[Congressional Record Volume 144, Number 78 (Tuesday, June 16, 1998)]
[House]
[Pages H4590-H4593]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  1530
               TELEMARKETING FRAUD PREVENTION ACT OF 1997

  Mr. GOODLATTE. Mr. Speaker, I move to suspend the rules and concur in 
the Senate amendment to the bill (H.R. 1847) to improve the criminal 
law relating to fraud against consumers.
  The Clerk read as follows:

       Senate amendment:
       Strike out all after the enacting clause and insert:

     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

[[Page H4591]]

       (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.

     SEC. 7. 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 a 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;''.

     SEC. 8. 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 a 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).''.

  The SPEAKER pro tempore (Mr. Ewing). Pursuant to the rule, the 
gentleman from Virginia (Mr. Goodlatte) and the gentleman from 
Massachusetts (Mr. Delahunt) each will control 20 minutes.
  The Chair recognizes the gentleman from Virginia (Mr. Goodlatte).
  Mr. GOODLATTE. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise today to urge my colleagues to support the final 
passage of H.R. 1847, the Telemarketing Fraud Prevention Act. This 
important legislation, which I introduced in January of last year, will 
take the strong action that is needed to step up the fight against a 
common enemy, the fraudulent telemarketer.
  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.
  The tragedy of telemarketing fraud is that its perpetrators often 
target elderly victims who have contributed so much to society. Who are 
these victims? They are our veterans of World War II and Korea. They 
are our retired schoolteachers. They are our parents and grandparents.
  Many of the victims, long-time residents of areas like the Shenandoah 
Valley in my district, 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, by playing on 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 that prevent them 
from testifying at trial.
  If they are brought to trial, they are currently not deterred in 
engaging from telemarketing fraud because the penalties are so weak. In 
one example of how large a problem telemarketing fraud has become, more 
than 400 individuals were arrested in 1996 as a part of Operation 
Senior Sentinel. Retired law enforcement officers and volunteers 
recruited by the American Association of Retired Persons went under 
cover to record sales pitches from fraudulent telemarketers.
  Volunteers from the 2-year-long operation discovered various 
telemarketing schemes. Some people were victimized by phony charities 
or investment schemes. Others were taken in by so-called premium 
promotions in which people were guaranteed one of four or five valuable 
prizes, but were induced to buy an overpriced product in exchange for a 
cheap prize. One of the most vicious scams preyed on those who have 
lost their money already, some telemarketers charge a substantial fee 
to recover money for those who had been victimized previously, and 
proceeded to renege on the promised assistance.
  By the time the operation was over, it took the Department of 
Justice, the FBI, the Federal Trade Commission, a dozen U.S. Attorneys 
and States attorneys general, the Postal Service, the IRS, and the 
Secret Service to arrest over 400 fraudulent telemarketers in five 
States.
  Clearly, telemarketing fraud is on the rise. According to Attorney 
General Reno, it is not uncommon for seniors to receive as many as five 
or more high-pressure phone calls a day.

[[Page H4592]]

  Mr. Speaker, malicious criminal activity like this must be punished 
with the appropriate level of severity. H.R. 1847 will take a number of 
steps to raise the element of risk for fraudulent telemarketers by 
directing the U.S. Sentencing Commission to provide for substantially 
increased penalties for those convicted of telemarketing fraud 
offenses.
  It also requires the Commission to provide an additional appropriate 
sentencing enhancement for cases in which a large number of vulnerable 
victims are affected by a fraudulent scheme or schemes. This provision 
will help to protect those most vulnerable in our society, including 
seniors and the disabled, from these malicious crimes.
  Let me repeat that language from the bill, Mr. Speaker: substantially 
increased penalties. This language is different from the House-passed 
version of the bill, which included specific sentencing increases for 
four levels for general telemarketing fraud and eight levels for 
telemarketers who defraud the most vulnerable in our society.
  Nevertheless, the language in the Senate-passed version was carefully 
chosen. A minimum increase of two levels is not substantial. The 
Sentencing Commission recently issued an amendment that would increase 
by two offense levels, the smallest increase possible, the penalties 
for fraud offenses that use mass marketing to carry out fraud. While 
their amendment was a step in the right direction, the step is much too 
small.
  Telemarketing fraud is a serious problem that is growing even as we 
speak. The Sentencing Guidelines should reflect this; but even with 
this recent action, they do not. From the House- and Senate-passed 
bills, it should have been clear to the Sentencing Commission last year 
the kind of significant increases Congress wanted. Unfortunately, it 
appears that our intention was not clear.
  Therefore, let me make it clear right now, along with my colleague, 
the gentleman from Florida, and along with the good Senator from 
Arizona who sponsored this legislation in the Senate, that in the next 
year we expect the Sentencing Commission to make the kind of 
substantial penalty increases that are needed to adequately address the 
growing crime of telemarketing fraud.
  In addition to this provision, the bill would also require the 
Commission to provide an additional appropriate sentencing enhancement 
if the offense involved sophisticated means, including, but not limited 
to, sophisticated and concealment efforts, such as perpetrating the 
offense from outside the United States.
  This provision will target those who set up their telemarketing fraud 
operations in other countries, particularly Canada, in order to evade 
prosecution. Of the top 11 fraudulent telemarketing company locations 
in 1996, four were Canadian provinces.
  The bill also addresses the problem of victims who are unable to 
recoup any of their losses after the criminal is caught and convicted. 
It includes provisions to requiring criminal asset forfeiture to ensure 
that the fruits of telemarketing fraud crimes will not be used to 
commit further crimes. It also includes mandatory victim restitution 
language to ensure that victims are the first to receive restitution 
for their losses.
  The bill includes conspiracy language to the list of enhanced 
telemarketing fraud penalties. This provision will enable prosecutors 
to seek our masterminds behind the boiler rooms, the places where the 
fraudulent telemarketers conduct their illegal activities.

  Finally, the bill includes a Senate-passed provision that will help 
law enforcement effectively combat the problem of telemarketing fraud 
operations that set up boiler rooms for a few months and then simply 
disappear.
  The provision would protect telemarketing fraud victims by providing 
law enforcement with the authority to more quickly obtain the name, 
address, and physical location of businesses suspected of telemarketing 
fraud. This would only be allowed if the official submitted a written 
request for this information relevant to a legitimate law enforcement 
investigation.
  Mr. Speaker, 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 this crime. I urge my 
colleagues to support the passage of this important legislation.
  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 commend my colleague, the gentleman from Virginia (Mr. 
Goodlatte), for introducing this measure, and I am pleased to join with 
him in supporting it.
  As the gentleman has noted, this is actually the second time the 
House has considered this legislation. We passed it by voice vote last 
July. Since then, the other body has taken up the bill, amended it, and 
passed it in the form in which it appears before us today. If we 
approve this amended bill, it will go straight to the President for his 
signature.
  The purpose of this legislation, as articulated again by the 
gentleman from Virginia (Mr. Goodlatte), is to crack down on 
telemarketing fraud, one of the fastest growing white collar crimes in 
America.
  I would ask that we just pause and reflect for one moment on a single 
statistic that I suggest is most disturbing, and that is $40 billion. 
The Federal Bureau of Investigation has estimated that the amount of 
fraud that can be allocated to this single white collar economic crime 
exceeds $40 billion annually and is growing.
  I dare say that if we added all of the crimes committed by violence 
in this country ranging from shoplifting to armed robbery, in the 
aggregate, it would pale in comparison in terms of economic loss to 
that statistic of $40 billion a year.
  Even those of us who have not been victims of fraud have plenty of 
experience with telemarketing. What family in America has not sat down 
for an evening meal only to have the telephone ring and at the other 
end is a telemarketer selling us something. I am sure many Members like 
I receive a constant flow of letters complaining about being plagued by 
telemarketing.
  Furthermore, as a woman from Martha's Vineyard in my district 
laments, every third call is someone trying to sell something 
unsolicited. For most of us, this is merely a nuisance. We may not want 
to hear the sales pitch, but at least we usually know when to hang up. 
But 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 scams.
  One recent Federal investigation uncovered a telemarketing scheme 
that bilked some 100,000 Americans out of $35 million. The victims were 
mostly older Americans who, as my friend and colleague, the gentleman 
from Virginia (Mr. Goodlatte), indicated, are the favorite targets of 
these criminals.
  I would suggest, too, we hear much, and much of it is true, about the 
effort in Congress to federalize what is particularly State crimes. We 
hear the Chief Justice of the Supreme Court criticizing this body for 
the federalization of what have traditionally been State crimes. I 
agree with the Chief Justice. However, in this particular instance, 
there is a special place and a special role for the Federal Government.
  I think that the gentleman from Virginia hit it on the mark when he 
talked about, in Canada, there is a source of telemarketing fraud that 
is going on. These crimes particularly are pernicious in the sense that 
no single jurisdiction can deal with them effectively because these 
scholars, if you will, in economic crime know that it is beyond the 
resources that exist currently at the State and local level to deal 
with this issue, and they can set up their operation in multiple 
jurisdictions and deal at the national level. This is where the Federal 
Government ought to allocate its resources. I am pleased that they are 
doing this.
  As the gentleman said, seniors are especially vulnerable to 
telemarketing fraud because many of them are lonely, homebound, or 
infirm. For them, that unwanted telephone call can mean the loss of 
everything they have managed to save over a lifetime.
  I am particularly pleased with the penalty enhancements in terms of 
those victims that are senior citizens. Furthermore, the fact that H.R. 
1847

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would permit Federal prosecutors to seek forfeiture of the proceeds of 
telemarketing fraud and of property used by the criminals to carry out 
the fraud, I think is a particularly important provision.
  In these kinds of crime, forfeiture is an important tool that enables 
prosecutors to shut down a criminal enterprise. I am confident that, in 
this particular case, it absolutely has a deterrent effect. These 
people know what they are doing. The profit motive is so significant 
that they are willing to take the chance, because, historically, white 
collar crime and economic crime in this country have not received the 
kind of incarceration and sanctions that it so rightly deserves.
  I and others have been working with the gentleman from Illinois (Mr. 
Hyde) to seek reform of some of the procedures used in Federal 
forfeiture cases, but I do not think there is any question, as I 
indicated, that forfeiture should be available in telemarketing fraud.
  Again, as my friend, the gentleman from Virginia, pointed out, H.R. 
1847 will also increase the penalties for telemarketing fraud by 
utilizing the Sentencing Commission. In this respect, I submit the 
Senate has substantially improved the bill. Our original version would 
have increased the penalties by specific amounts set forth in the 
legislation.
  When the House considered the bill last July, I expressed 
reservations about that particular provision because I do not believe 
that Congress should usurp the role we assigned to the U.S. Sentencing 
Commission in prescribing appropriate sentencing ranges.
  The bill before us today directs the Sentencing Commission to amend 
the Sentencing Guidelines to provide for substantially increased 
penalties for persons convicted of telemarketing fraud. I believe this 
is a major improvement in the bill, and I strongly support this change. 
I anticipate that the Sentencing Commission will listen clearly to the 
message intended to be sent by this body.

                              {time}  1545

  In sum, Mr. Speaker, criminals who prey on the vulnerabilities of 
others should be held to account. This legislation does just that. I 
commend the gentleman from Virginia (Mr. Goodlatte) for his leadership 
on the issue and urge my colleagues to support this bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. GOODLATTE. Mr. Speaker, I yield myself 30 seconds, and I do so to 
thank the gentleman from Massachusetts for his strong support for this 
legislation. He speaks from authority when he talks about this as a 
former prosecutor, and I very much respect his remarks and welcome them 
and welcome his support for this legislation.
  Mr. Speaker, I yield 2 minutes to the gentleman from New Jersey (Mr. 
Saxton).
  Mr. SAXTON. Mr. Speaker, I just rise briefly to commend both the 
gentleman from Virginia (Mr. Goodlatte) and the gentleman from 
Massachusetts (Mr. Delahunt) for the great job that they have done in 
bringing this bill to the floor, apparently without opposition, and 
that is great work.
  We have all heard stories from time to time of telemarketing scams 
that too often target, as both the gentleman from Virginia and the 
gentleman from Massachusetts have pointed out, our Nation's older 
citizens. However, yesterday, I met with a group of seniors in my 
district from Toms River, New Jersey, and one of my constituents 
brought this very issue to my attention and shared his own fears of 
being swindled.
  Seniors are apprehensive of these predators, and with good reason. It 
is a horrible day when greed motivates someone to strip the hard-earned 
earnings and livelihood an older adult has accumulated over a lifetime. 
These corrupt schemes will come to an end, or at least will begin to 
come to an end under this bill.
  I fully support the provisions of the Telemarketing Fraud Prevention 
Act of 1997, which protects seniors and punishes ruthless criminals.
  Under this bill, the U.S. Sentencing Commission must increase its 
punishment level guidelines by eight levels for persons convicted of 
telemarketing crimes against anyone 55 years of age.
  There is no excuse for behavior that victimizes those who rely on 
their savings to survive. These con artists must be punished for such 
horrendous crimes. I sincerely hope that one day soon our Nation's 
seniors will no longer be preyed upon by these criminals.
  Mr. DELAHUNT. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.

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