, these investigations 
have resulted in the seizure of over $1 million, much of which 
has been repatriated or is in the process of being repatriated 
back to victims.
    It should be noted there has and continues to be 
unprecedented cooperation with the government of Jamaica on 
these important issues. The Jamaican government has recently 
enacted new laws to facilitate the investigation, prosecution, 
and conviction of scammers, which will no doubt help law 
enforcement efforts moving forward. In addition, ICE will soon 
be conducting outreach training at the request of the Jamaican 
National Overseas Bank in New York and Florida to highlight 
some of the typologies associated with Jamaican telemarketing 
fraud.
    I want to thank you again for the opportunity to appear 
before you today and for your efforts in highlighting such 
important work. We look forward to working with the committee 
in the future and I am pleased to answer any questions.
    [The prepared statement of Mr. Callender follows:]
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
    
    Chairman Nelson. Mr. Callender, we are going to come back 
to you because we want you to tell us what it is going to take 
to get an indictment here, and then we can address the sending 
the person here from Jamaica.
    All right. Mr. Hopkins, tell us about Western Union.

 STATEMENT OF PHIL HOPKINS, VICE PRESIDENT OF GLOBAL SECURITY, 
                   THE WESTERN UNION COMPANY

    Mr. Hopkins. Good afternoon, Chairman Nelson, Ranking 
Member Collins, and members of the committee. I am Phil Hopkins 
and I am the Vice President of Global Security for Western 
Union. I have been with Western Union for seven years. Before 
that, I served for 20 years with the United States Secret 
Service.
    I think we all can agree that aggressive action should be 
taken to fight the criminals who take advantage of potential 
fraud victims. Preventing fraud is one of Western Union's top 
priorities. We have a comprehensive anti-fraud program which 
emphasizes consumer education and awareness, fraud monitoring 
and controls, and ongoing collaboration with law enforcement. I 
can only speak generally about our efforts. On certain points, 
I cannot provide details because we do not want to let the 
fraudsters know how to evade our program, abuse our system, and 
victimize our customers. Because criminals are constantly 
changing their tactics in an effort to evade our program, we 
regularly review and modify it.
    Education is a big part of our program. We provide fraud 
awareness information to consumers at the point of sale, and 
since fraudsters prey on the elderly, we have designed consumer 
outreach campaigns to reach our senior citizens.
    Western Union trains its agents in detecting and deterring 
fraud at the point of sale. Our agents are trained to listen to 
the consumers for cues indicating fraudulent activity. Agents 
who suspect that a transaction is fraudulent are trained to 
refuse the transaction or report it to Western Union for 
further investigation. Western Union also has a monetary reward 
program for its agents, known as the Eagle Eye Program, which 
incentivizes agents to detect and prevent fraud.
    We have industry-leading controls designed to stop 
fraudulent transactions before they are paid. Western Union 
attempts to contact senders whose transactions meet certain 
criteria to interview them in an attempt to determine if they 
are victims of fraud. Where we detect or suspect fraud, or if 
we cannot contact the sender, the transfer is canceled and all 
the funds and fees are returned to the sender. We also operate 
an interdiction program designed to prevent suspected 
fraudsters from receiving money transfers and to prevent 
chronic consumer fraud victims from sending money.
    Continuous and regular collaboration with law enforcement 
is another key component of Western Union's anti-fraud program. 
For example, Western Union participates in the ICE-led multi-
agency international task force known as Project JOLT that was 
created to combat Jamaican-based telemarketing operations that 
prey on U.S. citizens.
    On a daily basis, Western Union receives investigative 
leads from law enforcement and works with investigators to 
identify fraudulent activities. The Western Union personnel who 
work in our anti-fraud program have extensive backgrounds 
working in law enforcement agencies.
    In addition to all these measures, Western Union has paid 
particular attention to Jamaican fraud over the past few years. 
In the summer of 2012, when it appeared that these activities 
were increasing, we took enhanced measures, including 
suspending all 13 Western Union locations in Montego Bay for a 
minimum of two weeks. The temporary closure allowed us to 
extensively review agent activities and implement additional 
controls. We then implemented a $400 payout limit per 
transaction in the Montego Bay area and limited the number of 
transactions and the amount of money consumers in Jamaica can 
pick up in certain time periods.
    Western Union looks forward to continuing to work with this 
committee, law enforcement, and regulators on preventing 
consumers from becoming victims of fraud.
    Thank you again for inviting me to testify today. I look 
forward to answering any questions you may have.
    [The prepared statement of Mr. Hopkins follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
 
    
    Chairman Nelson. Thank you.
    Mr. Callender, thank you for setting up Project JOLT when 
you were the attache in the embassy in Jamaica.
    Mr. Callender. Yes, sir.
    Chairman Nelson. What do you think it is going to take to 
get an indictment here on what is going on there?
    Mr. Callender. Well, I can tell you that is being worked 
right now with agents on Project JOLT, working both 
domestically and in Jamaica. I cannot give details on that 
because I could compromise that, but these type of things are--
extradition investigations are forthcoming.
    Chairman Nelson. Can you imagine what it would be like for 
a prosecutor to put either of the daughters of the two 
witnesses in Panel One on the stand and get that story and what 
an effect that would have on a jury?
    Mr. Callender. Absolutely. I could not agree more. I have 
talked to literally hundreds of these victims myself. I have 
talked to them at every stage of the scam, trying to work 
through these issues with them, talked to their family members, 
encouraging the family members to take over their finances, to 
collect the evidence that the victims may have to get it in a 
manner that we can start--I can deploy agents in our domestic 
offices to get out there and take these statements from them. 
And it is time consuming. We have found that once you find one 
victim, it will lead you to 100 victims.
    It is a massive investigation. There is a lot of evidence. 
Most of these victims, as you have seen from the videos and the 
evidence that has been presented, they sometimes send 100 to 
1,000 wire transfers over the course of two years. Doing these 
types of investigations requires very slow, diligent 
documentation of every one of those wire transfers and a 
statement from the victim that denotes each one of these 
transfers.
    So you can imagine the time it would take to interview 50 
victims across the U.S. in different States, each of them 
sending 100, 300, 400 wire transfers, and bringing all that 
information together, creating an aggregate amount of loss. It 
is a very time consuming investigation. It is very slow. But 
the evidence--the great thing for us is the evidence is all 
there to make these cases. Jamaica is a country we can 
extradite out of. These things will happen, I guarantee you.
    Chairman Nelson. We would like--Senator Collins and I would 
like to be briefed on the ongoing investigation, realizing that 
we cannot be privy to a criminal investigation, but we would 
like to know the background because we have the responsibility 
as part of the oversight of the executive branch to make sure 
that this is getting ready and it is getting prepared to go in 
front of a grand jury for an indictment.
    Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Mr. Callender, I, too, commend you for creating the task 
force and clearly caring about this issue, but my concern is 
that we are just scratching the surface with our enforcement 
efforts. If you have seized $1.2 million, much of which has 
been returned to the victims, that is a tiny fraction of the 
amount that has been sent to Jamaica to these criminals. The 
estimate that I have heard is a minimum of $300 million a year 
flowing from elderly victims to these con artists, these 
scammers in Jamaica. So we are a long ways from getting a 
handle on this.
    In addition, if you look at the complaints to the Federal 
Trade Commission, which obviously just has civil jurisdiction, 
not criminal--and I would like that chart to be displayed if we 
could--okay, I thought we had it on the--I guess we do not have 
it on the teleprompter. But as you can see, it has gone up and 
up and up, and for the last calendar year, there are over 
29,000 complaints. Well, that amount grossly underestimates how 
much fraud there really is out there because we know that this 
is an under-reported crime.
    So I am concerned when you look at the dramatic increase in 
the number of complaints over the past few years, the estimate 
of $300 million, that our efforts, while they are well 
intentioned, are just not strong enough. They are just not 
effective enough. And since I know you care about this issue so 
much or you would not have created the task force, I am seeking 
your expert advice on what can we do about this to--part of it 
is public awareness, and that is one reason I asked the 
Chairman to hold this hearing, because I think public awareness 
helps a great deal. If we can get the message out to seniors 
that if they do not have relatives in Jamaica and they see the 
876 area code come up, it is not to hang up on the person. It 
is, do not answer in the first place.
    But what can we do from a law enforcement perspective to 
shut this down, to make the message sent to these criminals 
that this crime is not going to pay?
    Mr. Callender. I can tell you, ma'am, what we have done so 
far, and that is just not myself, it is the men at this table 
with me and other law enforcement officials in Jamaica and 
across the country, is to lay the foundation and the pathway to 
get to where we need to be, to get to where this committee 
would like to see. We have established the relationships, which 
did not exist before within the country, with the host law 
enforcement, numerous law enforcement agencies across Jamaica--
passport/immigration service, the Jamaican constabulary force, 
Jamaican military, the financial investigative division within 
Jamaica, their public corruption people.
    That foundation has been laid. It is a slow process. All 
the statutes in Jamaica are being corrected or being updated to 
address the crime. It was very hard to prosecute these crimes 
in Jamaica because the legislation had not developed to this 
new type of crime in Jamaica. There was no Proceeds of Crime 
Act in Jamaica until 2007, 2008. So we were some of the first 
people in the history of Jamaica to forfeit a list of proceeds, 
and it just so happens these were JOLT proceeds to get back to 
victims.
    So the first case that we worked in 2008, who was a young 
lady from El Paso who had sent her and her husband's life 
savings, which was $60,000--he left her, she moved into a 
homeless shelter--and we were able to repatriate $15,000. It 
took us a year and a half to get that through the Jamaican 
court system. Now, that process, because of that first one, has 
sped up significantly. We are able to get those proceeds back 
more rapidly.
    But it is a learning process and it is based on 
relationships. We have no authority in that country, remember. 
We are liaison officers there, capacity building, providing 
leads, giving training. And it is not just us, it is our 
partners. It is Western Union. It is the Postal Inspection 
Service. And then remember, as well, our agency, Homeland 
Security Investigations, has over 400 other crimes that we 
investigate.
    One of your fellow committee members there had asked the 
question, why is ICE the one--I wanted to make that clear, why 
do we have this jurisdiction. Because we handle cross-border 
crimes.
    Senator Collins. Right.
    Mr. Callender. It is a financial crime. And, you know, it 
has an effect on the U.S. financial system as it does the 
Jamaican financial system.
    Now, part of what we have learned in doing what we have 
done so far, the first six months of JOLT, we identified 36,000 
victims in six months, and there is not a law enforcement 
agency on this planet that can open 36,000 cases on one 
particular crime and still handle other crimes that are afoot.
    What we have to do is work smarter, not harder, and that is 
developing ways to group the victims together by the criminals 
targeting them. That way, we are able to identify which 
criminal groups are most successful by the amount of loss, the 
aggregate loss to the victims, and that aggregate loss is also 
used in the sentencing guidelines in the U.S. court system.
    Senator Collins. I know it is slow. I know it is 
complicated. I know that 36,000 victims is an enormous number. 
But we have got to go after these people and we have got to put 
pressure on the Jamaican government to continually update its 
laws. That has only happened very recently. It is still 
ongoing. And we have got to send a stronger signal. And I think 
the best way to do that, to deter others, is to put some people 
in prison. That is what is going to send the strong signal that 
this does not pay anymore.
    And Jamaica has got to do its part, as well. I, too, met 
with Jamaican diplomats this past week and I think they are 
finally taking it seriously, but it has taken a number of years 
for them to do so. I would like to see them put the effort in 
this, in stopping these scams, that it puts into enticing 
Americans to come vacation in Jamaica. A lot of money is spent 
on that.
    So we have just got to be more forceful and effective in 
this area, and I know you cannot open 36,000 cases, but I will 
tell you, if we saw prosecutions and tough sentences for some 
of the criminals in those cases, it would have an impact. And 
these people who are running the boiler rooms, if we can get at 
the people overseeing these criminal enterprises, it would have 
an impact.
    Mr. Hopkins, let me just ask a question of you. First of 
all, I am pleased to hear that you did shut down some of your 
offices until you could put in new anti-fraud provisions, but I 
need to know, when you see suspect activity, do you report it 
to law enforcement? Are you working with the JOLT Task Force, 
with others who have the ability to go after these people? I 
mean, you can try to do prevention, but you do not have any way 
to do enforcement.
    Mr. Hopkins. Right. Thank you for that question. Yes, we 
are. We work pretty extensively with all the Federal agencies, 
not only for fraud, but for terrorist financing, for drug 
smuggling. So I interact literally with every Federal agency 
that we have.
    What we do specifically for Jamaica is we, on a monthly 
basis, will send a list of the consumer victims that have 
identified a reported fraud to us to the agencies down in 
Homeland Security and with the Postal Inspectors. And at the 
same time, we have started to receive lists from them, the 
known fraudsters in Jamaica that we can put on our interdiction 
list so that those fraudsters are not going to be able to 
receive money from victims here in the U.S.
    I have a team in Denver where we kind of base our U.S. 
operation out of and we receive right now about 300 calls a 
month requesting assistance from law enforcement. We are 
providing information on pick-up locations or money transfer 
control numbers. Another thing that we do is we will take leads 
from any law enforcement agency that calls us, and if we can 
develop a comprehensive SARS, a Suspicious Activity Report, we 
will push that Suspicious Activity Report directly back to that 
law enforcement agent that was making the inquiry, which helps 
him get the information faster and get the investigations 
going. So I feel like we have a pretty aggressive team.
    Senator Collins. Thank you.
    Chairman Nelson. Senator Warren.
    Senator Warren. Thank you, Mr. Chairman.
    Mr. Callender, every one of these frauds involves the 
American banking system because that is where the money 
started, whether it ends up on a money card or it is done 
through a credit card or it is done directly through a checking 
account, a wire transfer. So can you describe in a general 
sense how you are working with the Office of the Comptroller of 
the Currency, the Federal Reserve Bank, and the Treasury 
Department?
    Mr. Callender. Well, we have worked with the investigators 
from some of those departments and agencies in Treasury, but, 
really, I mean, it is a crime centered around the victims and 
the evidence they possess. And I can tell you, quite a few of 
these crimes happen cash through the mail, through FedEx. It is 
not just the banking system----
    Senator Warren. Fair enough, Mr. Callender. Some of the 
money undoubtedly is cash and FedEx, but we just had two 
witnesses who sat here and every single thing they described 
went through the American banking system and touched the 
American banking system.
    Mr. Callender. Right.
    Senator Warren. And the reason I ask about this is Western 
Union is describing the steps they are taking voluntarily in 
order to detect and close down these operations. These are the 
three Federal banking regulators that I have named who are 
responsible for overseeing the activities of our banks in terms 
of their responsibilities to detect and to close down 
operations that involve money laundering. So I just want to 
know, have you reached out, have you talked to the regulators 
about whether or not they, in fact, are examining the banks on 
this very question of how they deal with these scams when this 
money is moving through the American banking system?
    Mr. Callender. We have, ma'am. We call it Operation 
Cornerstone. It is an operation we have had going on for 
several years, and all of our offices nationwide go to the 
local banks, go to the regulators. We brief them on the crimes 
and the different money laundering techniques, what is the 
latest, what they can look out for. Part of that is a 
telemarketing effort. There are many other facets to that, as 
well, but it is Operation Cornerstone and we do it 
continuously.
    Senator Warren. Well, I appreciate that you go to the local 
banks, but my question is, are the banks coming up with their 
own procedures to monitor this? We have banking regulators who 
evaluate the banks and supervise the banks in terms of whether 
they are complying with our laws about dealing with money and 
money laundering, and I just want to know if you are talking 
with the bank regulators, not the individual banks, but the 
bank regulators?
    Mr. Callender. Personally, I have not. I know we have our 
headquarters component that does do that, talk to them on our 
behalf. As part of JOLT down there, we did not leave the 
country to go talk to the regulators, no.
    Senator Warren. Fair enough, and I understand that you are 
in the field----
    Mr. Callender. But, yes, it is happening at a headquarters 
level. It is happening at more of a strategic level by people 
in our agency, yes.
    Senator Warren. I would just be grateful, as we go forward, 
to be able to learn more about this and find out what is being 
done at the regulatory side, and it is for all of the scams 
here that attack our seniors.
    If I could, there is another question I wanted to ask you. 
You mentioned, I think, in your testimony--perhaps it was in 
your written testimony--about what are, in effect, the sucker 
lists that get passed around that are enormously valuable. And 
we heard earlier about the work of the AARP, and I am familiar 
with it. They have done some extraordinary work and put 
extraordinary private resources into trying to warn people, in 
trying to help people avoid the consequences of these scams. 
And it is my understanding that they have asked for these lists 
to be shared, these sucker lists, and that you have not agreed 
to do that, and I want to understand, first, if that is right, 
and secondly, why.
    Mr. Callender. Well, there is--unfortunately, we have 
privacy issues with this information. Some of it is how we 
derive it. Some of it is derived through our partnerships with 
Western Union, with the Federal Trade Commission. Some of these 
lists, we pick up during--or the Jamaican government picks up 
during execution of search warrants in Jamaica and their 
privacy laws do not allow the sharing of that information, as 
well as some of our laws and policies, or rules and policies, 
as well.
    Senator Warren. So are you telling me--just because I want 
to understand this--are you telling me this is just a brick 
wall, that there is no place to go with this----
    Mr. Callender. No, these are things we have definitely 
worked on and we have established Memorandums of Understanding 
with the Federal Trade Commission about sharing of this type of 
information. But to disclose that to the AARP, at least at this 
point, for us becomes a privacy issue.
    Senator Warren. Are you moving toward trying to find a way 
to be able to disclose this to the AARP, or is that avenue 
right now just cut off?
    Mr. Callender. We are always working to further these cases 
and make what we do more effective, and notifying the victims 
is definitely something we would--or potential victims, if we 
have that ability, is something we want to be able to do.
    Senator Warren. All right. Well, thank you very much, Mr. 
Callender.
    May I have one minute, because I am going to be really 
quick on this----
    Chairman Nelson. Of course. Take as much time as you want.
    Senator Warren. Oh, thank you.
    Mr. Tiller, I just wanted to ask a question about the work 
of the Postal Service. You are out here trying to engage in 
enforcement to try to protect our citizens. We read a lot about 
the Postal Service facing financial cuts, that there have 
already been cuts, that there are perhaps more cuts in the 
future. Could you just speak very briefly to the potential 
impact of these cuts on your ability to enforce our Postal laws 
and protect our seniors from being scammed?
    Mr. Tiller. Very good. Of course, we understand that the 
Postal Service is in serious economic crisis, but we have to 
understand that criminals do not stop committing crime based on 
the Postal Service's volume or their income. So we are still 
out there every day, seven days a week, fighting crime, to 
identify these victims, to help preserve the sanctity of the 
seal and protect the American public from that mail hurting 
them.
    Senator Warren. Thank you. I appreciate it.
    I apologize. I have a group of high schoolers waiting for 
me, so I am not going to be able to stay for the last few 
minutes, but thank you for being here, and thank you, Mr. 
Chairman.
    Chairman Nelson. Well, you are an excellent member of this 
panel, Senator Warren. We appreciate your expertise and the 
passion that you bring to this committee. So thank you very 
much.
    Mr. Callender, first of all, again, I say, thank you for 
when you were the attache in the embassy in Jamaica, you set up 
this joint committee, the JOLT. That was in 2009. Has there 
been a prosecution by Jamaica's government of any of these 
people?
    Mr. Callender. There has, sir. I think for an actual fraud 
charge, there have only been two convictions. But what has 
happened down there, what they have done since they have had 
the lack of legislation, they have arrested for crimes 
associated with, you know, with going to do the search 
warrants. If it was not for doing the JOLT investigation, they 
would have not been doing a search warrant at this house, but 
when they get there, they find weapons, they find other 
violations--drugs, things of that nature--and so they make 
arrests based on that. It is going to be a much more solid 
conviction in Jamaica and more time.
    So I would say yes. Even though they may not be exact fraud 
charges, people are going to jail over these investigations 
down there, and they will be for fraud soon with their new 
legislation.
    One of the major hurdles we had is we needed the victims to 
come testify in Jamaica, and when you have an elderly person, 
traveling overseas, and then when they show up, the defense 
delays and they reset the court for another month and they end 
up coming down three times, that can be exhausting and it can 
practically be dangerous for them to travel that much, maybe at 
a particular age, and we have run into those hurdles quite a 
bit. So one of the new legislative items they are working on is 
videoconference testimony, which will be huge in moving these 
things forward.
    Chairman Nelson. And it underscores the need for an 
extradition after the United States Government has indicted 
some of these people.
    Mr. Callender. Absolutely.
    Chairman Nelson. And that would have the chilling effect.
    Before I turn to the former Attorney General of 
Connecticut, I want to ask Mr. Hopkins, I want to thank you for 
Western Union being proactive. Now, we asked some others to 
come here, the prepaid cards, and they declined. And so I want 
to enter into the record the declining letter from GreenDot.
    [The information from Chairman Nelson follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
 
 
 
    Chairman Nelson. But I think we have got to look at the 
responsibility of all parties, because we are dealing with a 
very vulnerable population here.
    All right. Senator Blumenthal.
    Senator Blumenthal. Thank you, Mr. Chairman, and I want to 
thank you for convening this hearing. As I learned in my former 
life as an Attorney General for some 20 years, these kinds of 
scams are a real scourge, not only on vulnerable populations, 
but on everyone, and they continue, as we have seen and heard, 
not just this fraud and scam, but many others, so I thank the 
Chairman for focusing our attention on this one.
    And I want to join in thanking Western Union for 
participating and cooperating, as not all such private 
enterprises do. I worked on a multi-State agreement, as a 
matter of fact, with Western Union while I was Attorney General 
dealing with warnings to consumers of the risks of fraud-
induced wire transfers. And I hope that your fraud prevention 
efforts have gone beyond what was required under that 
agreement. I believe that they have. But perhaps you can tell 
us what you have done proactively which perhaps can serve as a 
model for others and help us also possibly frame proactive 
measures on our part.
    Mr. Hopkins. Thank you, Senator. Yes, I will just kind of 
touch at a high level, like I said, without any real specifics 
because some of the details of the program. But the Courtesy 
Call-Back Program is a part of this prevention effort, and that 
is where we have various corridors around the world in the 
high-risk areas--I think we actually have over 55 corridors, 60 
corridors that we monitor now--and if people are sending wire 
transfers in those corridors, if it hits certain parameters, 
that consumer will get a call back from someone from our call 
center to try to determine if they are a victim of fraud or 
not. And that particular measure has been extremely successful 
for us and we continue to expand that program. And we 
constantly monitor the amount. We kind of call it like a zone 
defense. We are constantly trying to play with the numbers 
themselves so the fraudsters are not able to determine what 
those patterns are.
    Another program that we have is our Fraud Hotline. We have 
about 20 Fraud Hotlines now deployed globally. By the end of 
the year, we will have 35, is our goal. And this is our effort 
to try to give not only the U.S. consumers but the global 
consumers an opportunity to report fraud. So as we have all 
said and some of the witnesses earlier, we know that it is 
under-reported, and so we are trying to enhance our ability to 
allow our consumers to report fraud to us, which is going to 
give us better statistical information and allow us to adjust 
our program more.
    We also have what we call real-time risk assessment, which 
is a rules-based system that is used to automatically block 
transactions at a period to fit certain patterns, fraud 
patterns. And this is becoming increasingly useful to us. And 
as we get better at doing this and tweaking these patterns, 
this allows us to actually stop the fraud at the point of sale. 
So as the consumers come up, it literally blocks the 
transaction and they are not going to be able to do the 
transaction. We think the expansion of that program over the 
next year or so is really going to help take our program to 
another level.
    And yes, Senator, we have, since your agreement, we have 
continued to enhance our programs and continue to do so.
    Senator Blumenthal. And that blocking of the transaction is 
really key, is it not, because it is a lot easier to block it 
than recover----
    Mr. Hopkins. Absolutely. It prevents all the back-end work 
that needs to be done if we just stop it right there at the 
point of sale. So that is three kind of key areas that we 
have----
    Senator Blumenthal. I appreciate that. And what would you 
say to people who might complain that it discourages unbanked 
or underbanked people from engaging in legitimate transfers?
    Mr. Hopkins. That our system----
    Senator Blumenthal. The fraud prevention. As a sort of 
devil's advocate-type question, one of the points, I think, 
that might be made is are you discouraging people from engaging 
in legitimate transactions.
    Mr. Hopkins. Well, I think we are discouraging the 
fraudsters from engaging in transactions.
    Senator Blumenthal. Right.
    Mr. Hopkins. That is certainly our goal.
    Senator Blumenthal. Right. Let me just finish, Mr. Tiller, 
by asking you, in terms of the Postal Service, you may have 
heard Deputy Sheriff King express frustration with the degree 
of assistance or cooperation from Federal agencies. Is that a 
well-founded complaint?
    Mr. Tiller. Senator, that is a difficult one. It does cause 
me concern to hear that from a sheriff because we pride 
ourselves on networking and liaison and coordinating all of our 
investigations across the country. We have 1,400 inspectors 
spread throughout the country. It is very difficult for us to 
conduct our investigations without help, and we actually 
understand the benefit of leveraging our resources. So, 
obviously, it does cause me concern, which I will have to look 
into at some point.
    But I really feel that that is the big gap. We do not have 
a lot of Sheriff Kings out there in the country that understand 
this scam, so I will share that that is a key, is we need to 
educate local law enforcement what this is, so when they do get 
a call they have the tools available to deal with that.
    Senator Blumenthal. Because you have a lot of expertise and 
authority that local officials do not have.
    Mr. Tiller. We do, and we are actually working with the 
National Association of Attorney Generals now, the Inspection 
Service is, to help come up with some tools to share with local 
law enforcement so they do know how to handle that call when 
they do get it.
    Senator Blumenthal. Thank you.
    Thank you, Mr. Chairman.
    Chairman Nelson. We will keep the record open for ten days 
for further testimony that wants to be submitted for the 
record.
    I want to thank the second panel, Mr. Tiller, Mr. 
Callender, and Mr. Hopkins. Thank you very much. I want to 
thank all the folks that have been here today very patiently, 
interested in this subject.
    Senator Collins and I are not going to let this one go. We 
want to see some indictments and some extraditions and some 
prosecutions. And this is just one of the scams that is going 
on, and it is a vulnerable population and that happens to be 
the subject matter of this committee.
    So with that thought, thank you all. Have a great day. The 
meeting is adjourned.
    [Whereupon, at 4:18 p.m., the committee was adjourned.]


                                APPENDIX
                                
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                                


                                  [all]