Advance Fee Loan Scams: Hearing Before the Ad Hoc Subcommittee on Consumer and Environmental Affairs of the Committee on Governmental Affairs, United States Senate, One Hundred Second Congress, First Session, December 19, 1991 |
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action Active Financial advance fee fraud advance fee loan advance fee schemes advance-fee loan scams advance-fee loan schemes advertising application artists asked Attorney bank Better Business Bureaus boiler room oper broker boiler rooms CBBB codes Comptroller Lewis con artists consumer protection consumers and small Council of Better court credit card credit crunch crime criminal Dallas defraud dollars facie violations false representation statute Federal fee loan scams fee loan scheme fraud schemes fraud statute GLADDEN going HEARST injunction inspectors investigation law enforcement agencies legislation legitimate lender loan broker boiler mail fraud McILHENNY million money laundering National epidemic newspaper obtain payment person phony loan post office box Postal False Postal Service problem promoters received refund regulatory response Section Senator LIEBERMAN subpoena subpoena duces tecum swindle telemarketing telephone thank things tion told typical U.S. Postal U.S. Postal Service unsecured loans victims weeks
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Page 61 - SALESPERSONS WORKING IN BOILER ROOMS, AS WELL AS THE PROMOTERS, IN ORDER TO DISCOURAGE THEM AND OTHERS FROM STARTING ADDITIONAL BOILER ROOMS. OFTEN, HOWEVER, IT IS DIFFICULT TO PROVE THE REQUISITE INTENT TO DEFRAUD WHERE A SALESPERSON MERELY READS A PREPARED SCRIPT AND HAS NO ABILITY TO DETERMINE ITS TRUTHFULNESS.
Page 61 - The latter statute only applies to schemes which seek to obtain money or property through the mails. Under this statute, false representation of material facts about a product or service, intended or unintended, whether made in matter that has been mailed, or by word of mouth, radio, telephone, television or otherwise is actionable only if the advertiser invites consumers to respond by mail. The mail fraud statute does not require this but, under applicable Supreme Court decisions, use of the mails...
Page 61 - FRAUD AND FALSE REPRESENTATIONS STATUTES SHOULD BE HIGHLIGHTED. THE LATTER STATUTE ONLY APPLIES TO SCHEMES WHICH SEEK TO OBTAIN MONEY OR PROPERTY THROUGH THE MAILS. UNDER THIS STATUTE, FALSE REPRESENTATION OF MATERIAL FACTS ABOUT A PRODUCT OR SERVICE, INTENDED OR UNINTENDED, WHETHER MADE IN MATTER THAT HAS BEEN MAILED, OR BY WORD OF MOUTH, RADIO, TELEPHONE, TELEVISION OR OTHERWISE IS ACTIONABLE ONLY IF THE ADVERTISER INVITES CONSUMERS TO RESPOND BY MAIL. THE MAIL FRAUD STATUTE DOES NOT REQUIRE THIS...
Page 61 - ABOUT LOANS, CREDIT CARDS AND PROMISED REFUNDS THAT NEVER MATERIALIZED; FIND THAT THE PROMOTERS RESPONSIBLE FOR THESE COMPLAINTS OPERATED FOR ONLY A FEW WEEKS OR PERHAPS MONTHS BEFORE "BUSTING OUT"; AND IDENTIFY THE PROMOTERS AS HAVING PREVIOUSLY OPERATED THE SAME SORT OF SCAM UNDER SOME OTHER IDENTITY. WE ALSO HAVE WITNESSED THE EASE WITH WHICH OWNERS AND SALES PEOPLE MOVE AMONG THE BOILER ROOMS, THE HIGH DEGREE OF RECIDIVISM IN BOILER ROOM SCAMS, AND THE FACT THAT THESE SCHEMES TEND TO OPERATE...
Page 63 - ... the addressees that they had been selected to receive one of five valuable prizes. An 800 telephone number was given to obtain more information. Those calling the number were pitched to buy a misrepresented water purifier for $598.00 We obtained! a temporary restraining order in August of 1989 and in October, a consent agreement was signed with a cease and desist order issued in November of 1989. However, the operator then moved and set up another operation under the name of Stone Key Enterprises....
Page 59 - Act through or by means of the use of said property and business. Such receiver, when appointed and qualified, shall have such powers and duties as to custody, collection, administration, winding up, and liquidation of such property and business as shall from time to time be conferred upon him by the court.
Page 61 - IN THE LATE SEVENTIES AND EARLY EIGHTIES, WITH INTEREST RATES SOARING AND MONEY IN SHORT SUPPLY, MANY PEOPLE LOOKED FOR INVESTMENTS PROMISING HIGH RETURNS. THE BOILER ROOMS RESPONDED WITH A MYRIAD OF SPECULATIVE INVESTMENT OPPORTUNITIES IN COLD AND SILVER, SECURITIES, COMMODITY FUTURES, REAL ESTATE AND OIL AND GAS LEASES.
Page 63 - ... set up fee" for the credit card account. Since the victims of the scheme do not have a credit card they are asked for the financial code on their checks. Those who disclose the code numbers soon find their account reduced by $119.00. Victims who do not have a checking account are asked to make three calls to 900 telephone numbers, for each of which they are billed $25.00 by the telephone company. The losses from the billings for 900 number phone calls alone exceeded $450,000.
Page 8 - Bureaus promotes ethical standards of business practices and protects consumers through voluntary selfregulation and monitoring activities.
Page 21 - ... MIGHT BE TO ENACT LEGISLATION REQUIRING THAT WHERE TELEPHONE SERVICE IS USED TO DO BUSINESS WITH THE PUBLIC, THE IDENTITY OF THE PERSONS HAVING THE SERVICE SHALL BE FURNISHED TO LAW ENFORCEMENT AGENCIES UPON REQUEST. BY WAY OF ANALOGY, WHEN THE POSTAL SERVICE BECAME AWARE...