Entries in Scamming (2)


Fraud Charges Filed Against Alleged Scammer Seen on "Nightline"

Jupiterimages/Thinkstock(NEW YORK) -- A federal grand jury charged a California man with 21 counts of fraud Thursday in connection with a massive debt collection scam that was highlighted in an ABC News investigative report in June.

Kirit Patel, 68, of Tracy, faces up to 20 years in prison if convicted of the charges, which stem from an operation that authorities allege targeted hundreds of thousands of cash-strapped Americans with millions of coercive and threatening phone calls from boiler rooms in India.

Patel has proclaimed his innocence through an attorney, and refused to answer questions when ABC's Nightline tracked him to his son's home in Texas in June.

Law enforcement officials told ABC News the phone calls targeted struggling Americans -- especially those who had gone online to apply for payday loans.  Armed with personal information from those pilfered loan applications, the threatening callers, who claim to be debt collectors poised to initiate legal action, managed to pry loose millions of dollars from their victims -- even when the victims never owed money in the first place.

"This is what we call a phantom debt collection scam," said Jon Leibowitz, the chairman of the Federal Trade Commission.  "It's a very pernicious and innovative new fraud."

The indictment alleges that Patel participated in the scheme by setting up a front company in Northern California named "Broadway Global Master" that was used to process the payments after victims relented and provided credit card numbers to avoid arrest over the nonexistent debts.

According to the indictment, the scheme involved more than two million phone calls, resulting in fraudulent transactions totaling more than $5 million.

Some victims told ABC News they had receiving dozens of calls per hour.  One victim, Cindy Gervais, of New Orleans, said she believes the calls started after she went online for a quick loan when her husband's car was hit by a driver who didn't have insurance.

Even though she paid the loan off, the so-called "phantom" debt collectors began calling to say she still owed money.

"He more or less told me that if I didn't pay, they were going to have someone on my doorstep to arrest me," she told ABC News.  "And that they were going to contact my place of business, and tell them what kind of person I am."

At first, she said she resisted.  Then the calls became more frequent, and started to ring on her cellphone, and at the grocery distribution company where she had worked for 27 years.

"I was more or less in panic mode because he told me there would be someone before noon at my place of business to arrest me and take me to jail," she said tearfully.  "So I agreed to pay him."

After receiving scores of complaints, investigators with the FTC said they began tracking the calls, and following the payments.  They alleged the payments led them to Patel.  ABC News tracked Patel for weeks, from the suburbs of San Francisco to Austin, Texas.

Patel refused to talk.  But his lawyer, Mark Ellis, said in June he believed it was far too early to pass judgment on his client.  Ellis, a Sacramento-based attorney, told ABC News that Patel was hired for a nominal fee to set up an American shell company, and had no idea what the call centers in India were doing.

"I can tell you, he was as snookered by the people in India as anybody," Ellis said.  "He's a man who is nearing his retirement who thought all he had to do was set up some corporations and everything was on the up and up.  He's completely dismayed that he has become the lightning rod of this entire problem."

Leibowitz, the FTC chairman, said his agency did not believe Patel was snookered.

"I would say that all roads of this scam, or many of the roads of this scam, lead back to Mr. Patel," he said.

The FTC has froze more than half a million dollars in accounts from Patel's corporations.  FTC officials said they will argue in court that the funds should be seized and returned to consumer victims.

Copyright 2012 ABC News Radio


How to Protect Yourself From Fake Debt Scammers

Eyecandy Images/Thinkstock(WASHINGTON) -- "You will be behind the bars for six months and once you go behind the bars, you will lose your job. Once you are behind the bars, you won't get a single drop of water."

That's the message received by just one of hundreds of thousands of cash-strapped Americans who authorities say have become the targets of a "phantom" debt collection scheme in which victims are bullied and threatened into paying conmen money they do not owe, as reported in an ABC News Nightline investigation.

"They call up and they pretend to be policemen... sometimes they've been from the FBI or the Department of Justice," said Jon Leibowitz, chairman of the Federal Trade Commission. "So it is just a hardcore kind of scam and we're beginning to see more of it."

WATCH FULL REPORT: Phantom Debt Collectors From India Harass Americans, Demand Money

But there are steps consumers can take to make sure their money is safe the next time the phone rings. Check out the tips below and head to the Federal Trade Commission website for more.

Spotting a Potential Conman

Just because the caller says he's an authority figure, that doesn't mean he is. According to the FTC, there are several ways to tell if someone may be trying to pull one over on unsuspecting callers. Keep a lookout for the following red flags:

  • First, does their story make sense? Are they asking you about a debt you don't recognize in the first place?
  • Be suspicious of anyone claiming to be law enforcement. "The police, the FBI, the Justice Department probably never enforces payday loan collection," Leibowitz said. "They're not debt collectors."
  • The caller won't give you ways to reach him such as a mailing address or phone number.
  • The caller asks you for personal financial information -- that a legitimate figure would likely not have to ask for -- or threatens you with legal action if you do not pay.

If You Think You're the Target of a Scam...

  • First things first, the FTC says to ask for the caller's name, company, address and phone number and for a "validation notice" detailing the debt owed. "If a caller refuses to give you all this information, do not pay!" the FTC says.
  • Do not provide any personal information over the phone. If you do, that information could be used by thieves for identity theft.
  • Tell them to stop calling and, if you have an address for them, ask them to stop calling in writing. By law, real debt collectors must stop calling if you request that in writing, the FTC says.
  • The most obvious course of action, Leibowitz said, is to call up your actual creditor. "If a consumer knows they have debt, call the debtor up. The debtor can can you, 'Yes, I called.' or 'No, that was somebody else,'" he said.
  • Report the call to the FTC and state authorities. "Many states have their own debt collection laws" in addition to federal ones, the FTC says. "Your Attorney General's office can help you determine your rights under your state's law."

"The thing we wanted to do first and foremost was we wanted to shut this operation down," Leibowitz said.

CLICK HERE to visit the FTC's website.

Copyright 2012 ABC News Radio

ABC News Radio