    [Senate Hearing 114-866]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-866

                              CATCH ME IF YOU CAN:
                           THE IRS IMPERSONATION SCAM
                         AND THE GOVERNMENT'S RESPONSE

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

                                    HEARING

                                   BEFORE THE

                           SPECIAL COMMITTEE ON AGING

                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 WASHINGTON, DC

                                   __________

                                 APRIL 15, 2015

                                   __________

                               Serial No. 114-04

             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.govinfo.gov

                                   ______

                  U.S. GOVERNMENT PUBLISHING OFFICE
     49-469PDF          WASHINGTON : 2022

                           SPECIAL COMMITTEE ON AGING

                       SUSAN M. COLLINS, Maine, Chairman

    ORRIN G. HATCH, Utah                 CLAIRE McCASKILL, Missouri
    MARK KIRK, Illinois                  BILL NELSON, Florida
    JEFF FLAKE, Arizona                  ROBERT P. CASEY, JR., Pennsylvania
    TIM SCOTT, South Carolina            SHELDON WHITEHOUSE, Rhode Island
    BOB CORKER, Tennessee                KIRSTEN E. GILLIBRAND, New York
    DEAN HELLER, Nevada                  RICHARD BLUMENTHAL, Connecticut
    TOM COTTON, Arkansas                 JOE DONNELLY, Indiana
    DAVID PERDUE, Georgia                ELIZABETH WARREN, Massachusetts
    THOM TILLIS, North Carolina          TIM KAINE, Virginia
    BEN SASSE, Nebraska
                                  ----------
                   Priscilla Hanley, Majority Staff Director
                     Derron Parks, Minority Staff Director

                             C  O  N  T  E  N  T  S

                                  ----------

                                                                       Page

    Opening Statement of Senator Susan M. Collins, Chairman..........     1
    Opening Statement of Senator Claire McCaskill, Ranking Member....     3

                               PANEL OF WITNESSES
                                    PANEL I

    Al Cadenhead, Ph.D., Senior Pastor, Providence Baptist Church....     5
    Jason Moore, Detective, Auburn Police Department.................     7

                                    PANEL II

    Julie Brill, Commissioner, Federal Trade Commission..............    22
    Alysa D. Erichs, Special Agent in Charge, Homeland Security
      Investigations Miami, U.S. Immigration and Customs Enforcement,
      U.S. Department of Homeland Security...........................    24

                                    APPENDIX
                          Prepared Witness Statements

    Al Cadenhead, Ph.D., Senior Pastor, Providence Baptist Church....    37
    Jason Moore, Detective, Auburn Police Department.................    40
    Julie Brill, Commissioner, Federal Trade Commission..............    47
    Alysa D. Erichs, Special Agent in Charge, Homeland Security
      Investigations Miami, U.S. Immigration and Customs Enforcement,
      U.S. Department of Homeland Security...........................    58

                           Statements for the Record

    Jason Moore, Detective, Auburn Police Department, Exhibit 1......    69
    Jason Moore, Detective, Auburn Police Department, Exhibit 2......    71

                              CATCH ME IF YOU CAN:

                          THE IRS IMPERSONATION SCAM

                         AND THE GOVERNMENT'S RESPONSE

                                  ----------

                           WEDNESDAY, APRIL 15, 2015

                                           U.S. Senate,
                                    Special Committee on Aging,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 1:34 p.m., Room
    562, Dirksen Senate Office Building, Hon. Susan M. Collins,
    Chairman of the Committee, presiding.
        Present: Senators Collins, Heller, Cotton, Perdue, Tillis,
    Sasse, McCaskill, Gillibrand, Donnelly, and Kaine.

                     OPENING STATEMENT OF SENATOR
                       SUSAN M. COLLINS, CHAIRMAN

        The Chairman. The Committee will come to order. Good
    afternoon.
        Today, our Committee continues its fight against the
    fraudsters, swindlers, and con artists that plague America's
    seniors. Our hearing this afternoon will focus on the IRS
    impersonation scam. We will examine how the scam works, what
    seniors can do to keep from falling victim to it, and what law
    enforcement is doing or is not doing to stop it.
        The Treasury Inspector General for Tax Administration has
    called this scam the largest, most pervasive impersonation scam
    in the history of the IRS. According to the Inspector General,
    more than 434,000 Americans have been targeted by scammers
    impersonating IRS officials. Thousands of citizens have been
    defrauded of millions of dollars. The IG estimates that 10,000
    IRS impersonation scam calls are placed each week.
        As we will hear from our witnesses in greater detail in a
    few minutes, the scam often starts with a call like the one I
    am about to play, which was provided to us by the police
    department in Auburn, Maine, so if we could listen to the call.
        [An audio recording was played.]
        A rather ironic ending there.
        Victims are told that they owe back taxes and will be
    arrested or, in some cases, deported if they do not pay up
    immediately. They are then instructed to purchase prepaid debit
    cards at local retailers, to load those cards with cash, and to
    read the PIN numbers on the back of the cards to the
    fraudsters. Armed with these PIN numbers, the fraudsters then
    transfer the money to their accomplices and wipe the cards
    clean of value. Scammers are also known to use wire transfers
    to steal money from their victims.
        These methods are typical of the other scams that our
    Committee has investigated, but the IRS impersonation scam
    artists have added a pernicious twist. They are pretending to
    be government officials working for the IRS, a Federal agency
    that, frankly, makes most Americans apprehensive. When they get
    their victims on the phone, they warn them not to hang up, and
    if the call is terminated, a different scammer impersonating a
    local law enforcement official calls back immediately and
    threatens the target with arrest.
        As best we can tell, many of these calls originate in
    boiler rooms in India, but the scammers use Voice Over Internet
    Protocol technology to spoof the caller ID to make it appear
    that the calls are being placed by the IRS or even local law
    enforcement, so when the unsuspecting victims see the Internal
    Revenue Service or the local police department pop up on their
    caller ID, they are terrified and easily hustled into doing
    whatever the scammers demand.
        We have an excellent panel of witnesses today. First, we
    will hear from one of the victims, Pastor Al Cadenhead, who was
    defrauded of some $16,000 in just seven-and-a-half hours, and
    Pastor, I want to tell you how much I appreciate your
    willingness to come forward and tell your story publicly. You
    are going to save a lot of other people from going through what
    you did.
        I am also delighted to welcome Detective Jason Moore of the
    Auburn Police Department in Auburn, Maine. Detective Moore will
    describe a case he handled just two weeks ago involving a
    constituent of mine who was defrauded out of $23,000. Detective
    Moore and his colleagues took quick action to stop the transfer
    of the victim's funds to the scammers and they were able to
    recover $11,000, so I congratulate him and the Auburn Police
    Department for their effective work.
        I also want to welcome on our second panel Alysa Erichs,
    the Special Agent in Charge of the Miami Field Office for
    Immigration and Customs Enforcement. Ms. Erichs' office helped
    to prosecute and convict two individuals involved in the IRS
    impersonation scam, and for this good work, they also deserve
    our thanks.
        Finally on the second panel, I want to welcome FTC
    Commissioner Julie Brill. The FTC plays an important role in
    educating consumers about how to better protect themselves from
    these scam artists.
        Before I close my remarks, I want to note publicly my
    disappointment that the Department of Justice declined the
    Committee's invitation to testify before us today. As I noted
    at the outset of my remarks, thousands of Americans have been
    victimized by IRS impersonation scammers and 10,000 new scam
    calls are being placed each week. Actually, the number of
    victims is greatly understated because we know from previous
    experience that it is just the tip of the iceberg, that many
    victims are too embarrassed to come forward or they still do
    not realize that they have been taken.
        Yet, despite all of this harm, it appears that the
    Department of Justice has prosecuted just three IRS
    impersonation con artists in the entire country, two of which
    were done in the case we will hear about in the second panel,
    and these were not even the criminal masterminds running the
    scams. They were low-level operatives.
        I simply do not understand the Department's apparent
    indifference, and its refusal to testify before this Committee
    is completely unacceptable. I am left to conclude that the
    Department does not want to be held accountable or answer
    questions about its poor record.
        There seems to be a pattern of lax enforcement by the
    Department of Justice when it comes to pursuing the various
    scams targeting seniors. If the Department contends that it
    does not have the tools or the resources it needs to protect
    American citizens against these scams, it ought to be working
    with us to get those tools, not refusing to testify.
        After all, there are really only two remedies to these
    kinds of scams. One is educating the consumer so that the
    consumer can avoid becoming a victim, and second is going after
    the con artists and putting them in prison. That is a
    tremendous deterrent to others who would try to rip off our
    seniors and other citizens.
        I do want to thank those witnesses who are appearing before
    us today and I look forward to their testimony.
        Senator McCaskill.

                     OPENING STATEMENT OF SENATOR
                    CLAIRE McCASKILL, RANKING MEMBER

        Senator McCaskill. Thank you, Chairman Collins.
        With many Americans focused on their taxes today, this is a
    great opportunity to call their attention to this scam that is
    sweeping the Nation. This impersonation scam does not
    discriminate. We have seen a wide range of people targeted,
    from the young to the old, and it does not matter where you
    work or where you live.
        The Inspector General for the IRS has received threatening
    calls, so too, have many Members of Congress. It seems that
    virtually everyone you talk to these days has either gotten one
    of these calls or knows someone who has.
        It is easy to fall for this. To many victims around the
    country, you should not be ashamed of what happened to you. All
    of us have a natural fear of the IRS. It is in our DNA as
    Americans. I appreciate the bravery of someone like our
    witness, Dr. Cadenhead, who is stepping forward in hopes others
    can learn from his painful experience. It is easy to see why he
    and thousands of others have fallen for this. The IRS is an
    agency that does strike fear into Americans' hearts, and many
    are scared of both the tax code and its complexity and the
    agency itself, so when they receive a threatening call from
    what appears to be a 202 area code, it is no wonder that many
    people believe what they are hearing.
        I am going to say something to the American people that
    should warm their hearts. If you get a call out of the blue
    from the IRS, do not answer it. Let it go to voice mail. Pick
    up the phone and hang it up. The IRS has told us very clearly
    that they only use the telephone as a last resort after sending
    multiple notices via mail, their preferred method of
    communication.
        Furthermore, the IRS is never going to dictate a method for
    you to pay what you owe, so if you, for some reason, find
    yourself on a phone call with someone purporting to be an IRS
    agent demanding you send money through a debit card or a credit
    card without giving you an option on how you want to pay, that
    should be another red flag.
        Frankly, you should not even engage these people. If you
    are concerned that your call could be legitimate, call our
    Committee's fraud hotline to check it out. Call your Member of
    Congress. Call the FTC. Call the Inspector General at the
    Treasury Department. Or, call the IRS and talk to the IRS about
    the call you have received.
        The FTC tells us this is one of the few scams where
    consumer education can, in fact, make a real difference, that
    once people know the IRS is not going to be calling them, these
    fraudsters will end up moving on to something else because this
    will no longer be a worthwhile endeavor.
        I certainly hope so, because right now, the agency has
    generally seen more and more IRS impostor scam complaints every
    month. We are almost halfway to the number of complaints we got
    in all of 2014 and we are only through the first quarter of
    2015. Whether more people are complaining because they are
    aware this is a scam or whether more people are actually being
    targeted is unclear, but we know we need to do something about
    it.
        The Better Business Bureau of Southwest Missouri estimates
    hundreds of people have been called there and are calling this
    scam an epidemic. In 2014, FTC reports receiving more calls
    from Missouri about impostor scams than all other types of
    fraud except for debt collection, and the stories they have
    collected are heartbreaking.
        One woman lost $15,000 after a man claiming to be an IRS
    agent threatened to arrest her and threatened a lien on all of
    her assets and a threat to notify her employer. Another woman
    detailed an 8-hour ordeal during which she handed over more
    than $16,000 to these criminals.
        I am eager to hear from the FTC and law enforcement today
    about what they are doing to go after the fraudsters and to
    alert the public, and I thank Chairman Collins for bringing
    this to the attention of the American people by holding this
    hearing.
        Let me also say that I share the Chairman's disappointment
    about the Department of Justice not being here today. Let no
    one think there is a dime's worth of difference between the
    Chairman of this Committee and the Ranking Member about the
    refusal of agencies of this government to participate in
    oversight hearings. There is no good excuse to not participate
    in an oversight hearing.
        I will just say this to any agency in the future who thinks
    it is a good idea to ignore an invitation to come to this
    Committee in front of this Chairman. I know her. This does not
    mean she will go away, and by the way, I have got her back. I
    will not go away, so let the word go out that it is a bad idea
    to avoid a hearing in the Aging Committee when we are trying to
    get at solutions for a problem that is painful, real, and
    impacting innocent Americans all over this country.
        Thank you, Madam Chairman.
        The Chairman. Thank you very much for such a strong
    statement.
        I am delighted now to call on our first witness, who is a
    constituent of Senator Tillis, Dr. Al Cadenhead, who is the
    Senior Pastor at the Providence Baptist Church in Charlotte,
    North Carolina. Thank you so much for being here.
        Senator Tillis, if you have any words of welcome for your
    constituent, feel free.
        Senator Tillis. I just hope we have been taking care of you
    since you have been here a little bit earlier. Thank you for
    traveling up, and we really do appreciate you coming forward
    and sharing your story. I think it is critically important. We
    need more to do it.
        The Chairman. Thank you.

           STATEMENT OF AL CADENHEAD, PH.D., SENIOR PASTOR,
                       PROVIDENCE BAPTIST CHURCH

        Dr. Cadenhead. Madam Chairman, I am going to stick pretty
    close to my prepared text. As a Baptist preacher, I am not
    known for brevity, so I will stick close to that and try to
    move as quickly as possible and then absolutely entertain any
    question that you might have.
        On October 28, 2014, I received a voice mail on my cell
    phone from a woman who identified herself as an agent for the
    Internal Revenue Service. In this voice mail, she said that I
    was being charged with tax fraud for serious miscalculations on
    tax returns from 2008 to 2011 and that I should return the call
    immediately or have my attorney contact them. She further
    stated that they were contacting the local authorities.
        Assuming that it was a legitimate message, I returned the
    call at approximately 8:30 a.m. The woman indicated that I was
    in serious trouble and the charge of tax fraud was due to my
    not responding to numerous attempts to contact me, that they
    had actually left a letter on my front door. She said they had
    a photo of an agent placing an envelope on my door with a
    letter requesting that I contact the IRS immediately. I asked
    if I might see the photo. She said, no, because it will be used
    in court against me.
        She told me that I should not interrupt her for any reason
    and that I should be taking notes of the conversation. I
    indicated that I was driving and could not write. She told me
    to find a place to pull over. I pulled into the parking lot of
    a school on my way to my church office.
        She proceeded to tell me that they were issuing a warrant
    for my arrest, that they were placing a lien on my house and
    freezing my accounts because I had failed to cooperate. She
    also said that they would be notifying the local media about
    the arrest. This prompted enormous anxiety for me because so
    much of my role depends on my public image, and also I planned
    to retire in six months then, which is now only two weeks away,
    and certainly did not want to embarrass my church.
        When I said I would like to contact my accountant, she told
    me that that would not be a good idea because the
    miscalculations were so blatant that the court would likely
    take his license from him, and she told me not to interrupt her
    and began to describe the court costs that I could anticipate.
        When I asked if I could then correct the miscalculation and
    pay the amount, she told me that it was $4,900, and I said, may
    I pay that? She said, let me refer you to my supervisor. She
    then forwarded me to a many who identified himself as Steve
    Evans, gave a badge number.
        He told me that if I broke connection with him, the warrant
    would be filed. The only way to pay the amount owed would be
    through a Government Approved Center and by use of Green Dot
    Visa cards. He indicated that Rite Aid was a place that handled
    the Visa cards and gave me instructions on where the closest
    one was. I indicated that I must get the money from the bank.
    He told me to keep the phone in my pocket and under no
    circumstance say anything about the IRS or why I needed the
    money. I should get the money, then go to the Rite Aid store
    and purchase five Green Dot cards, load each one with $500,
    then come back to the car and scratch off the cards and give
    him the numbers. He said he must check to see if the funds went
    through, and while he did that, he switched me to an assistant,
    and that I must acknowledge every thirty seconds that I was on
    the line with him.
        After successfully transmitting the scratched off numbers,
    he told me to go to another Rite Aid store and purchase five
    more. I followed the same procedure the second time.
        Realizing that he had a gullible victim, he then said that
    he wanted to notify me that there was a miscalculation, that I
    owed another $5,000, so I went to the bank a second time,
    borrowed the money, then I proceeded to the Rite Aid store
    according to his instructions, and if I broke connection for
    any reason, the warrant would be issued immediately.
        Thinking that I had cleared the matter, he indicated that I
    still owed $6,000 from 2008, so I went to the bank a third
    time, borrowed $6,000. The lady at the bank asked me if
    everything was okay. I responded it was just personal business.
    I followed the exact same protocol, and by the time I paid the
    $6,000, it was 3:30 in the afternoon, over six hours into the
    conversation. I told him that I had a medical appointment and
    needed to honor it.
        This Steve Evans told me that he had good news for me, that
    I should receive a refund of $8,900. He had to clear it with
    the Attorney General's office and then he would instruct me on
    the method of the refund. He would contact me before six p.m.
        Realizing then that I had been scammed, I immediately
    talked with my attorney. He, too, knew that I had been scammed.
    However, in my attorney's presence, I called Steve Evans back
    to inquire of the refund. He said that he was still waiting on
    the documentation from the Attorney General's office, that they
    were closed for the day, and that he would call me by 8:30 the
    next morning.
        When I did not hear from him the next morning, I called him
    at 9:00 a.m. He then proceeded to tell me the next morning that
    I needed to forward another $4,900 in order to get my $8,900
    back. By then, I had made a phone call to the local FBI. They
    had directed me to the Treasury Department.
        With the thought that maybe my line might be tapped, I
    answered the phone again when Steve Evans called me back. I
    kept him on the line with hopes that possibly somebody might be
    listening in. He again threatened me, even though I told him I
    knew he was scamming me. I hung up.
        Within ten minutes, he called me back on another number.
    Thinking it might be an agency of the government, I answered
    the call. It was Steve Evans again, making his familiar
    threats.
        In summary, I will easily confess the question can be
    raised as to how could anybody be so gullible. The short answer
    is that I was the perfect victim. I had never had any issues
    with the IRS and had no idea how they operate. I was well aware
    that many years ago, my father had a very difficult experience
    with the IRS. They were very harsh with him, never responded
    when they found out his calculations were correct, so for all I
    knew, the call of the impersonators was very believable.
        I am also fortunate that I have not had to pay fines for
    major traffic violations and had no reason to assume that
    payments should not be made by way of Green Dot Visa cards. The
    scammers also talked a lot about notifying the media, and in my
    profession, that could be a nightmare, so I was the perfect
    victim.
        I am sharing my experience for one reason only. It is with
    hopes that my involvement might assist in stopping this scam
    and prosecuting these criminals. There is no way to gauge the
    amount of hardship they have created for so many individuals. I
    get no pleasure out of sharing such an embarrassing experience.
    My only reward for being public with my shame is to communicate
    to as many people as possible that the IRS does not do business
    over the phone and that when calls are received, hang up. That
    is my reason for being here today.
        Thank you.
        The Chairman. Thank you very much for your extremely
    helpful testimony.
        Detective Moore.

                 STATEMENT OF JASON MOORE, DETECTIVE,
                        AUBURN POLICE DEPARTMENT

        Mr. Moore. Chairman Collins, Ranking Member McCaskill, and
    members of the Committee, thank you for the opportunity to
    testify today.
        As you know, I am a police detective with the Auburn Police
    Department in Maine. I have been there for 17 years, and I
    recently handled a case involving a 50-year-old grandmother
    from Auburn who was scammed out of $23,000 by someone posing as
    an IRS agent. The victim is very embarrassed and has requested
    anonymity, and so I will refer to her as Mrs. A for the purpose
    of this testimony.
        Mrs. A came into the Auburn Police Department to report
    that she may have been scammed. She explained that she received
    a message on her home answering machine that stated she was
    being sued by the IRS. She returned the call and spoke to a man
    with an Indian-sounding accent who stated his name was Alex
    Rogers. He identified himself as an agent with the IRS and
    provided a badge number.
        He stated that he was calling regarding a tax audit because
    Mrs. A had used the wrong tax rate when she filed her taxes. He
    said that she owed $4,982. He told her that if that was not
    paid by 5:00 p.m. that day, she would be arrested and liens
    would be placed on her property. Mrs. A explained that she had
    her grandchildren with her and would be unable to pay that day.
    Mr. Rogers said that was no reason and they would still come
    arrest her. He also told her that she could not tell anyone
    that she had been contacted by the IRS, including her husband.
        Mrs. A said that she was very nervous and shaking at this
    point. She questioned why she had not been previously notified
    by the IRS and why the IRS had not mailed her a letter. Mr.
    Rogers said that due to the seriousness of the matter, the
    papers had to be hand delivered.
        Following Mr. Rogers' instructions, Mrs. A went to her bank
    and withdrew cash. She then went to a Walmart and purchased
    multiple MoneyGrams that were directly loaded to a prepaid
    card. She was told to buy them using a different sender name
    for each MoneyGram. She was then sent to the nearest Bank of
    America branch, which is about thirty minutes away from her,
    and was instructed to wire funds to a specific account.
        There was a technical issue which prevented the wire
    transfer, so the scammer sent her back to Walmart to purchase
    more prepaid cards. At 6:00 p.m., Mr. Rogers told Mrs. A the
    IRS is closing for the day and the legal action will be put on
    hold until 9:00 a.m. the following day.
        Throughout this ordeal, Mrs. A was told to stay on the
    phone. She was continually threatened with arrest if she told
    anyone that she was in contact with the IRS or failed to make
    payments as instructed.
        On a couple of occasions, her phone lost connection. She
    then received a call from the Auburn Police Department--at
    least the number displayed that--and she spoke with a person
    who claimed to be Lieutenant Green, though there is no one
    employed there by that name. Lieutenant Green said if she
    continued to hang up that she would be arrested. She explained
    that these are unintentional drops and he said that he would
    fax Mr. Rogers. After ending that call, Mr. Rogers called back
    and she asked if the fax had gone through and he said it had.
        Throughout these events, Mrs. A had her two grandchildren
    with her. She was in tears when she returned home that evening
    and was too scared to tell her family why she was so
    distressed.
        Mr. Rogers called back Friday morning. He was now claiming
    Mrs. A owed another $7,432. He had her speak to two other
    people who were supposed to be with the IRS, one an account
    manager and one an attorney. They had her make another deposit
    at the Bank of America--they had her make that deposit at the
    Bank of America.
        Afterwards, they told her that they needed another $900 for
    document fees. She began to cry and was told if she continued
    to cry, they would hang up and the process would start all over
    again.
        She was then told they had discovered another $14,322 that
    was due. They said they would settle for $10,500 that day and
    she would receive 40 percent back in her tax refund in three
    weeks.
        Mrs. A was next directed to obtain $6,300 in money orders
    from Western Union, which she purchased and then shipped to a
    Days Inn in South Carolina. She was again continually
    threatened throughout the day. The scammers told her that the
    IRS offices were closing for the weekend and they would call
    her again Monday morning.
        Upset by what had transpired and becoming increasingly
    suspicious, Mrs. A went to the Auburn Police Department. She
    brought with her all the receipts for the transactions. When I
    was meeting with her, she received a call on her phone. She
    said it was them. I assumed this meant the scammer, so I
    answered. I found myself speaking with a male with an Indian-
    sounding accent. He asked to speak to Mrs. A and I told him he
    could not. The male persisted in his request to speak with her,
    so I hung up.
        Within seconds, her phone rang again. I could see it was
    the same caller and I again answered. It was the same male
    again asking to speak to Mrs. A. I told him that every time he
    called, he would be speaking with me. He continued to ask to
    speak with Mrs. A, even saying ``please.'' I was firm and rude
    with him to the point that he hung up.
        Since Mrs. A had made cash deposits at a Bank of America
    branch, I thought it was important that I notify them. I also
    wanted to inquire if there was a way to reverse the deposit,
    since it was made as part of a fraud. It took several attempts
    for me to reach somebody, but I eventually made contact with a
    Ms. Chauntel James, who is a Senior Investigator with the Fraud
    Investigations Group. Ms. James later advised that the Bank of
    America had been successful in halting the wire transfer. I
    understand from Ms. James that Bank of America was also able to
    recover money for victims in California and New Jersey totaling
    $34,000 from that same account. Bank of America has agreed to
    refund Mrs. A her $12,432. From speaking to Ms. James, I
    understand that if Mrs. A had torn up receipts as she had been
    instructed to do by the scammers, she may not have been able to
    recover her money.
        On behalf of Mrs. A, I filed a complaint online with the
    Treasury Inspector General for Tax Administration. She received
    a call the next day, and an agent has been assigned and is
    working on the case.
        I and other detectives with whom I work have fielded calls
    from citizens who have received calls similar to the one Mrs. A
    did. I myself received one the day I first began investigating
    this. I feel that there are other victims who have not reported
    these crimes as they have fallen victim and may be too
    embarrassed to report it, or may be unaware that they were even
    scammed.
        I am hopeful that our public outreach will serve to
    minimize future victims of this crime. I am, however, dismayed
    that Mrs. A's large volume of money orders and prepaid card
    purchases were unchallenged by the retailers. She has been
    given little hope of recovering the remaining $11,000.
        Again, thank you for the opportunity to testify. I would be
    happy to respond to any questions.
        The Chairman. Thank you very much for your testimony and
    your effective work.
        Dr. Cadenhead, I was struck by the fact that it appears no
    one at the Rite Aid questioned your buying so many cards, and
    Detective Moore talked about that he was surprised that there
    was not more questioning by the wire transfer companies. This
    has been an issue that we have raised before in our hearings,
    that is there not a responsibility on the retailers' part to
    just question, without invading the privacy of the individual,
    but just raise some questions. Would that have been helpful in
    your case, Pastor?
        Dr. Cadenhead. Senator, I think early on, it would have
    been helpful, when I am totally covered up with angst about
    this whole thing, and this is how many Green Dot Visa cards it
    took in the course of one day to transfer $16,000 to them. You
    can only purchase five, or you could at that time only purchase
    five, load each one with $500, so you might think that--and I
    had to go back to the second--after noon, you can go back to
    the same Rite Aid again and purchase more. For four hours, you
    cannot purchase any more, but after four hours, you could.
        Even then, nobody said, ``Is there a problem?'' My bank
    did. The lady at the bank did ask me. She said, ``Dr.
    Cadenhead, is there a problem?'' I just said, no, it is
    personal business, but nobody in the Rite Aid store even
    questioned that maybe something was going on when I continually
    went in and bought five at $500 each over and over.
        The Chairman. Detective, do you think that that would have
    helped with Mrs. A's case, if someone at the wire transfer
    business had said, ``Gee, is the reason that you need this
    money, or is there something we could help you with? You seem
    distressed.''
        Mr. Moore. Yes, I do, and I simply asked her, I said, did
    anybody challenge you at any of these locations? You are buying
    multiple--and, especially when she is buying the MoneyGrams.
    She is instructed to get them all from different names, so not
    just Mrs. A, but Mrs. B, Mrs. C, Mrs. D. I think that would be
    a huge red flag to the retailer, but she was unchallenged at
    any location, Western Union or MoneyGram.
        The Chairman. That is an extraordinary detail that I did
    not know until just now, that she was using different names and
    yet going to the same retailer. I mean, talk about a red flag.
    How much bigger a red flag could you have?
        Mr. Moore. I agree.
        The Chairman. That is extraordinary.
        Another element that both cases seem to have in common is
    the use of technology to spoof the call so that it looked like
    it was a legitimate call from government. Doctor, we were
    talking before the hearing.
        Dr. Cadenhead. Correct.
        The Chairman. Could you talk a little bit about that and
    what led you to believe that it was truly the IRS calling you.
        Dr. Cadenhead. Yes. It showed a Washington area code, and I
    even asked at one point, what was the address, and this Steve
    Evans gave me the actual address of the IRS office here in
    Washington, and I would ask questions of it.
        One thing that I might add about the warning that maybe
    some retailer might give is that they are incredibly
    intimidating--not the retailer, but the phone call. They
    convince you that you need to have the phone in your pocket, do
    not say anything about the IRS. You are almost afraid they will
    ask you at that point about it because you do not know what to
    say. He is listening to the conversation in my pocket. Even if
    they had said something, I would have been very leery, at that
    early point, anyway, of saying much other than, yes, I just
    need it for personal business.
        The Chairman. Well, I am struck in hearing both cases how
    ruthless the con artists are, but also how sophisticated and
    clever they are. If this were an agency other than the IRS that
    they were pretending to be, it is doubtful that the level of
    anxiety that you would have would be quite so high. If this did
    not have the constant threats and phone calls and explicit
    instructions, and in your case, Pastor, even knowing where your
    local retail Rite Aid was----
        Dr. Cadenhead. He directed me to them. He directed me to
    every Rite Aid, told me how to get there.
        The Chairman. That is extraordinary, that kind of level of
    knowledge, and clearly, they used the threat of embarrassment,
    also, with both of the cases that we have discussed. I wonder,
    we have a lot of members present, so I am going to go on to the
    next questions, but I do want to thank you both.
        Just one final point, and that is for Detective Moore. How
    important was it that you acted so quickly on this case,
    because one of the complaints we have heard when people go to
    the FBI or try to contact the Federal Government is nothing
    happens quickly enough to get that money stopped.
        Mr. Moore. It was vital. If I had delayed at all, I would
    not have been able to recover any money. I was fortunate on
    that day that I was aware of the case that had come in over the
    weekend and that I was able to turn my full attention to it.
    Before I even had a chance to call Mrs. A, I was actually
    reading the report and I found out she had come in on her own,
    so her coming in helped tremendously, too, so I could get going
    faster.
        I spent a considerable amount of time on the phone that day
    trying to get hold of the Bank of America, because I knew that
    was my only chance to recover some of her money. I got passed
    around a lot, passed around a lot, but eventually, I got
    through to somebody who could help, and when I was speaking to
    her, she let me go because she noticed that the wire transfer
    was actively going out. The criminals were taking it as we were
    speaking, so if I had delayed, they would not have been able to
    notice that. They would not have been able to stop it, and we
    would not have been able to recover any funds, and not just
    Mrs. A's, but those two other victims in California and New
    Jersey.
        The Chairman. Thank you.
        McCaskill. I wonder, do the victims in California and New
    Jersey know that you saved their money?
        Mr. Moore. I do not know.
        Senator McCaskill. Congratulations on that.
        Mr. Moore. Thank you.
        Senator McCaskill. Dr. Cadenhead, did the criminals know
    that you were a pastor?
        Dr. Cadenhead. I have no way of knowing exactly. They very
    quickly began talking about public image, that they were
    notifying the media, and they really played that card well, and
    I do not remember telling them----
        Senator McCaskill. Yes. The interesting thing that has
    happened is that criminals have the ability now with the
    Internet to go in and find ministers or find people that have a
    public profile that might be more likely to be very concerned
    about----
        Dr. Cadenhead. Yes.
        Senator McCaskill [continuing]. something happening in the
    public media, and certainly they had done the homework to
    figure out--which is not hard, I mean, from anywhere in the
    world, you can figure out where the nearest CVS or Walgreens or
    Rite Aid is, just by the beauty of the Internet.
        Tell me what happens after you figure out that it is a scam
    and these are criminals. Other than praying for their souls,
    which they need a lot, because I do believe there is a special
    place in a bad place for people who do this, tell me about
    where you went and what you did as it relates to law
    enforcement.
        Dr. Cadenhead. I was fortunate in that the afternoon, that
    afternoon, late, I was at church with my attorney, whose
    daughter works in a firm that she works next to a person who
    was a former Assistant U.S. Attorney. She was able to give me
    some instruction about where to go, but the next morning, I
    immediately contacted the local office of the FBI and they
    instructed me to go to the Department of Treasury, that there
    was a website set up, to enter the information on that website,
    so I immediately did that, filled out the report, and beyond
    that, I did not hear anything else from anybody that day.
        Senator McCaskill. Did you eventually hear from anyone
    else?
        Dr. Cadenhead. No.
        Senator McCaskill. You have never heard from Federal law
    enforcement at all?
        Dr. Cadenhead. No. I did--I am also a writer for the
    Charlotte Observer and was to do a column that very next
    Saturday, the first Saturday after this occurred, and I called
    the editor and told him what had happened, would it be okay if
    maybe I talked about it in my column, and he said he would like
    to do more than that, that he would really like to have the
    paper cover the story, so he sent an Observer reporter out and
    it appeared on the front page of the Charlotte Observer that
    next Sunday morning.
        That got the attention of folks in Raleigh, and then I got
    a call from the Attorney General's office, from the Better
    Business Bureau, and they set up a press conference, so the
    press conference immediately got the word out and some things
    began to happen after that, but did I hear from the FBI? No,
    not that I recall.
        Senator McCaskill. Detective, you, in fact, have local
    jurisdiction for a fraud that occurs to someone who lives in
    Maine.
        Mr. Moore. That is a point in contention that we always
    come across with the prosecutors. Where did the crime actually
    occur?
        Senator McCaskill. Yes, and this is the kind of crime that
    every prosecutor wants to be someone else's jurisdiction----
        Mr. Moore. Yes.
        Senator McCaskill [continuing]. because it is incredibly
    challenging to catch these people, because they are--nine times
    out of ten, maybe 99 out of 100--the people who are actually
    talking are not in this country.
        Mr. Moore. Correct.
        Senator McCaskill. They are located in a different country,
    and that is why the Federal authorities are so important here.
        I was fascinated by the fact that this was supposed to go
    to a, was it a hotel, Days Inn in the United States?
        Mr. Moore. A Days Inn in Greenwood, South Carolina. She
    addressed that package simply to ``Andy.''
        Senator McCaskill. To Andy at Days Inn?
        Mr. Moore. Yes.
        Senator McCaskill. Did you have an opportunity, or do you
    know if anyone in Federal law enforcement had an opportunity to
    contact Days Inn and find out who Andy was, because, clearly,
    that is somebody who is on our soil.
        Mr. Moore. To my knowledge, the Treasury agent is following
    up on that.
        Senator McCaskill. Okay.
        Mr. Moore. We have not been able to talk directly, but he
    has told Mrs. A that he has agents from that area following up
    on that.
        Senator McCaskill. Well, one of the things----
        Mr. Moore. Mrs. A herself called down there and talked to
    staff and they thought they knew who that person's last name
    may be.
        Senator McCaskill. Okay, because that is a huge get----
        Mr. Moore. Yes.
        Senator McCaskill [continuing]. because once you grab one,
    then you turn the screws and all of a sudden you are talking to
    other people who are setting up these people in other countries
    who are actually making the call, so I think it is really
    important for us to keep following up with Treasury and with
    FBI about how many people have they actually arrested. Are you
    aware of any actual arrests and prosecutions that have occurred
    with the IRS scam?
        Mr. Moore. I am unaware of any.
        Senator McCaskill. Thank you.
        The Chairman. Thank you.
        Senator Tillis.
        Senator Tillis. Thank you, Madam Chairman.
        The question I had relates--well, first off, I just want to
    echo what the Chair and the Ranking Member said, that it is
    unacceptable for DOJ not to be here, because a part of what we
    need to do is figure out strategies we can use for effective
    prosecution. Hopefully, they will see the benefit of coming and
    visiting from time to time.
        My question really relates to something that is in the
    staff memo and it is the IRS numbers by State. You may not have
    seen this, but it is a stack ranking of the incidents and the
    dollar loss, and I am wondering if there are, to your
    knowledge--you may not be aware, it may be a question for the
    other panelists--if there is anything to learn from some States
    that have relatively high populations but, relatively speaking,
    lower incidents of this sort of scam, or scams in general.
    Could it be possible that the State legislatures or through
    other agencies they provide a higher level of awareness to make
    it less likely that it occurs? Are you familiar with any States
    that seem to be ahead of the game or leading the charge more?
        Mr. Moore. I am not aware of that, and Maine being a
    somewhat rural State, I think maybe the word does not get out
    as well, and so maybe these other States are more well
    informed, as you indicated.
        Senator Tillis. Yes. I think you all had about eleven
    incidents. I was just looking at North Carolina. It is
    probably--well, it is the ninth most populous State, but it is
    41, or, let me see, somewhere down in the--maybe 30th or 35th
    in incidents. I was just curious, because one thing we did in
    the legislature was a little bit more financial--I should say,
    public awareness in general, so I am just curious if there is
    something we can learn from that as a part of prevention.
        I am wondering what we do--when we talk about the
    retailers--when I think about a Rite Aid, I think about an 18-
    to 20-something kid that sees somebody coming up with five of
    these cards and they are just running them through like they
    are the deodorant or whatever else they are buying there. What
    more could we do, or do you know of anything, any collaboration
    with the issuers of these cards to really step that up and make
    people think about are you being scammed at that point of
    retail? Is that a significant point of opportunity or choke
    point for us?
        Mr. Moore. I agree with what you are saying and I think it
    comes down to a training education for the retailers, because,
    as you said, it is usually a young populous that is manning
    these and selling them, so that they should be made aware that
    some of these red flags, like Mrs. A is buying for Mrs. B and
    Mrs. C and Mrs. D, and she is buying six of them, all from a
    different name.
        I think, internally, the computer system should at least
    flag that. The scammers are aware of it. They know what dollar
    amounts not to break, so they have her get multiple ones at the
    same dollar amount.
        Senator Tillis. Detective Moore, I had a question that had
    more to do with law enforcement. With respect to training, when
    somebody picks up the phone and says that I may be scammed, do
    we have adequate training at the local level for people to take
    that seriously, and do we have any kind of tools that are in
    place or discussion of tools that could be put into place to
    make it more likely that we can track back these things,
    because the way that they are structuring it on the Internet
    makes it virtually impossible, unless you know it is a scam
    from the beginning and you can kind of take advantage of that,
    but are there any, in law enforcement circles, discussions of,
    boy, if we had these tools, we could at least get back and claw
    back of some of these?
        Mr. Moore. I am not aware of the discussions, but there is
    always room for improvement. You know, I get one of these
    cases. I am not always exactly sure of the jurisdiction, who is
    going to handle it in the end, so I just do whatever I can up
    front to identify where the crime is occurring, who the
    criminal may be, and if I can at least stop the transfer of
    money, do that, and then, from there, look out to the larger
    Federal law enforcement agencies who may have the jurisdiction.
        Senator Tillis. Okay. Madam Chairman, just a comment. I
    think it is remarkable that we could have an agency where you
    would think it would be likely that you would get that kind of
    call, so that tells me that the IRS needs to spend some time
    not making it likely that the average person gets a call,
    thinks they are talking from a heavy-handed regulator that they
    should be afraid of, that they would go to this act. I could
    see how anybody could do it. I think about my mother and other
    family members who have been subjected to it, but my mother
    does not like the IRS, so she is the one that hangs up on them,
    but it is--I mean, we really need to think about the image we
    project in these agencies so that you are afraid of a
    government agency and that would lead you--that creates the
    pretext for the scam to occur, and I think that says something
    about what we need to do a better job of in terms of projecting
    our image and more of a customer service image than a bullying
    entity.
        Dr. Cadenhead. There is one other dynamic here. We have
    been told that the scammers will also sell our numbers to other
    people, and since that day in October, I have gotten numerous
    calls from other attempts at other things, so there is a whole
    industry out there selling numbers to other scammers. It is
    amazing.
        Senator Tillis. Thank you.
        The Chairman. Thank you very much.
        Senator Kaine.
        Senator Kaine. Thank you, Madam Chairman, and thank you to
    both of you for your testimony. Dr. Cadenhead, I really
    appreciate you being willing to make an example--be an example,
    even--in a difficult circumstance that was obviously painful
    and costly to try to teach others that, hey, do not fall for
    this. That has been--it is very admirable that you have done
    that, and the local coverage and national news coverage, I am
    sure, has helped a lot of people out, so I really appreciate
    you doing that.
        Dr. Cadenhead. I hope so.
        Senator Kaine. Detective Moore, I just was kind of curious,
    when you were with your Mrs. A and she was getting the phone
    call, not having been in the kind of criminal investigations--I
    was a lawyer, but only a civil lawyer--if you were able to
    trace calls like that, would they be blocked? Would there be no
    way for somebody who is taking that call, if they think, I
    think this is definitely a scam, now what can I do to keep this
    person on the line so I can try to track them down--but, would
    that be a dead end, probably?
        Mr. Moore. Yes. I have no means to trace that call as it
    was happening.
        Senator Kaine. Mm-hmm.
        Mr. Moore. For most--a number of her calls were spoofed.
    Like, she received a call from, supposedly from my agency,
    which was a spoof----
        Senator Kaine. Yes.
        Mr. Moore [continuing]. received calls from our local
    District Attorney's office, that was a spoof, and I assume the
    number that he called from that day when I spoke to him was
    just a VOIP number, a Voice Over Internet Protocol----
        Senator Kaine. I missed the beginning of Dr. Cadenhead's
    testimony. You indicated that the material suggests a lot of
    these may be coming from India, that it was an Indian-sounding
    voice. Was that the same case for you, Dr. Cadenhead?
        Dr. Cadenhead. Yes. One of the flags for me, finally,
    earlier in the afternoon--middle afternoon when I became aware
    that it was a scam--was that when I would come back to the car,
    scratch off the numbers, give them to this Steve Evans, he
    would disappear and would say to me, ``I am transferring this
    call to one of my assistants. Please hold and let him know
    every thirty seconds that you are still on the line.'' Every
    thirty seconds, I had to say, ``Still on the line. Still on the
    line.''
        This happened several times, but everybody they transferred
    me to had an Indian accent. They all had American names. It was
    Steve and Mike and Susie, but they all had Indian accents, and
    I began to think--and the background noise, it sounds like you
    are in a cubicle and a lot of other business going on. It
    sounds just like what you might imagine at a floor of IRS
    agents.
        It began to dawn on me that after all this time, there is
    not somebody whose name is Bubba or some kind of Georgia or
    North Carolina name with a Carolina accent. They all had Indian
    accents with American names.
        Senator Kaine. Mm-hmm.
        Dr. Cadenhead. That was really one of the flags for me.
        Senator Kaine. I guess, that is all part of making it very
    difficult to enforce against someone. If this is all largely
    done overseas, that really puts a dead end up or puts blocks up
    to enforcement.
        All right. No further questions, Madam Chair.
        The Chairman. Thank you very much, Senator Kaine.
        Senator Heller.
        Senator Heller. Madam Chairwoman, thank you, and to the
    Ranking Member, for holding this hearing, especially on tax
    day. I think that makes it a little appropriate. I want to
    thank our witnesses, also----
        Dr. Cadenhead. Thank you.
        Senator Heller [continuing]. for taking time and being here
    today and sharing your experiences and your stories.
        Ranking Member McCaskill and myself are no strangers to
    marketplace scams. We served together, she as Chairwoman and I
    as Ranking Member, for the Subcommittee on the Commerce
    Committee dealing with consumer protection, so we have heard a
    lot of this and have worked together trying to get to the
    bottom of some of these things.
        The chart that Senator Tillis had that talked about the
    different States, Nevada lost nearly $300,000 recently to IRS
    impersonations, and they said they had 58 cases. My concern is
    this. We have 58 cases. For every time yourself, Doctor, comes
    forward and shares what you have done and goes to the
    authorities, there are numerous people that do not. You know,
    the 58 cases in Nevada are probably multiples of those kind of
    numbers, and I fear--do not feel alone in this. This is pretty
    large scale.
        Now, just within the last couple of months, both my father
    and my daughter were affected by similar situations, not
    specifically like yours, but fortunately, they stopped it
    before it got too far, but they are shopping.
        I guess my question, Doctor, is do you think they were
    trolling or do you think they were looking for you specifically
    in your case?
        Dr. Cadenhead. I can only guess. It appears that--keep in
    mind, this was six months ago, almost six months ago now, and
    it appeared they were a bit more specific then, but as the word
    got out, it is just my hunch that more and more people were
    willing to hang up and not follow through and it required them
    making more calls, maybe less scrutinized.
        I have received, because of the press conferences and the
    CBS coverage and some other networks, I have received letters
    and e-mails from people all over the country, and for them, the
    trigger for them was the Green Dot Visa card. When the scammers
    started talking about Green Dot, then they remembered the
    article or the news broadcast, and for some reason, that woke
    them up to the fact that this was a scam.
        I really think, now, they are just calling
    indiscriminately. It is just a ramped up number, trying to get
    their business back up.
        The reason I ask that question is if I were looking through
    the phone book for someone that was awfully trusting, I would
    think a senior pastor may meet that qualification. Do you know
    of others that are in the same field as yourself that have had
    similar issues, problems, questions, phone calls, concerns?
        Dr. Cadenhead. After I came forward publicly and it was
    covered in the paper, there have been several local ministers
    who said to me they had gotten the same call since that
    article----
        Senator Heller. Yes.
        Dr. Cadenhead [continuing]. and knew to hang up.
        Senator Heller. I would anticipate that they would think
    you were pretty trusting individuals of your fellow human
    beings.
        Dr. Cadenhead. Public image is pretty important.
        Senator Heller. Yes, and that makes sense, also.
        You know, I regulated the securities industry in Nevada for
    12 years and did all the research, background checks for all
    the securities fraud that was occurring in the State at that
    time and some of the stories are horrifying, of individuals who
    have a retirement account, they are in their 60's, 70's, and
    even 80's, losing this kind of money to similar types of scams,
    and the most difficult part is the restitution portion of it.
    Detective Moore, you talked about it. What is your experience?
    What has been your experience in restitution, the ability to
    get somebody's money back in similar cases like the Doctor's?
        Mr. Moore. Pretty much nonexistent. This is the only case I
    can think of where I was able to recover money.
        Senator Heller. Okay. Give me some background, Detective.
    How many cases have you had that are similar to this? You have
    been doing this, what, since 2006?
        Mr. Moore. As a detective, yes.
        Senator Heller. Okay.
        Mr. Moore. At patrol level, they handle those same calls,
    and if they reach a level where they can no longer handle it,
    it gets passed on, or if it is a larger scale.
        Senator Heller. Can you give me some kind of an idea how
    many cases like this you have dealt with?
        Mr. Moore. Personally, I cannot come up with a hard and
    fast number.
        Senator Heller. That is fine. That is fine.
        Mr. Moore. Probably just a handful, but----
        Senator Heller. In your office. In your office, I assume
    there are multiple detectives.
        Mr. Moore. Yes, and I would say we probably get at least
    one a month.
        Senator Heller. One a month.
        Mr. Moore. Of varying, different scams.
        Senator Heller. Right. Right.
        Mr. Moore. I dealt with one not too long ago involving
    Green Dots where a restaurant was called and the caller,
    pretending to be Central Maine Power Company and saying, if you
    do not pay by five today, we are going to shut your power off,
    and they just happened to get hold of the owner's mother. She
    unknowingly got a Green Dot card and paid it out, and I had--
    the only thing I had to followup on was a phone number. That
    went nowhere.
        Senator Heller. Again, share your experience with
    restitution in most of these cases.
        Mr. Moore. Slim to none. Outside of this case we are
    talking about today, I have never gotten money back from a
    scammer.
        Senator Heller. Madam Chairman, no further questions.
        The Chairman. Thank you very much.
        Senator Gillibrand.
        Senator Gillibrand. Thank you, Madam Chairwoman.
        I am very grateful for both of your testimony here today. I
    have had roundtables all across New York State on this very
    issue where I have met with seniors about how they have been
    targeted. They have been targeted on the phone. They have been
    targeted on the Internet. They have been targeted through the
    mail, and the experiences are all similar in that they are
    pressured, they are confused, they are made to have to make
    decisions quickly without the benefit of children or advisors,
    and the reality is, is our seniors have a trillion dollars of
    assets and so they are just a very ripe target for criminals.
        What I would like from you, Detective, what can law
    enforcement do and advocacy organizations do better to inform
    seniors of how to protect themselves? In some of the
    roundtables I had, it was the first time seniors actually had
    someone come in and tell them, these are the things to look out
    for. These are the things that we have known have already
    happened in this community, and they are very grateful to get
    phone numbers and someone to call to verify if something is
    true or not. What has your experience been in trying to advise
    seniors of how they may be targeted in the future?
        Mr. Moore. Well, it is important, as you say, to get the
    word out. Some people do not want to believe they are in a
    scam, and no matter how much you show them and tell them that
    the evidence is that they are in a scam, they do not want to
    believe it, but it is really important just to get the word
    out. We have taken to social media. I have posted on my
    personal social media page, and as I field calls from people
    who are getting these same voice mails at home, I tell them it
    is a scam. Tell everybody you know that it is a scam. If it is
    truly the IRS, hang up and call back to verify. They will not
    object. A scammer will adamantly object every time.
        Senator Gillibrand. Do you have any thoughts about how
    victims are targeted? I know in some of the examples in New
    York State, the criminals knew the names of the person's
    children, and so they might call--or grandchildren--and might
    call their grandmother and say, oh, ``I am in school. I am in a
    lot of trouble. Can you wire $2,000 immediately? If I do not
    get this money, I am going to--'' and, of course, the
    grandmother responds immediately. Have you had a sense of how
    sophisticated some of these criminals have been in terms of
    researching their victims in advance?
        Mr. Moore. I have not personally dealt with any of that
    level of sophistication. I have heard of similar scams to that.
        Senator Gillibrand. Mm-hmm.
        Mr. Moore. The one with Mrs. A here, I believe she was just
    a victim of trolling. I think they are just calling numbers and
    wait and see----
        Senator Gillibrand. Try to get one.
        Mr. Moore [continuing]. who calls back.
        Senator Gillibrand. Mm-hmm.
        Mr. Moore. I did not get the impression they had any prior
    knowledge of her name or demographics or anything. The voice
    mail she received was generic. It did not address her, anything
    about her family. It simply stated, ``This is the IRS. You are
    being sued. Call us back.''
        Senator Gillibrand. Doctor, did you ever have any
    conversations or information from your church community, from
    your local community about how seniors had been targeted in
    your community? Had you ever had any notion that this could
    happen to you?
        Dr. Cadenhead. Well, I have had several who talked about
    the same kind of scenario you just mentioned----
        Senator Gillibrand. Mm-hmm.
        Dr. Cadenhead [continuing]. where they were contacted by
    someone who knew their name and also knew their grandson's
    name----
        Senator Gillibrand. Right.
        Dr. Cadenhead. This has happened three or four times with
    people in our congregation, that they were in trouble and that
    they needed them to----
        Senator Gillibrand. Send money.
        Dr. Cadenhead [continuing]. send some money.
        Senator Gillibrand. Yes.
        Dr. Cadenhead. In fact, it happened to my own father in
    Georgia----
        Senator Gillibrand. Yes.
        Dr. Cadenhead [continuing]. same thing exactly.
        Senator Gillibrand. When your congregation talked about it,
    was it a service that your church was providing, or did it just
    come up in social conversation?
        Dr. Cadenhead. Social conversations, and of course, after
    October, I became the target for everybody's latest information
    on any scam going on, so it became sort of a topic, a fairly
    public topic after that.
        Senator Gillibrand. Do you think communities would receive
    outreach from either law enforcement or church communities or
    community centers to begin to have classes on how you could be
    targeted, things to be careful of, how to respond to a caller
    asking for your bank account number, you know, all the
    scenarios that happen every day? What do you think the most
    effective medium would be, for you personally or for the people
    you know well, to get that information out to them in a
    friendly and approachable way?
        Dr. Cadenhead. Well, people get their news in different
    ways now. Younger generations really do not always read
    newspapers, but older generations do. I think any information
    that can be passed along----
        Senator Gillibrand. The newspaper might be a good venue.
        Dr. Cadenhead. Absolutely, and television. Most everybody
    still watches television. I think any way that you can get the
    word out. The way we get our news is different depending on the
    generation.
        Senator Gillibrand. Right. Detective, what is your
    experience in that? What would you recommend if we were to
    create an avenue or a grant program or something that people
    could apply for funding? What would you recommend for the
    victims that you have helped?
        Mr. Moore. Any way to get the information out is helpful. I
    am not sure how my victim could have been addressed in advance,
    maybe through--maybe banks could provide pamphlets, but any
    kind of information, newspaper, television, so that people know
    what to expect, what the signs are that this is a scam and
    should hang up and call law enforcement, the police, to verify.
        Senator Gillibrand. Mm-hmm.
        Dr. Cadenhead. I might add, too, that in most cities, the
    Better Business Bureau is ready to provide that kind of help.
    In Charlotte, they have an entire clinic they can perform for
    you, and a local congregation would be a great place for that
    to occur.
        Senator Gillibrand. Yes. Maybe we could work through that,
    Madam Chairwoman, and find ways to get information out.
        The Chairman. Thank you.
        Senator Gillibrand. Thank you.
        The Chairman. Thank you.
        Senator Perdue.
        Senator Perdue. Thank you. First of all, thank you both for
    being here----
        Dr. Cadenhead. Thank you.
        Senator Perdue [continuing]. and Detective, thank you for
    your specific effort here.
        I just have a couple questions of the Detective. Dr.
    Cadenhead, I am from Georgia, but I have spent a lot of time in
    Auburn-Lewiston, so I appreciate what you are doing up there.
    They did not call me Bubba when I was a kid, though.
        I have a generic question. This is going to be very
    difficult, but I want to get your personal feelings on it. I
    mean, we know this is a difficult crime to measure because a
    lot of people do not report it. In your community and your
    experience, do you have any feel for what percentage of these
    crimes go unreported?
        Mr. Moore. I could not estimate how many go unreported, but
    in dealing with my victim, Mrs. A, I get the impression if it
    was not for the substantial amount of money, she may not have
    reported herself. I mean, she is just so embarrassed and
    mortified by this, and I get the impression of people even
    losing a few hundred dollars or even a few thousand may not
    report it.
        Senator Perdue. Right.
        Mr. Moore. Some of them may not even know. They may think
    that is how the IRS works these days.
        Senator Perdue. Dr. Cadenhead, in your congregation, do you
    have a feel for that?
        Dr. Cadenhead. Well, I think--I can only guess. I have no
    way of verifying it, but my guess is there are as many out
    there who have not reported it as those who have. I know how
    difficult it was for me to become open and public about this,
    and the only reason my wife and I agreed was that it might be
    of some help to other folks, but it was a difficult decision to
    make because it is very embarrassing.
        Senator Perdue. Yes, sir.
        Detective, you know, a lot of these calls come into the
    local authorities or maybe the State authorities or whatever.
    What kind of training would you see would be fruitful to help
    these first-line service people help a potential victim or an,
    indeed, victim?
        Mr. Moore. Something as simple as maybe a checklist on who
    can assist--what agency can assist us with this. Like, I have
    no means to trace a lot of this, so to know who I can reach out
    to, and I turned to the Internet myself and that is how I came
    across the number for Treasury to report this, and I filled out
    the form on behalf of Mrs. A and they were very responsive.
    They got back to her the next day, but oftentimes, I am not
    exactly sure which agency to turn to for assistance.
        Senator Perdue. Did you seek Federal or State help in any
    of those cases that you have dealt with?
        Mr. Moore. Yes, whenever I can.
        Senator Perdue. What kind of responses did you get?
        Mr. Moore. This one, in particular, was--I filled it out
    and I provided her information and they got back to her the
    very next day, which I was very impressed with.
        Senator Perdue. And that helped you in this case,
    obviously.
        Mr. Moore. Yes. In the past, I have called the FBI and gave
    them, you know, this is what is going on, it is widespread scam
    we are dealing with. They took the information and I never
    heard anything again, so I do not know what they did beyond
    that.
        Senator Perdue. You both are very knowledgeable about this,
    obviously, from personal experience and helping the victims,
    but is there any sense in your mind that there are networks
    perpetrating this, or are these individuals, or do you have any
    sense of that in your experiences?
        Mr. Moore. Based on the way they pass the calls around to
    multiple people, it has got to be at least a small network. I
    could not estimate how large. I mean, they could be separate
    cells working. I mean, it could be a separate cell that called
    Dr. Cadenhead as opposed to called my victim, or it could be
    just one big network.
        Dr. Cadenhead. Because of the number of calls being made
    and the wide area over which those calls are being received, it
    has to be a network. There is no way any small group can make
    it happen, and all the calls, whether it is Steve or her or him
    or whoever the person might be, they are so similar. I mean,
    they are working for a script and they have a response for
    every question that you might raise. They can answer it and
    tell you exactly why you should not do this or should do that.
    They constantly talk about protocol. Do not break protocol,
    they will tell you, or else we will file the warrant.
        Senator Perdue. Detective, I saw in your story they try to
    keep them on the phone while they are going through this
    perpetration of fraud, is that right?
        Mr. Moore. Yes, and that is the same thing that happened to
    Dr. Cadenhead that happened to my victim. Stay on the phone. Do
    not hang up. You know, when my victim lost connection due to
    the poor cell service at Walmart, they assumed she was hanging
    up on them, and that is when they spoofed the police
    department's number and called her back and said, ``You are
    going to be arrested if you hang up again.''
        Dr. Cadenhead. Within the first thirty seconds--no, within
    the first three minutes, he told me, ``If you have a charger
    for your phone, go ahead and plug it in because you are going
    to need it today.''
        Senator Perdue. Really.
        Dr. Cadenhead. He said, ``If your phone goes dead, we are
    filing the warrant.''
        Senator Perdue. How long were you on the phone?
        Dr. Cadenhead. Six-and-a-half hours.
        Senator Perdue. One last question. What can we do at the
    Federal level in your mind, Detective, and if either of you
    have a thought, I would welcome it. I am about out of time, but
    what can we do in terms of helping the local--you are the front
    line officer. You are going to get the call more than anybody
    else. What can we do to help you?
        Mr. Moore. Just knowledge about who we can contact for
    assistance, what assistance is available, and what the best
    protocols for responding to these are.
        Senator Perdue. Do you have any suggestions?
        Dr. Cadenhead. I think there are going to always be
    scammers. It is always going to happen, but I think the more
    you can publicize this kind of thing to get the word out,
    educate people, I think that is the other half of it, and it is
    just as important.
        Senator Perdue. Thank you both. Thank you.
        The Chairman. Thank you very much.
        I want to thank both of our witnesses on this first panel.
    You have added enormously to our understanding of the problem
    by giving us both the consumer perspective and the local law
    enforcement perspective. Thank you so much for coming to the
    hearing today.
        Dr. Cadenhead. Thank you.
        The Chairman. I am now going to call forth our second
    panel, Commissioner Brill and Special Agent Erichs.
        Commissioner Brill, if you could proceed with your
    testimony, please.

                STATEMENT OF JULIE BRILL, COMMISSIONER,
                        FEDERAL TRADE COMMISSION

        Ms. Brill. Good afternoon, Chairman Collins, Ranking Member
    McCaskill, and other members of the Special Committee. I am
    Julie Brill, a Commissioner at the Federal Trade Commission.
    Thank you so much for inviting me to speak with you about the
    serious problem of IRS impostor scams. I am pleased to have the
    opportunity to discuss with you some of the FTC's efforts to
    help consumers avoid these scams.
        The powerful stories that the witnesses on the first panel
    shared with you describe the MO that IRS impostors and other
    government impostor scam artists have developed and employ
    widely. Many consumers would be terrified to receive the kind
    of call that Dr. Cadenhead or Mrs. A received, and
    unfortunately, this sense of terror only feeds into a scam that
    too often succeeds.
        As we heard, an IRS impostor catches a consumer off-guard
    with an unexpected phone call. The impostor often knows
    personal details, such as the consumer's name, her address and
    Social Security number, which convinces her that the call is
    real. The impostor tells a plausible story about how the
    consumer owes thousands of dollars in back taxes. He then--the
    impostor then threatens the consumer with a combination of dire
    consequences: Arrest, prosecution, deportation, or revocation
    of the driver's license that might be key to her independence.
    Then, the final hook. The consumer can avoid all of these
    problems with a simple but painful solution: Send money through
    a wire transfer or preloaded debit card immediately.
        Consumers who are targeted by these scams might believe
    that they are not behind in paying their taxes, but they might
    also think that maybe they made a mistake and that they will be
    better off paying the amount of overdue taxes in order to make
    these problems go away. Dr. Cadenhead described vividly how
    impostors put these elements together, and I thank him, just as
    you all did, I thank him very much for coming forward to shed
    light on how these scams work so convincingly.
        Dr. Cadenhead's experience is far from unique. This
    pernicious scam is growing rapidly. In 2013, the FTC received
    just over 2,000 complaints about IRS impostor scams. In 2014,
    the FTC received over 52,000 complaints about these scams. If
    the trends that we are seeing so far this year continue, we
    will reach nearly 90,000 IRS impostor scam complaints by the
    end of 2015.
        While IRS impostors target many consumers, older Americans
    are particularly vulnerable to them. Seniors often share
    sensitive personal information, including their Social Security
    numbers, with a wide range of family members and service
    providers, including lawyers, accountants, financial advisors,
    and health care professionals. In many instances, seniors have
    accumulated assets that make them attractive targets to
    fraudsters, and some seniors may have diminished mental
    capacity and may not see the signs of fraud when it is in
    progress or once it is complete.
        The FTC plays a leading role within the Federal Government
    in educating consumers about IRS impostor scams as well as
    assisting consumers who have fallen victim to one of these
    scams, and luckily, it is possible to educate consumers about
    how to avoid these scams, so consumer outreach is crucial.
        As we say in our consumer education materials--and can you
    go to the first slide, please? Thank you so much. This is from
    our--this information, by the way, is on our website. We
    welcome any of you to link to it on your websites, but this is
    an informational poster that we have. What we tell consumers is
    that the IRS's first contact with you will not be by phone or
    e-mail. The IRS will first contact you by mail only, and the
    IRS will not ask you to pay back taxes with a prepaid debit
    card or money transfer, just as we heard earlier today, so we
    tell consumers that if you receive a call or e-mail that
    appears to be from the IRS and they ask you to wire money or
    send a prepaid debit card, it is a scam.
        We also provide tips to consumers who do receive these
    calls. Could we go to the next slide? Thank you. Do not give
    the caller any personal information. Write down the name and
    number of the caller. Hang up. Contact the IRS directly. Report
    the call by filing a complaint with the Treasury Inspector
    General for Tax Administration, as well as with the FTC. Warn
    family and friends.
        IRS impostor scams are serious crimes and need to be
    prosecuted as such, just as you mentioned, Madam Chairman. As a
    civil law enforcement and consumer education agency, we at the
    FTC also think there is an important role here for consumer
    education, because we can teach consumers how to avoid these
    scams in the first instance.
        I look forward to discussing these critical issues with you
    today and to continuing to work with you on them in the future.
    Thank you.
        The Chairman. Thank you very much, Commissioner, for your
    testimony.
        We are now going to pause for just a moment of silence in
    honor of the victims of the Boston Marathon bombings. The exact
    time is 2:49. We are very close to that time, and it seems
    appropriate for us to just pause for a moment of silence right
    now.
        [A moment of silence was observed.]
        Thank you. As one who has a friend whose son was severely
    hurt in that bombing, I thought it was important that we
    commemorate the day.
        We will now hear from Special Agent Erichs. Please proceed.

              STATEMENT OF ALYSA D. ERICHS, SPECIAL AGENT

           IN CHARGE, HOMELAND SECURITY INVESTIGATIONS MIAMI,

             U.S. IMMIGRATION AND CUSTOMS ENFORCEMENT, U.S.

                    DEPARTMENT OF HOMELAND SECURITY

        Ms. Erichs. Chairman Collins, Ranking Member McCaskill, and
    distinguished members, on behalf of Secretary Johnson and
    Director Saldana, thank you for the opportunity to discuss
    ICE's efforts to combat cross-border financial crimes,
    including consumer fraud scams.
        Homeland Security Investigations, or HSI, is the
    investigative arm of ICE and conducts criminal investigations
    to protect the United States against terrorism and other
    criminal activity that threaten public safety and national
    security and to bring to justice those seeking to exploit our
    customs and immigration laws worldwide. In its investigative
    capacity, HSI enforces more than 400 Federal laws and
    regulations, with jurisdiction over investigations of crimes
    with a nexus to the U.S. border.
        As you know, there are many fraud schemes, such as tax
    fraud schemes, bogus lottery and sweepstakes schemes, phony
    investment pitches, and business opportunities, and others
    which are growing increasingly sophisticated and international
    in scope. Perpetrators will victimize consumers of all ages,
    backgrounds, and income levels, but the elderly are
    disproportionately targeted.
        I understand the Committee is particularly interested in
    the scenario where the perpetrator impersonates an individual
    of legal authority over the phone, such as an IRS agent,
    attempting to collect a tax or a fee that the victim allegedly
    owes to the government. The scammer claims the tax or fee must
    be paid immediately or a warrant will be issued for the
    victim's arrest. Or, more urgently, the warrant has been issued
    and will be served following the call if the victim does not
    pay the amount requested immediately.
        HSI investigates this and several other types of fraud
    schemes, as well. One of the most common types of telemarketing
    fraud is the lottery or sweepstakes scam. These schemes
    typically involve fraudulent telemarketers identifying
    themselves as a lawyer, customs official, or lottery company
    representative to a potential victim.
        In a typical fraud scenario, potential victims are led to
    believe that they have won an international multi-million-
    dollar sweepstakes. The scammers tell the victims that in order
    to receive their winnings, they will need to pay an advance
    fee. The fee is usually described as a tax, insurance payment,
    or customs duty that must be paid to release the winnings. The
    victims are instructed to send the funds via mail, courier,
    wire transfer, or prepaid card. The winnings are invariably
    nonexistent and the scammers steal the victims' money.
        Most of these scammers are articulate and can involve a
    variety of partners to defraud the victim over the course of a
    period of time, a strategy that serves to increase the
    complexity of the matter and leads to a greater credibility to
    the scheme itself. Scammers have also been known to repeatedly
    bombard their victims with nonstop calls, even employing verbal
    abuse, to coerce the victims to comply. Intimidated, confused,
    and exhausted, victims yield to the scammers' demands.
        I would like to take a few minutes to walk the Committee
    members through this one particular type of scam. HSI, along
    with several of the law enforcement agencies, have been
    investigating a growing and pervasive scam where scammers,
    frequently operating overseas, will contact American victims,
    pretending to work for government agencies like the IRS and
    others, and they will falsely and fraudulently tell victims
    that they have a tax lien or have committed some crime and must
    pay a fine.
        We have also seen scammers call individuals and claim to
    work for a local Attorney General's office. The scammer tells
    the victim that he or she will be charged with fraud, but that
    the victim could pay a sum of money to avoid being charged.
    Victims will agree to pay all or part of the money demanded,
    and then the scammers instruct them to purchase a third-party
    money transfer card and later provide scammers with the
    information from that card.
        At that point, the scammers will have the information they
    need to collect the fraudulent proceeds. The money is then
    frequently transferred onto a loaded prepaid debit card which
    can be used to purchase money orders at a variety of reputable
    establishments. Those money orders can then be ultimately
    deposited into bank accounts that scammers control.
        In one case, scammers stated that they purchased
    approximately $5,000 in money orders each day, six days a week.
    Over the course of nine months, our investigators estimated
    these scammers facilitated the transfer of $900,000 from
    victims to scammers operating overseas.
        Outreach and education are critical components in
    addressing telemarketing fraud. For example, the HSI
    Cornerstone Outreach Program Initiative was launched in July
    2003 and has grown into a robust, unparalleled financial
    outreach program. The success of the program is due in large
    part to the personalized collaboration with financial industry
    partners, sharing red flag indicators relating to consumer
    fraud activity. Bringing together the expertise from government
    and non-government is the core of the Cornerstone program in
    addressing financial vulnerabilities exploited by trans-
    national criminal organizations.
        Thank you again for the opportunity to appear before you
    today. ICE looks forward to working with the Committee to
    reduce the potential for these criminals to harm our senior
    citizens.
        I would be pleased to address any questions that you have
    at this time.
        The Chairman. Thank you very much for your testimony.
        I have to say that when we found out that only three people
    in the United States appeared to have been prosecuted for these
    IRS impostor schemes, that I did not expect that ICE,
    Immigration and Customs Enforcement at the Department of
    Homeland Security, would be involved. Could you explain the
    involvement of DHS in these cases? Are you only involved if
    there is an overseas nexus, or how do you get involved? I do
    not think the average consumer or victim would think that ICE
    would be a place to go to get help.
        Ms. Erichs. Thank you, Madam Chairman. Yes, ICE is in a
    unique position because, as I had mentioned in my testimony, we
    enforce over 400 Federal statutes. With that, we also have a
    significant presence internationally. We have 63 offices in 46
    countries, and with our agency with the nexus to the U.S.
    border, we do investigate those crimes that have a nexus to the
    border.
        In this case, it is money that is leaving the United
    States. It may be leaving the United States in the form of
    cash. It may be leaving the United States in the form of
    prepaid cards or wire transfers. We also have the authority to
    investigate money laundering investigations domestically under
    Title 18, which is shared authority with other agencies, as
    well.
        We do feel that we are in a unique position to address this
    crime because of our overseas presence.
        The Chairman. How did the case that you successfully
    prosecuted come to the attention of ICE? Walk us through what
    happened.
        Ms. Erichs. Yes, ma'am. The case came to us--it was
    actually referred to us from our U.S. Attorney's Office. The
    U.S. Attorney contacted us and told us of a victim who had
    indicated that he was contacted by somebody claiming to be from
    the U.S. Miami Attorney General's Office, obviously, sort of a
    blend of the U.S. Attorney's Office and the State Attorney's
    Office. That victim was told that he had to pay $750 or he was
    going to be charged with fraud.
        The victim was able to at least say, I will make a good
    faith payment to hold it over while I look into the matter and
    agreed to pay $150. The victim was instructed to go purchase a
    prepaid care--a MoneyPak, excuse me--and load the MoneyPak with
    the money. Obviously, after that time, we were contacted and
    were able to get involved in the case, again, through the
    referral from the U.S. Attorney's Office.
        In that particular instance, this victim was out of State.
    It was not within the Miami area of responsibility, but being
    able to determine through law enforcement efforts that the
    MoneyPak and the prepaid card associated with then loading of
    those funds was negotiated within the Miami AOR. We went to one
    of the stores where some of the transactions took place, had
    investigators go out and check it out and spoke with their loss
    prevention folks. Again, a lot of these, as indicated earlier,
    these are reputable businesses that are selling products that
    the general public does use, but are being, in this case,
    exploited by criminals.
        We actually have an Organized Crime Retail Task Force
    within HSI Miami where we partner with the retailers in our
    area, and again, we do conduct outreach on a number of things,
    including boosters and theft, but also that these products, and
    the vulnerabilities that exist in the use of these products, or
    the misuse of these products.
        They dealt with the local loss prevention person and that
    person was able to provide us with video. We subsequently were
    able to identify the folks, because, low and behold, the next
    day they came back and tried to negotiate another prepaid card,
    conducted a traffic stop, identified them, and from that point
    then used a variety of law enforcement methods to trace their
    habit, what they were doing, how they were moving the money and
    the cards, et cetera, until, ultimately, they were arrested and
    charged with the crime.
        One interesting point of this is to show again, and I know
    it was mentioned earlier, how far they are willing to go. At
    one point during this case, in cooperation with Green Dot, we
    actually were able to receive information on the Green Dot
    cards very quickly which was able to assist us in this
    particular case, but we actually approached the targets and
    inquired whether or not they knew whose name the cards were
    held in and whether they were, in fact, that person, and
    whether they, in fact, knew that you are not supposed to
    negotiate a card that is not yours, and they put someone else
    on the phone to speak to us, posing as the cardholder, to try
    to convince us that this was a legitimate transaction that
    should be used.
        What we are seeing in this case is very typical. It is a
    layering process. It is a layering process of taking someone's
    money initially and loading it into, either from a MoneyPak,
    which, thankfully, no longer exists through Green Dot, and then
    loading it onto prepaid cards, and then loading it onto another
    prepaid card, and then purchasing money orders. It is a
    layering process to further distance themselves from the
    victim, from attempting to find the trace--for law enforcement
    to trace to them.
        The Chairman. Thank you.
        Commissioner Brill, you mentioned the number of complaints
    that you have been receiving has soared, and I have a chart on
    complaints by month, consumer complaints. I am not sure if
    these are all IRS impostor scams or whether it is scams in
    general, but for March of this year, just last month, it shows
    more than 8,000 complaints, which if you annualize it, it is
    96,000 complaints.
        What do you do when you get these individual complaints?
        Ms. Brill. Thank you. We run the National Consumer Data
    base, which is known as Consumer Sentinel, and all of these
    complaints are placed into our data base. Two-thousand law
    enforcement agencies at the Federal, State, and local level, as
    well as some of our international partners, have confidential
    access to this data base, and what we can do, we spot trends
    and that allows us to begin consumer education efforts, as we
    have done vigorously in this instance with respect to IRS
    impostor scams, but it also allows the local and State and
    other Federal criminal law enforcement agencies to figure out
    where the trends are and to proceed.
        As you said yourself, Senator Collins, Chairman Collins, I
    believe, just as you believe, that there are two solutions to
    this problem, consumer education and putting them in jail.
    Those are the two solutions.
        We do not have criminal authority, so our job is the
    consumer education side and the data base and the data trend
    side.
        The Chairman. Thank you. I guess I would just say that I
    worry a little bit that consumers think when they file a
    complaint with you that that triggers a law enforcement
    response, and I have a feeling Senator McCaskill will get into
    this in more detail----
        Senator McCaskill. I am going to.
        The Chairman [continuing]. so I am going to yield to her.
        Senator McCaskill. The two people that have been arrested
    in Florida, is that your case?
        Ms. Erichs. It is a case from my office.
        Senator McCaskill. You are it. You have done it. You are
    the only one in the whole freaking country that has pulled this
    off?
        Ms. Erichs. We have very--we have numerous cases like this,
    but----
        Senator McCaskill. Let me interrupt you, because here is
    what I am really frustrated about. We have got Treasury IG----
        Ms. Erichs. Mm-hmm.
        Senator McCaskill [continuing]. got a website, file a
    complaint on a website. We have got the FTC. You can file a
    complaint and you do a data base. We have got the Department of
    Justice who is AWOL today. We have no idea what they are doing
    or if they care. We have ICE. I cannot figure out why ICE has
    jurisdiction here, criminal jurisdiction on these cases. It is
    surprising to me, too. We have Treasury, and then we have State
    and local prosecutors.
        It appears to me that this is all this and no one is doing
    a comprehensive effort to get everybody in the room. I mean, if
    these people were moving crack cocaine or heroin, we would have
    inter-jurisdictional task forces immediately. I mean, inter-
    jurisdictional task forces are a bread and butter in law
    enforcement because people move across State lines. People move
    products internationally, and this is exactly what these cases
    are. These are networks of criminals that are working
    domestically. They are working internationally. They are moving
    money. It takes technical expertise.
        The notion that it is not a local jurisdiction--sure, there
    is local jurisdiction. You can make local jurisdiction on these
    cases because part of the crime is committed locally. You can
    make Federal jurisdiction on these crimes, and obviously,
    somehow, we are finding jurisdiction in all these agencies.
        Now, I am kind of yelling at you guys and you are not the
    ones to yell at, but who should I be yelling at that no one
    appears to be making this a priority? Thousands and thousands
    of people are being ripped off and we are good enough in
    America to catch these guys and we are not catching them,
    because I think, frankly, Special Agent, you have decided to do
    a good job on this and you just decided you were going to keep
    pulling that thread until you got a live one, but I do not
    think there are very many of you. You may be the only one that
    has actually cared enough to try to pull the thread and arrest
    people.
        Can you guys explain to me why there is not someone that we
    can hold accountable for the fact that these people, this
    pastor who made a complaint, and all this money is disappearing
    and it does not appear that, writ large, law enforcement in
    this country cares much.
        Ms. Erichs. May I respond to this?
        Senator McCaskill. Absolutely.
        Ms. Erichs. I just would like to be clear and go back if
    I--I do not think I said it earlier, that TIGTA did participate
    in the investigation with us, so they were very much involved
    in the success of that particular case that I had mentioned.
        I would also like to clarify that that is just one type of
    scam. What we are looking at is they can call and represent
    themselves to be anything. Again, it could be an IRS agent. It
    could be a U.S. Attorney's Office official. It could be a
    Customs official. It could be a lottery sweepstakes winner. It
    is just the idea itself of that contacting folks by phone and
    telling them that they need to pay money to either collect
    their winnings or avoid being charged is the underlying
    principle here that we need to address, number one, especially
    mainly through outreach and education to stop the money from
    ever going.
        What we do is we are in the business of trying to either
    stop that money at any point before it leaves the United States
    and gets into their hands, and there are multiple opportunities
    for us to do that, and again, we do have the unique authority
    to do that, but we do partner with many Federal, State, and
    local agencies in order to do that----
        Senator McCaskill. Well, then why have we not arrested
    anybody?
        Ms. Erichs. We have actually had a significant number of
    arrests. We have initiated----
        Senator McCaskill. On these IRS scams?
        Ms. Erichs. Well, that is what I am saying. It is a new--it
    is a newer scam, but----
        Senator McCaskill. It is not. It has been around since
    2013. That is like saying heroin is coming across the border
    and we are going to wait two years before we lock anybody up.
        Ms. Erichs. It is also--well, it is one that can develop
    from another ongoing scam, so they may say they are a lottery
    sweepstakes winner, and then the next thing you know, the IRS
    is calling them to pay the taxes on their lottery winnings, so
    we see sometimes a development of these cases where they will
    go into it.
        We have initiated a task force in Miami, in the Miami area,
    to make an operations link to telemarketing, but mainly we are
    doing this is because what we are seeing is that the
    organizations are overseas and the money is eventually going
    overseas. You do have domestic cells. You do have anywhere from
    your smaller group----
        Senator McCaskill. Right.
        Ms. Erichs [continuing]. of operators to a larger group of
    operators, but our goal is to get the biggest fish possible,
    and again, in this case, we were fortunate enough that we were
    able to act on it. We also try to, even before we are notified
    of a crime, if we along with our partners at U.S. Postal
    Inspection Service do----
        Senator McCaskill. I forgot Postal. Postal is in this, too.
        Ms. Erichs. Yes.
        Senator McCaskill. That is another one.
        Ms. Erichs. If we do currency operations, we can try to
    detect outbound currency going to Jamaica by flight, by cruise
    ship, through the mail, express mail----
        Senator McCaskill. How many task forces like the one in
    Miami exist in the country?
        Ms. Erichs. I would have to get back to you with an exact
    number from each office.
        Senator McCaskill. I would like to know that. I would like
    to know how many inter-jurisdictional task forces there are on
    these scams, and this is the number one scam for IRS in the
    country and----
        The Chairman. In its history.
        Senator McCaskill. In its history, and this is a powerful
    scam, and there is a reason it is so effective, is people are
    scared to death of the IRS, so I want to know how many inter-
    jurisdictional task forces there are out there and why this is
    not gelling more quickly within the law enforcement community,
    and, unfortunately, you are really the only one in law
    enforcement that I can get my hands on right now, but believe
    me, I am going to keep trying, because this is really pretty
    outrageous that we do not have more of a clarion call within
    law enforcement to make this a priority.
        Thank you, Madam Chairman.
        The Chairman. Thank you very much.
        Commissioner, did you want to add anything?
        Ms. Brill. I agree that this is a terrible scourge and I
    applaud your continuing effort in this area. We have seen
    impostor scams that are a little bit broader than just IRS.
    There are cases where the scam artists pretend to be from the
    Department of Justice, as you mentioned. We filed one case
    where a company--an entity claimed that they had an affiliation
    with the Federal Debt Commission--it does not exist--the
    Federal Mortgage Marketplace, Federal Enrollment Center,
    Federal Assistance Program, Federal Modification Assistance,
    and Federal Mortgage Counseling. We see a lot of this,
    particularly with respect to mortgage assistance and credit
    repair. It is a real problem.
        The IRS impostor scams have this extra layer, as we have
    all been talking about, that really frightens consumers, and I
    just applaud your continuing efforts here.
        The Chairman. What I want to make very clear, as I
    associate my comments with my colleague's, is that it is so
    frustrating for the average consumer, the average victim. Once
    they realize that they have been a victim, they do not know
    where to go. Thank goodness, my constituent went to her local
    police department, and thank goodness she ran into Detective
    Moore, who really cared enough to instantly go after it and was
    able to halt part of the wire transfer, but from what I heard
    from the Pastor today, he still has not heard back from anyone
    in Federal law enforcement who is going after anybody to try to
    get his money back.
        I think that you cannot--most people have not heard of
    TIGTA. I mean, TIGTA, the Treasury Inspector General for Tax
    Administration--that does not come trippingly off the mouths
    of--out of the mouths of most of my constituents or
    constituents throughout America.
        Senator McCaskill. Or Senators.
        The Chairman. Most Senators, even, yes. In fact, I bet if
    we did a survey----
        Senator McCaskill. Nobody would know what it is.
        The Chairman [continuing]. nobody would know what it was,
    and would not know to go there, so I think the educational
    campaign needs to be broadened beyond prevention to say, what
    do you do if you think you are a victim.
        I, too--I am so impressed that Special Agent in Charge
    Erichs went after these individuals, and I was amazed that ICE
    did that kind of thing, and I thought I knew a fair amount
    about ICE, but again, that is not who you would expect.
        When we are talking about crimes that are originating in
    India, the Auburn Police Department, talented though it is, is
    not going to be able to pursue that kind of case, other than
    trying to halt the transfer in the first place.
        I think we need a concerted effort by the Department of
    Justice, working with its partners in law enforcement across
    the Federal Government and at the State and local levels, and
    the FTC and the more educational agencies, to ensure that
    consumers know what to do, and the way we were able to really
    crack down on the Jamaica lottery scam was when, through
    pressure from this Committee, the Department of Justice finally
    started arresting people and extraditing people and making it
    clear to the Jamaican government that this was not going to be
    tolerated, and I, personally, was about to lead a boycott of
    tourists going to Jamaica until they changed their law, and
    they changed their laws.
        We really need more of an effort in this area, and I hope
    that you will help us figure out what should be done.
        Again, I want to thank my Ranking Member, Senator
    McCaskill, who you can tell was a whale of a prosecutor, for
    all of her insight and support and expertise, and thank you
    both for testifying today.
        Ms. Erichs. Thank you.
        Ms. Brill. Thank you.
        The Chairman. I would like to thank all of our witnesses
    for testifying today. I hope that this hearing has helped to
    inform and protect Americans from ruthless scams, but most
    notably the one that we have focused on today, the IRS impostor
    scheme. Each of you has provided us with a valuable perspective
    and we want to make sure that we do pursue what I see as the
    two remedies: Greater public education so that people can avoid
    becoming victims in the first place, but far, far more
    aggressive investigation and prosecution of these criminals who
    are ripping off blameless people and using the name of the
    Federal Government to do so. That is one reason that they are
    so successful.
        Again, I want to express my extraordinary frustration and,
    indeed, anger at the Department of Justice for failing to
    cooperate with this Committee and to testify today. That is not
    something that we are going to tolerate, and I think you saw
    today that there will be unanimous outrage from this Committee
    if that lack of cooperation continues.
        The Committee members and any members of the public will
    have until Friday, April 24th, to submit testimony, statements,
    or questions for the record.
        Again, thank you all for being here today.
        This hearing is now adjourned.
        [Whereupon, at 3:12 p.m., the Committee was adjourned.]

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                                    APPENDIX

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                          Prepared Witness Statements

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                           Statements for the Record

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