[Congressional Record Volume 143, Number 95 (Tuesday, July 8, 1997)]
[House]
[Pages H4868-H4872]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TELEMARKETING FRAUD PREVENTION ACT OF 1997
Mr. McCOLLUM. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 1847) to improve the criminal law relating to fraud against
consumers, as amended.
The Clerk read as follows:
[[Page H4869]]
H.R. 1847
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Telemarketing Fraud
Prevention Act of 1997''.
SEC. 2. FORFEITURE OF FRAUD PROCEEDS.
Section 982(a) of title 18, United States Code, is amended
by adding at the end the following:
``(8) The Court, in sentencing a defendant for an offense
under section 2326, shall order that the defendant forfeit to
the United States any real or personal property--
``(A) used or intended to be used to commit or to promote
the commission of such offense, if the court in its
discretion so determines, taking into consideration the
nature, scope, and proportionality of the use of the property
in the offense; and
``(B) constituting, derived from, or traceable to the gross
proceeds that the defendant obtained directly or indirectly
as a result of the offense.''.
SEC. 3. SENTENCING GUIDELINES CHANGES.
Pursuant to its authority under section 994(p) of title 28,
United States Code, the United States Sentencing Commission
shall review and amend the sentencing guidelines to provide a
sentencing enhancement for any offense listed in section 2326
of title 18, United States Code--
(1) by at least 4 levels if the circumstances authorizing
an additional term of imprisonment under section 2326(1) are
present; and
(2) by at least 8 levels if the circumstances authorizing
an additional term of imprisonment under section 2326(2) are
present.
SEC. 4. INCREASED PUNISHMENT FOR USE OF FOREIGN LOCATION TO
EVADE PROSECUTION.
Pursuant to its authority under section 994(p) of title 28,
United States Code, the United States Sentencing Commission
shall amend the sentencing guidelines to increase the offense
level for any fraud offense by at least 2 levels if the
defendant conducted activities to further the fraud from a
foreign country.
SEC. 5. SENTENCING COMMISSION DUTIES.
The Sentencing Commission shall ensure that the sentences,
guidelines, and policy statements for offenders convicted of
offenses described in sections 3 and 4 are appropriately
severe and reasonably consistent with other relevant
directives and with other guidelines.
SEC. 6. CLARIFICATION OF ENHANCEMENT OF PENALTIES.
Section 2327(a) of title 18, United States Code, is amended
by striking ``under this chapter'' and inserting ``for which
an enhanced penalty is provided under section 2326 of this
title''.
SEC. 7. ADDITION OF CONSPIRACY OFFENSES TO SECTION 2326
ENHANCEMENT.
Section 2326 of title 18, United States Code, is amended by
inserting ``, or a conspiracy to commit such an offense,''
after ``or 1344''.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Florida [Mr. McCollum] and the gentleman from Massachusetts [Mr.
Delahunt] each will control 20 minutes.
The Chair recognizes the gentleman from Florida [Mr. McCollum].
General Leave
Mr. McCOLLUM. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days to revise and extend their remarks on the
bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Florida?
There was no objection.
Mr. McCOLLUM. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, in September 1996 the House of Representatives passed by
a voice vote an identical version of H.R. 1847, the Telemarketing Fraud
Prevention Act. The Senate failed to act on that legislation before
final adjournment, and the gentleman from Virginia [Mr. Goodlatte], a
dedicated member of the Committee on the Judiciary, has picked up the
flag and is now advancing this important issue.
Mr. Speaker, the Subcommittee on Crime, which I chair, held a hearing
a year ago on telemarketing fraud particularly as it related to our
Nation's elderly. The Federal Trade Commission estimates that
telemarketing fraud costs consumers about $40 billion a year. It is a
sad fact that crooked telemarketers prey especially on our senior
citizens. Telemarketing fraud is devastating for older persons because
they often lose their entire life savings. As the American Association
of Retired Persons has noted, many of this Nation's elderly are too
trusting, they are very much too trusting, and cannot distinguish
between a legitimate telephone pitch and a fraudulent one.
Unfortunately, those who fall prey unintentionally aid the criminals
because they are too humiliated to tell anyone of their drastic
financial losses.
In the hands of a fraudulent telemarketer, a phone is a very
dangerous weapon. They will use every trick possible to get their
victims to send money. Examples of such deceptions include offering
phony investment schemes, claiming to work for charitable organizations
while promising grand trips and prizes. These telephone thieves are
ruthless in their pursuit of someone else's hard-earned paycheck.
The most heinous part of the telemarketing fraud crime, however, is
the final step. After a crooked telemarketer has wrung every last dime
possible out of a victim, he then sells the victim's name to a so-
called recovery room operation. The victim is contacted by a recovery
room operator who pretends to be a private investigator or an attorney.
The crook, masquerading as a legitimate investigator, tells the victim
that he can help recover all the lost money, but first the victim needs
to mail in some more money to cover the cost of the investigation. The
victim is so desperate that anything seems reasonable, even a few
hundred dollars to cover a private investigator's fee. Of course once
the money is sent, the hopeful victim never hears from the scammer
again. The recovery room operator is a true bully, kicking the victim
when the victim is already down.
H.R. 1847 is designed to strengthen Federal law enforcement's fight
against telemarketing fraud. Since money is all that matters to a
fraudulent telemarketer, H.R. 1847 strikes back where it hurts, by
requiring that any defendant convicted of a telemarketing scam forfeit
all property used in the offense or any proceeds received as a result
of the offense.
This bill also directs the U.S. Sentencing Commission to amend the
guidelines to increase sentences for telemarketing fraud offenses
defined in section 2326 of title 18 of the United States Code.
Furthermore, the bill includes conspiracy language to allow prosecutors
to seek out and punish the organizers of these illegal activities.
Again I thank my good friend from Virginia [Mr. Goodlatte] for not
allowing this issue to go unnoticed. I am going to yield to him in a
moment but I am going to first of all withhold the balance of my time
and let my good friend from Massachusetts have some time on this bill.
Mr. Speaker, I reserve the balance of my time.
Mr. DELAHUNT. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I am pleased to join with the gentleman from Florida and
my friend, the gentleman from Virginia [Mr. Goodlatte] in supporting
this measure which would increase penalties for telemarketing fraud,
particularly when such fraudulent schemes victimize older Americans.
While I ordinarily feel that Congress should allow the U.S. Sentencing
Commission to determine when sentences and what sentences are
appropriate, I am very glad that the bill takes steps to address what
has become a serious and growing problem.
{time} 1600
What family has not had the unpleasant experience of sitting down to
a quiet dinner at home, only to have the telephone ring with some
obnoxious telemarketer on the other end? Only this morning I received
from a constituent of mine on Martha's Vineyard a letter who spoke of
being plagued by telemarketing. Every third call is someone trying to
sell something unsolicited.
For most of us, this sort of occurrence is a recurring nuisance. We
may not want to hear the sales pitch but we usually know when to hang
up. Unfortunately, when the caller is a sophisticated scam artist,
things are rarely so clear. We have all heard from constituents who
were tricked into contributing to nonexisting charities, or conned into
throwing away their hard-earned money on phony real estate schemes. The
situation is especially serious for older Americans, who are the
favorite targets of these criminals.
Older people are especially vulnerable because many of them are
lonely, homebound, and infirm. For them, that unwanted telephone call
can mean the loss of everything they have managed to save over a
lifetime. Predators who take advantage of other peoples' weaknesses
should be held to account.
I urge support for H.R. 1847, and again extend my congratulations to
[[Page H4870]]
the gentleman from Florida and the gentleman from Virginia.
Mr. McCOLLUM. Mr. Speaker, I yield such time as he may consume to the
gentleman from Virginia [Mr. Goodlatte], a member of the Committee on
the Judiciary and the author of this bill.
Mr. GOODLATTE. I thank the gentleman for yielding time to me, Mr.
Speaker, and I especially thank him as chairman of the Subcommittee on
Crime for his leadership in helping to move this important legislation
forward.
Mr. Speaker, I want to begin by reading from an article in last
week's New York Times dated June 29. The article describes a recent
investigation by Federal prosecutors targeting fraudulent telemarketers
based out of Chattanooga, TN.
According to Federal officials, at least 100,000 people, most of them
elderly, sent $35 million to fraudulent telemarketers based there from
1992 to 1995. According to the Times, and I quote,
These scams were connected loosely, if at all. They ranged
from single operators to 30-person phone banks. Typically,
the lonely grandmothers and grandfathers were told that they
had won one of four prizes: a new car, a Hawaiian vacation,
$25,000 in cash, or $100.
They were then asked to send a check, usually for hundreds
or thousands of dollars, by overnight mail to cover taxes,
postage, and handling for the winnings. If the taxes were
this high, the telemarketer would say, ``Then the prize must
be wonderful.'' According to one 80-year-old woman from New
York who had fallen prey to the slick criminals, ``I have
been a widow for 19 years. It is very lonely. They were nice
on the phone. They became my friends.''
Fortunately, Federal prosecutors succeeded in winning convictions of
50 people as a result of their investigation. However, the average
sentence in those 50 cases was less than 3 years for each person. Many
of these people will be eligible for parole even sooner. The
legislation I am offering today will send a loud and clear message to
fraudulent telemarketers: the punishment for destroying the lives of
our Nation's most vulnerable citizens will fit the crime, and it will
be severe.
Telemarketing fraud has become a critical problem across the country,
but especially in my home State of Virginia, where it has made victims
of countless unsuspecting folks and their families.
Who are these victims? They are most often the elderly and disabled,
those who have contributed so much to our society over the years. They
are veterans of World War II and Korea, they are our retired
schoolteachers, they are our parents and grandparents. Many of these
victims, longtime residents of southwestern and central Virginia, come
from a time when one's word was his or her bond, and they are often
deceived by a con artist who will say whatever it takes to separate
victims from their money. It has been estimated by the FBI that nearly
80 percent of all targeted telemarketing fraud victims are elderly.
Who are these people who victimize our Nation's elderly? They are
white-collar thugs who contribute nothing to our society but grief.
They choose to satisfy their greed by bilking others instead of doing
an honest day's work. They strip victims not only of their hard-earned
money but also of their dignity. They are swindlers who con our senior
citizens out of their life savings by playing on their trust, sympathy
and, if that does not work, their fear.
These criminals have said that they do not fear prosecution because
they count on their victims' physical or mental infirmity or the
embarrassment that victims feel from being scammed to prevent them from
testifying at trial. Even if they are brought to trial, they are
currently not deterred from engaging in telemarketing fraud because the
penalties are so weak.
My bill raises the risk for criminals by directing the U.S.
Sentencing Commission to increase by four levels the sentencing
guidelines for fraudulent telemarketers and by eight for those who
defraud those most vulnerable in our society, those over the age of 55.
My bill also includes conspiracy language to help put a stop to the
targeting of Virginia as a victim State. Virginia is currently called a
victim State by telemarketing criminals because very few of them have
set up their boiler room operations here. Instead, they set up their
operations in other States or even other countries, in particular
Canada, to target Virginia's citizens as part of their scams. The
addition of conspiracy language to the list of enhanced penalties will
enable prosecutors to seek out the masterminds behind these boiler
rooms and bring them to justice.
Of the top 11 company locations in 1996, four were Canadian
provinces, Quebec 3d, Ontario 8th, British Columbia 9th, and Nova
Scotia 11th. My bill will increase by two levels the penalty for those
who use international borders to further their scams or evade
prosecution.
Finally, my bill addresses the problem of victims who are unable to
recoup any of their losses after the criminal is caught and convicted.
It includes provisions requiring criminal asset forfeiture, to ensure
that the fruits of crime will not be used to commit further crimes.
The Telemarketing Fraud Prevention Act will serve as a vital tool in
the Federal arsenal of weapons available to law enforcement officials
in the fight against telemarketing fraud. Since its introduction it has
attracted several cosponsors from both parties, as well as the
enthusiastic support of various seniors' groups, consumer protection
groups, and law enforcement officials.
I thank my colleague for his assistance in advancing this important
legislation, and urge my colleagues to support its passage this
afternoon.
Mr. DELAHUNT. Mr. Speaker, I am pleased to yield such time as he may
consume to the gentleman from Indiana [Mr. Hamilton], the distinguished
ranking member of the Committee on International Relations, who was
unavoidably detained during consideration of H.R. 748.
Mr. HAMILTON. I thank the gentleman for yielding time to me, Mr.
Speaker.
I rise in opposition to H.R. 748. I fully understand that is not the
bill that is being discussed at the moment, and I want to express my
appreciation to the gentleman from Florida [Mr. McCollum] and the
gentleman from Massachusetts [Mr. Delahunt] to permit me to speak for
just a moment out of turn here, and perhaps even out of order.
Mr. Speaker, I rise in opposition to H.R. 748. I do not have any
doubt at all about the popularity of the bill. The intent of the
authors is altogether praiseworthy, as are their motives. I think,
however, the bill presents a number of unintended consequences,
unintended problems.
I am aware of the fact that the authors of the bill, the gentleman
from Florida and the gentleman from New York, have tried to meet some
of the objections that the administration has put forward. I am also
aware that the administration was probably late into the game as this
bill was moving along. I appreciate that they are trying to deal with
those problems by including a number of exceptions in the bill. My
concern is that they cannot see every problem or circumstance, and I
think what is really needed in this bill to make it okay is a waiver
authority for the President.
Let me try to spell out very quickly some of the consequences that I
see in the bill, and I know they are not intended by the authors. I
think the bill would not help and could harm the peace process. All of
us realize that process is at a very fragile state today, a very high
priority for the United States, for the United States is trying to get
Israel and Syria to restart the peace talks.
The prohibition on financial transactions, for example, with Syria in
this bill will not make it any easier and could make it a lot more
difficult for the United States to act as a catalyst in the peace talks
between Israel and Syria. I think it is quite possible that the bill
could hurt counterterrorism cooperation.
The authors of the bill are exactly correct when they say that Syria
continues to provide safe haven and logistical support to some of the
groups engaged in terrorism. It is also true, however, that Syria has
been helpful to the United States on certain terrorism cases. This bill
would make cooperation by Syria very difficult.
I think the bill's exceptions are too narrow and could harm U.S.
interests. For example, the emergency medical services exception does
not include
[[Page H4871]]
nonemergency medical items like antibiotics and bandages. The
humanitarian assistance exception may not cover U.S. nationals working
on humanitarian programs. U.S. nationals working for the United Nations
or other international organizations may not be covered.
The exception for official U.S. Government transactions may not
include repatriation of MIA remains from North Korea, dismantlement of
North Korea's and Iraq's nuclear weapons programs, and promotion of
freer communications with the Cuban population.
Finally, let me just say that the bill is another application of
unilateral sanctions by the United States. I certainly understand the
frustration of Members and the desire to put unilateral sanctions into
place. We often get very frustrated by the actions of foreign
governments. But unilateral sanctions have now become quite popular in
this body.
Too often I think we reach into the foreign policy toolbox and decide
to rely on unilateral sanctions to try to solve problems. But when we
act unilaterally, U.S. business interests often suffer. Unilateral
sanctions are not usually effective, and sometimes the biggest impact
of the sanctions are to make more difficult our relations with our
European and Asian friends. We can sometimes lose U.S. markets as well.
So I think the gentlemen who are supporting this bill, the gentleman
from Florida, the gentleman from New York, the gentleman from
Massachusetts, have the highest of motivations here. I believe that in
moving the bill forward, they are actually doing a good service, but I
do believe the bill needs some significant changes.
On the Senate side, as I understand it, there was a Presidential
waiver provision put in the State Department authorization bill, a
comparable provision to this bill. I would hope that the authors of
this bill might look at that pretty carefully.
For these reasons I will not be able to vote for the bill, but I
certainly understand why it is brought forward, and I appreciate the
popularity of the bill. Let me say again to the gentleman from
Massachusetts [Mr. Delahunt] and the gentleman from Florida [Mr.
McCollum] how much I appreciate their magnanimous action here in
letting me speak out of turn.
Mr. McCOLLUM. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I certainly respect the gentleman who has spoken, the
gentleman from Indiana [Mr. Hamilton]. He is a very strong voice in the
concerns of our Nation with respect to international affairs and has
been for many years. As he has indicated, a number of us have worked
diligently to try to address the concerns that he expressed in his
statements, and I know that we have not perhaps done so to his
satisfaction.
As I stated before he got here, a number of the provisions in the
bill, in my personal belief and that of my staff and the experts we
have had look at it, do cover and do address those areas of concern.
Again, as I stated earlier, it seems to me that for that particular
bill dealing with financial transactions with the named terrorist
countries, Iran, Iraq, Sudan, North Korea, Libya, Syria, that it is
very important that we do send this message, that we are not going to
allow financial transactions between United States citizens and those
governments as long as they are on the terrorist list.
I will continue to work with the administration and with the
gentleman from Indiana as well as others to improve this bill as we go
forward, but it does occur to me that at the present moment there is no
peace process with regard to Syria. I wish there were. I hope there
will be.
I certainly would like to see this bill, if anything, encourage that
process. Syria certainly could do so by dropping those things which it
is doing that puts it on the terrorist list, albeit maybe lesser than
those things which some of the other countries on the list are doing.
Mr. Speaker, returning to the subject at hand, the bill that is
before us of the gentleman from Virginia [Mr. Goodlatte], H.R. 1847,
regarding telemarketing fraud, affects just about every person who owns
a telephone.
Mr. Speaker, I yield 3 minutes to the gentleman from Florida [Mr.
Stearns] on H.R. 1847.
(Mr. STEARNS asked and was given permission to revise and extend his
remarks.)
Mr. STEARNS. Mr. Speaker, I thank my distinguished colleague, the
gentleman from Florida, for yielding time to me.
Mr. Speaker, I also rise in support of this legislation sponsored by
my good friend, the gentleman from Virginia [Mr. Goodlatte], and
reported out of the Subcommittee on Crime of the Committee on the
Judiciary, chaired by another good friend, the gentleman from Orlando,
FL, Mr. Bill McCollum.
There is a quote by Sir Walter Scott that goes something like this:
``Oh, what a tangled web we weave when first we practice to deceive.''
I think that quote by Sir Walter Scott sort of sums up what we have
here. It is perhaps a perfect description of the fraud committed by the
unscrupulous telemarketers who prey on the susceptibility of our
citizens. Particularly in Florida we have senior citizens, elderly
people, and I think telemarketing would be something that people would
use to prey on our citizens.
I was the original cosponsor of this legislation when it was first
introduced on January 21, 1997, when I believe the bill back then was
H.R. 474. Now it is H.R. 1847. It has been strengthened, I think,
through the committee process, so I think the current version is even
better.
{time} 1615
As my colleague from Florida has mentioned, telemarketing fraud is
estimated to rob the United States consumers of at least $40 billion
annually. This legislation would finally send a clear signal to the con
men who manipulate the public's telephone systems to commit fraud.
Under current law, fraudulent telemarketers spend an average of only 1
year in jail. This bill directs the United States Sentencing Commission
to increase prison sentences for those convicted of telemarketing
fraud. The commission is directed to increase the recommended penalties
to a prison term of 2\1/2\ years with longer sentences for those who
defraud the elderly, mentally disturbed, disabled, and other vulnerable
consumers.
H.R. 1847 also requires a person convicted of telemarketing fraud to
forfeit all money made in executing the fraud and to forfeit any
property used in connection with the fraudulent acts as well as
forfeiting any investments or property purchased with the profits of
the telemarketing fraud. So with all that in mind, I urge all my
colleagues to vote in support of this important piece of legislation. I
congratulate the gentleman from Virginia [Mr. Goodlatte] and my
distinguished colleague, the gentleman from Florida [Mr. McCollum].
Mr. GALLEGLY. Mr. Speaker, I am pleased to be a strong supporter of
H.R. 1847, the Telemarketing Fraud Prevention Act.
The FBI estimates that telemarketing scams, such as schemes involving
bogus charities, fake gem stones and deceptive travel promotions cost
consumers as much as $40 billion annually. Often these fraudulent
schemes target those who are least able to defend themselves, including
senior citizens, many of whom live by themselves. The callers, through
the use of deception, threats, or outright lies, are able to convince
many elderly Americans to part with hundreds or thousands of dollars to
companies who promise spectacular profits or outstanding deals.
The Telemarketing Fraud Prevention Act takes dead aim at those who
prey on seniors and other unsuspecting consumers. H.R. 1847 increases
Federal criminal penalties for persons convicted of committing fraud
through the telephone. This legislation directs the U.S. Sentencing
Commission to increase the sentencing levels for all telemarketing
fraud, with the greatest increase in sentences for those who target
those over 55 years of age. H.R. 1847 also requires monetary
restitution to victims through the use of proceeds from persons or
groups convicted under the statute.
Mr. Speaker, it is time that our Nation gets tough with criminals who
use the telephone to steal from American consumers. And, it is time we
get tough against con artists who prey on vulnerable senior citizens.
Mr. DELAHUNT. Mr. Speaker, I yield back the balance of my time.
Mr. McCOLLUM. Mr. Speaker, again I want to encourage support for this
bill, H.R. 1847, the Telemarketing Fraud Act. I thank my good friend,
the gentleman from Virginia [Mr. Goodlatte] for bringing it forward.
[[Page H4872]]
Telemarketing fraud is really one of the most dastardly types of
crimes in this country. The bill will do a lot to enforce that law and
to make much tougher punishments.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Goodling). The question is on the motion
offered by the gentleman from Florida [Mr. McCollum] that the House
suspend the rules and pass the bill, H.R. 1847, as amended.
The question was taken; and (two-thirds having voted in favor
thereof) the rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
____________________