[Congressional Record Volume 143, Number 157 (Sunday, November 9, 1997)]
[Senate]
[Pages S12426-S12427]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               TELEMARKETING FRAUD PREVENTION ACT OF 1997

  Mr. SESSIONS. Mr. President, I ask unanimous consent that the Senate 
now proceed to the consideration of calendar No. 206, H.R. 1847.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       A bill (H.R. 1847) to improve the criminal law relating to 
     fraud against consumers.

  The PRESIDING OFFICER. Is there objection to the immediate 
consideration of the bill?
  There being no objection, the Senate proceeded to consider the bill, 
which had been reported from the Committee on the Judiciary, with an 
amendment to strike all after the enacting clause and inserting in lieu 
thereof the following:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Telemarketing Fraud 
     Prevention Act of 1997''.

     SEC. 2. CRIMINAL FORFEITURE OF FRAUD PROCEEDS.

       Section 982 of title 18, United States code, is amended--
       (1) in subsection (a)--
       (A) by redesignating the second paragraph designated as 
     paragraph (6) as paragraph (7); and
       (B) by adding at the end the following:
       ``(8) The Court, in sentencing a defendant convicted of an 
     offense under section 1028, 1029, 1341, 1342, 1343, or 1344, 
     or of a conspiracy to commit such an offense, if the offense 
     involves telemarketing (as that term is defined in section 
     2325), shall order that the defendant forfeit to the United 
     States any real or personal property--
       ``(A) used or intended to be used to commit, to facilitate, 
     or to promote the commission of such 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.''; and
       (2) in subsection (b)(1)(A), by striking ``(a)(1) or 
     (a)(6)'' and inserting ``(a)(1), (a)(6), or (a)(8)''.

     SEC. 3. PENALTY FOR TELEMARKETING FRAUD.

       Section 2326 of title 18, United States Code, is amended by 
     striking ``may'' each place it appears and inserting 
     ``shall''.

     SEC. 4. 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''.

     SEC. 5. CLARIFICATION OF MANDATORY RESTITUTION.

       Section 2327 of title 18, United States Code, is amended--
       (1) in subsection (a), by striking ``for any offense under 
     this chapter'' and inserting ``to all victims of any offense 
     for which an enhanced penalty is provided under section 
     2326''; and
       (2) by striking subsection (c) and inserting the following:
       ``(c) Victim Defined.--In this section, the term `victim' 
     has the meaning given that term in section 3663A(a)(2).''.

     SEC. 6. AMENDMENT OF FEDERAL SENTENCING GUIDELINES.

       (a) Definition of Telemarketing.--In this section, the term 
     ``telemarketing'' has the meaning given that term in section 
     2326 of title 18, United States Code.
       (b) Directive To Sentencing Commission.--Pursuant to its 
     authority under section 994(p) of title 28, United States 
     Code, and in accordance with this section, the United States 
     Sentencing Commission shall--
       (1) promulgate Federal sentencing guidelines or amend 
     existing sentencing guidelines (and policy statements, if 
     appropriate) to provide for substantially increased penalties 
     for persons convicted of offenses described in section 2326 
     of title 18, United States Code, as amended by this Act, in 
     connection with the conduct of telemarketing;
       (2) submit to Congress an explanation of each action taken 
     under paragraph (1) and any additional policy recommendations 
     for combating the offenses described in that paragraph.
       (c) Requirements.--In carrying out this section, the 
     Commission shall--
       (1) ensure that the guidelines and policy statements 
     promulgated or amended pursuant to subsection (b)(1) and any 
     recommendations submitted thereunder reflect the serious 
     nature of the offenses;
       (2) provide an additional appropriate sentencing 
     enhancement if offense involved sophisticated means, 
     including but not limited to sophisticated concealment 
     efforts, such as perpetrating the offense from outside the 
     United States;
       (3) provide an additional appropriate sentencing 
     enhancement for cases in which a large number of vulnerable 
     victims, including but not limited to victims described in 
     section 2326(2) of title 18, United States Code, are affected 
     by a fraudulent scheme or schemes;
       (4) ensure that guidelines and policy statements 
     promulgated or amended pursuant to subsection (b)(1) are 
     reasonably consistent with other relevant statutory 
     directives to the Commission and with other guidelines;
       (5) account for any aggravating or mitigating circumstances 
     that might justify upward or downward departures;
       (6) ensure that the guidelines adequately meet the purposes 
     of sentencing as set forth in section 3553(a)(2) of title 18, 
     United States Code; and
       (7) take any other action the Commission considers 
     necessary to carry out this section.
       (d) Emergency Authority.--The Commission shall promulgate 
     the guidelines or amendments provided for under this 
     subsection as soon as practicable, and in any event not later 
     than 120 days after the date of enactment of the 
     Telemarketing Fraud Prevention Act of 1997, in accordance 
     with the procedures set forth in section 21(a) of the 
     Sentencing Reform Act of 1987, as though the authority under 
     that authority had not expired, except that the Commission 
     shall submit to Congress the emergency guidelines or 
     amendments promulgated under this section, and shall set an 
     effective date for those guidelines or amendments not earlier 
     than 30 days after their submission to Congress.


                           Amendment No. 1628

(Purpose: To prohibit false advertising or misuse of a name to indicate 
                  the United States Marshals Service)

  Mr. SESSIONS. Mr. President, I send an amendment to the desk on 
behalf of Mr. Leahy and ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Alabama [Mr. Sessions], for Mr. Leahy, 
     proposes an amendment numbered 1628.

  Mr. SESSIONS. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       At the appropriate place, insert the following new section:

     SEC.   . FALSE ADVERTISING OR MISUSE OF NAME TO INDICATE 
                   UNITED STATES MARSHALS SERVICE.

       Section 709 of title 18, United States Code, is amended by 
     inserting after the thirteenth undesignated paragraph the 
     following:
       ``Whoever, except with the written permission of the 
     Director of the United States Marshals Service, knowingly 
     uses the words `United States Marshals Service', `U.S. 
     Marshals Service', `United States Marshal', `U.S. Marshal', 
     `U.S.M.S.' or any colorable imitation of any such words, or 
     the likeness of the United States Marshals Service badge, 
     logo, or insignia on any item of apparel, in connection with 
     any advertisement, circular, book, pamphlet, software, or 
     other publication, or any play, motion picture, broadcast, 
     telecast, or other production, in a manner that is reasonably 
     calculated to convey the impression that the wearer of the 
     item of apparel is acting pursuant to the legal authority of 
     the United States Marshals Service, or to convey the 
     impression that such advertisement, circular, book, pamphlet, 
     software, or other publication, or such play, motion picture, 
     broadcast, telecast, or other production, is approved, 
     endorsed, or authorized by the United States Marshals 
     Service;''.

  Mr. LEAHY. Mr. President, I am glad to support this measure with my 
amendment to prevent the misuse of the name and likeness of the U.S. 
Marshals Service.
  The U.S. Marshals Service is the Nation's oldest Federal law 
enforcement agency. Since 1789, U.S. marshals have served the country 
through a variety of vital law enforcement activities, such as the 
protection of Federal judicial officials, the apprehension of Federal 
fugitives, and the transportation of Federal prisoners. Today, 
approximately 4,000 deputy U.S. marshals and career employees perform 
these important services across the Nation. I receive frequent reports 
about the day-to-day activities of the Service from Vermont's U.S. 
marshal, Jack Rouille, who has been a model public servant and has been 
a linchpin of coordination for Federal and local law enforcement 
agencies in Vermont.
  The amendment I have offered will assist the Marchals Service by 
amending 18 U.S.C. 709--the part of the U.S. Code that deals with 
misuse of names to indicate Federal agencies--to include the Marshals 
Service among the Federal agencies whose name and likeness are 
protected from imitation on items of apparel or in connection with any 
commercial enterprise.
  At present, the name and likeness of many other Federal law 
enforcement agencies are protected under law. For instance, the name 
and likeness of the Federal Bureau of Investigation [FBI], Secret 
Service, and Drug Enforcement Agency [DEA] are protected under 18 
u.S.C. 709. Moreover, the name and likeness of several non-law 
enforcement agencies are protected under law. For example, the name and 
likeness of the Federal Deposit Insurance Corporation, the National 
Credit Union, the Federal Home Loan Bank, the Overseas Private 
Investment Corporation, and

[[Page S12427]]

the U.S. Mint, to name a few, are protected under 18 U.S.C. 709.
  The lack of protection for the Marshals Service has generated serious 
security concerns. At a minimum, the public may be falsely lead to 
believe that the Marshals Service approves or endorses an unauthorized 
product. Even more problematic is the possibility that unauthorized 
individuals may wear apparel to look like marshals to effectuate 
criminal purposes or to gain undesired access to secured areas such as 
courtrooms or witness security facilities.

  Recent cases highlight the need for this amendment:
  In 1994, an individual dressed in full marshal ``swat team'' apparel 
and in possession of a loaded weapon made a series of presentations to 
a group of students at a local high school in Virginia.
  An organization known as the United States Marshals and Peace 
Officers Association of America markets home security systems. Its 
advertisements use a replica of the Marshals Service badge, implying 
government endorsement of the organization and its product. The 
organization is not endorsed or authorized by the Marshals Service.
  A Texas company offers bullet-resistant panels as an alternative home 
protection system. The company advertises that these bullet-proof 
panels are approved by the Marshals Service. This product is not 
officially endorsed by the Marshals Service.
  While the amendment that I am introducing would protect the Marshals 
Service against these illegitimate uses of its name and likeness, the 
amendment is purposely limited in its scope. Specifically, this 
amendment would not prevent the use of the name or likeness in those 
instances where the use would not be reasonably calculated to convey 
the impression that either, first, the wearer of the item of apparel 
with the name or likeness is acting pursuant to legal authority; or, 
second, the use is approved, endorsed, or authorized by the Marshals 
Service.
  Thus, for example, there was a case brought before the Patent Office 
Trademark Trial and Appeal Board in 1971 in which a French clothing 
manufacturer used the initials FBI in conjunction with the words 
``Fabrication Bril International'' on clothing. The Trial and Appeal 
Board ruled that the law did not create an absolute prohibition against 
the use of the initials FBI, but was applicable only in those cases in 
which the initials were used in a manner reasonably calculated to 
convey a mistaken impression that the item of clothing was approved, 
endorsed, or authorized by the FBI. In that case, the Board ruled, 
there was little chance that anyone would think that the clothing was 
approved, endorsed, or authorized by the FBI, hence there was no 
violation of the statute.
  In a case of political satire, the use of the Marshals Service name 
or likeness would almost always be permissible. In such instances, 
there would be little chance that any reasonable person would think 
that the satirist was acting pursuant to legal authority. This 
amendment should not interfere with the Capitol Steps or other 
satirists. As the court stated in Cliff Notes versus Bantam Doubleday 
Dell Pub. Group in 1989, trademark law courts have uniformly ruled that 
noncommercial parodies and satires do not infringe legitimate 
trademarks because there is little chance of confusion as to 
sponsorship.
  Allowing unauthorized individuals to pose as Marshals Service 
officials or allowing unauthorized individuals to use the name in a 
manner that mistakenly conveys the impression that the use is 
sanctioned by the Marshals Service is an affront to those who 
legitimately and nobly serve under its banner and wear its badge. For 
this reason, I am delighted that the Senate has accepted this 
amendment.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  The amendment (No. 1628) was agreed to.


                           Amendment No. 1629

 (Purpose: To combat telemarketing fraud through reasonable disclosure 
          of certain records for telemarketing investigations)

  Mr. SESSIONS. Mr. President, I send an amendment to the desk on 
behalf of Mr. Harkin and ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Alabama [Mr. Sessions], for Mr. Harkin, 
     proposes an amendment numbered 1629.

  Mr. SESSIONS. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       At the appropriate place, add the following:

     SEC.   . DISCLOSURE OF CERTAIN RECORDS FOR INVESTIGATIONS OF 
                   TELEMARKETING FRAUD.

       Section 2703(c)(1)(B) of title 18, United States Code, is 
     amended--
       (1) by striking out ``or'' at the end of clause (ii);
       (2) by striking out the period at the end of clause (iii) 
     and inserting in lieu thereof ``; or''; and
       (3) by adding at the end the following:
       ``(iv) submits a formal written request relevant to law 
     enforcement investigation concerning telemarketing fraud for 
     the name, address, and place of business of a subscriber or 
     customer of such provider, which subscriber or customer is 
     engaged in telemarketing (as such term is in section 2325 of 
     this title.''.

  Mr. HARKIN. Mr. President, Every year thousands of Americans are 
victimized by fraudulent telemarketing promotions. And, unfortunately, 
these scam artists prey most often on our senior citizens. The losses 
every year are estimated to be in the billions of dollars. My amendment 
will help law enforcement to more effectively combat these abuses.
  Today, it's all to easy for telemarketing rip-off artists to profit 
from the current system. How do these rip-offs occur? Advertisements 
regarding sweepstakes, contests, loans, credit reports and other 
promotions appear in newspapers, magazines, and other direct mail and 
telephone solicitations. The operators of many of these phoney 
promotions set up telephone boiler rooms for a few months in which a 
number of phones are operated to receive calls responding to their ads. 
They steal thousands--even millions--of dollars from innocent victims 
and then they simply disappear. They take the money and run--moving on 
to another location to start all over again.
  Here's just one example. Not too long ago, 30,000 Iowans received 
postcards from an organization calling itself Sweepstakes 
International, Inc. The postcard enticed recipients to call a 900-
number and they were charged $9.95 on their phone bill.
  Based on a Postal Service investigation, civil action was initiated 
in U.S. District Court in Iowa. As a result, the promotion was halted 
and $1.7 million was frozen. This represented just one and a half 
month's revenue from the scam!
  My amendment will protect telemarketing victims by providing law 
enforcement the authority to more quickly obtain the name, address, and 
physical location of businesses suspected of telemarketing fraud. Phone 
companies would have to provide law enforcement officials ONLY the 
name, address and physical location of a telemarketing business holding 
a phone number if the officials submitted a formal written request for 
this information relevant to a legitimate law enforcement 
investigation. It will make it easier for officers to identify and 
locate these operations. This is similar to the procedure that is 
already in place for post office box investigations.
  Mr. President, it is necessary to crack down on serious consumer 
fraud. With this change, we will have many more successful efforts to 
shut down these rip-off artists like several recent cases in my home 
state of Iowa.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  The amendment (No. 1629) was agreed to.
  Mr. SESSIONS. Mr. President, I ask unanimous consent that the 
committee substitute be agreed to, the bill be considered read the 
third time, and passed, as amended, the motion to reconsider be laid 
upon the table, and that any statements relating to the bill appear at 
this point in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The committee amendment was agreed to.
  The bill (H.R. 1847), as amended, was considered read the third time, 
and passed.




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