[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
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Priscilla Hanley, Majority Staff Director
Derron Parks, Minority Staff Director
C O N T E N T S
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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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