[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
         
         
         
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        Available via the World Wide Web: http://www.govinfo.gov
        
        
        
        
                               ______
 
              U.S. GOVERNMENT PUBLISHING OFFICE 
 49-469PDF          WASHINGTON : 2022 
 
 
       
        
        
        
                       SPECIAL COMMITTEE ON AGING

                   SUSAN M. COLLINS, Maine, Chairman

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

                              ----------                              

                                                                   Page

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

                           PANEL OF WITNESSES
                                PANEL I

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

                                PANEL II

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

                                APPENDIX
                      Prepared Witness Statements

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

                       Statements for the Record

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


                          CATCH ME IF YOU CAN:

                      THE IRS IMPERSONATION SCAM

                     AND THE GOVERNMENT'S RESPONSE

                              ----------                              


                       WEDNESDAY, APRIL 15, 2015

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

                 OPENING STATEMENT OF SENATOR 
                   SUSAN M. COLLINS, CHAIRMAN

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

                 OPENING STATEMENT OF SENATOR 
                CLAIRE McCASKILL, RANKING MEMBER

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

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

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

             STATEMENT OF JASON MOORE, DETECTIVE, 
                    AUBURN POLICE DEPARTMENT

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

            STATEMENT OF JULIE BRILL, COMMISSIONER, 
                    FEDERAL TRADE COMMISSION

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

          STATEMENT OF ALYSA D. ERICHS, SPECIAL AGENT

       IN CHARGE, HOMELAND SECURITY INVESTIGATIONS MIAMI,

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

                DEPARTMENT OF HOMELAND SECURITY

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



 
      
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                      Prepared Witness Statements

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                       Statements for the Record

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