Telemarketing Fraud Operations
Telemarketing fraud operations are defined simply by the principle
medium of contact used to perpetrate the fraud. They should not
be, but are often confused with legitimate telemarketing operations
and call centers which, though potentially annoying, make up a
large industry and workforce.
|Operations may consist of a single individual,
a complex call centre, or a makeshift and portable office facility
set up with a bank of phones. If calls have not been preceded
with promotional materials but are made from lists of leads
or at random, then they shall be deemed as being outbound calls.
If consumers are encouraged or induced to call
a number on their own, then the call and operation
are deemed to be of an incoming or inbound nature.
The Federal Trade Commission estimates that in excess of 14,000 fraudulent telemarketing
businesses currently operate in North America.
Telemarketing Fraud in Canada
As of 2001, criminal telemarketing fraud operations in Canada
remain strongly concentrated in three major metropolitan areas:
Montreal, Toronto, and Vancouver.
•Montreal The greater Montreal area is the location
of approximately 5 to 10 large telemarketing operations, plus
an unknown number of smaller telemarketing operations. These
operations, which use anywhere from a single operator to nearly
30 employees, concentrate on schemes offering foreign lottery
chances and prizes or sweepstakes, as well as so-called "recovery
•Toronto The greater Toronto area has approximately
50 to 60 fraudulent telemarketing operations, some of which can
be as large as 40 or 50 employees. These operations are conducting
a variety of schemes, including offering advance-fee loans, credit-card "protection," stock
swaps; prizes and sweepstakes; and "investment-grade" gemstones.
•Vancouver The lower mainland area of British Columbia – including
Vancouver, Burnaby, North Vancouver, Richmond, and Surrey – has
approximately 220 to 250 fraudulent telemarketing operations.
These operations, which typically use anywhere from 3 to 35 or
40 employees, concentrate on schemes involving foreign lotteries,
investments in so-called "British bonds," credit-card
protection, recovery rooms, and fraudulent billing of compromised
A number of these operations take extraordinary measures to increase
the difficulty of successful investigation and prosecution. These
measures include using cell phones (sometimes in conjunction with
prepaid "calling cards"), which can be discarded after
several weeks of intensive use; using stolen identity cards to
open mail drops for receipt of payments that victims mail to them;
using multiple mail drops that shuttle victim-related mail through
multiple destinations; impersonation of FBI and Customs agents
or RCMP officers, to make victims believe that law enforcement
is already aware of their losses; contracting with other telemarketing "boiler
rooms" to do their work; and laundering of fraud proceeds
through foreign bank accounts.
In addition, U.S. and Canadian law enforcement have noted the
involvement of organized crime in some of these telemarketing operations,
although organized crime does not dominate fraudulent telemarketing
as a whole.
Toronto a hotbed for phone fraud
Telemarketers sell phony credit cards to U.S.,
By Robert Cribb and Christian Cotroneo 11/02/02
Dale is lying.
The telemarketer, covered in tattoos and wearing a blue bandana
around his head, is convincing a stranger on the other end of the
phone to trust him with a bank account number.
"We're not telemarketers," he tells his hesitant American
customer. "We're a bank. There's a difference."
The person on the other end of the line may have visions of a
well-heeled businessman, in a pin-striped suit, surrounded by marble
pillars. But it's far from reality.
The austere and dingy third-floor office, on Yonge St. near Queen,
where Dale sits with about 20 other telemarketers, bears no resemblance
to a bank branch.
There's precious little of his skin not covered with ink, and
precious few things he won't say to make a sale.
Welcome to the boiler room.
Many legitimate telemarketing firms operate in Canada, selling
everything from museum memberships to newspaper subscriptions.
But experts say there are as many as 500 shady operations in Toronto
alone, with thousands of telemarketing workers making deceptive
pitches to Americans and Europeans.
These offices may not look like much, but it takes only polished
phone patter —filled with half-truths and outright lies —to
Dale has just sold one unsuspecting American a "Gold MasterCard" with
a "zero per cent interest rate" and "no annual or
monthly fees" —all for a one-time membership payment
of $199 (U.S.).
A MasterCard doesn't arrive. In fact, the credit card giant isn't
involved with the telemarketing company. The card offer is part
of a "package" of services offered under the business
name U.S. Guardian.
With his sale, Dale is one step closer to his weekly paycheque
of $800, tax-free.
And, since a valid credit card never comes, Dale's target joins
the thousands of consumers being defrauded.
Instead of the promised card, some receive applications for "stored
value" cards, which can be used only to tap money customers
have already put into an account, much like a debit card. Others
receive coupon books and information on applying for products or
services, such as cell phones or satellite dishes.
How do you move what amounts to a package of coupons?
Part of it is salesmanship —those twisting, charming pitches
that swing through each sale with the greatest of ease. An ability
to think quickly and creatively is definitely an asset. But that's
not enough to ring up big sales.
"You gotta lie," Dale tells a reporter posing as a new
"This is telemarketing. You tell them they're approved (for
a credit card), but they're not. ...You just gotta say whatever
you need to say to get the sale."
Thousands of Americans —mostly people with bad credit and
heavy debts —are lured by the promise of a new card. Buffered
by an international border, which offers added protection against
prosecution, offices in Toronto, Montreal and Vancouver are turning
plastic promises into a billion-dollar industry. And ringing up
Canada's reputation as a telemarketing titan.
Most major Canadian cities have telemarketing boiler rooms —small
sales offices that can spring up and close down overnight. Usually,
the only desk furniture is a telephone.
Montreal and Toronto have sophisticated operations with hundreds
of call centres specializing in unsecured credit cards. Vancouver
has earned a reputation as an international capital of foreign
lottery scams, promising customers big winnings on overpriced tickets.
Targets tend to be poor, often elderly, people with a lot of debt
and little chance of obtaining credit. Their names may appear on "sucker" lists,
especially if they have fallen for misleading pitches in the past.
Companies buy and sell these names.
Officially, call centres use a script that's scrutinized by a
legion of lawyers.
But the script has little to do with what agents actually say
on the phone.
Telemarketing success relies on the creative sales pitch. The
bigger the lie, the fatter the bottom line.
At another boiler room across town, Vicki is getting a bit testy
with her prey.
"What do you mean you're confused?" she says sharply
to the person on the other end of the phone. "I've explained
it to you. It's very simple. There's nothing illegal here."
Her forehead crumples with disgust as she scolds the Texan.
"You have to make a decision right now," says Vicki,
a law school student.
"It's a one-time offer. Is the problem with the membership
fee? You weren't listening. I told you there are no surprise or
hidden fees," she says in a brisk monotone, her eyes rolling
toward the ceiling.
"The $199 is the last fee you will ever pay. It's a real
credit card that does everything a real credit card does. Is it
so difficult to understand?"
Vicki tells customers the card comes from a company called Trans
America and has no annual fee. But the information sheet, handed
to employees on their first day on the job, states: "There
is an annual fee, approx. $45.00 per annum."
"Now I need the account number to process the application," she
tells her customer.
Pen in hand, her arm darts to a piece of paper. Bingo. She begins
scribbling down the numbers being read to her over the phone.
This is Vicki's third sale of the morning at this boiler room
on Danforth Ave. near Coxwell.
About 30 small desks line the walls, each with a telephone.
Vicki is one of the office heavyweights, able to land a solid
10 to 15 sales a day between law classes.
"People can walk out of here with $3,000 a month," she
tells a newcomer to the office. "I wouldn't have any other
job. I like the money. I can article at a Bay Street law firm and
they pay $200 a week. Two hundred! It's a big Bay Street law firm,
but so what? I come here and make far more than that."
She's got the golden patter, a mix of quick and creative answers
to any questions, truth notwithstanding.
"We're just trying to boost consumer spending in the aftermath
of 9-11," she tells her next customer. "We want to see
your credit rating grow like a tree."
How does a law student get into the phone fraud business?
Pick up a newspaper classified section. "Fresh start!" one
"New beginning," proclaims another.
Show up for the interview and you could be working within minutes.
Boiler room managers in Toronto don't ask for identification,
experience or a resumé.
Even teenagers who have never owned credit cards could find themselves
selling after little more than a slap on the back.
If you can speak English and read the pitch, and embellish it
without tripping up on guilt, you're likely in.
"We don't take off any taxes or CPP or nothing," one
manager tells a new recruit. "It's all clear money. We pay
There are no tax deductions since most telemarketers are considered "independent
contractors." They are paid by the hour, or earn about $20
commission per sale, or receive a blend of hourly pay and commission.
Handing out scripts with the slow, steady gravity of a blackjack
dealer, manager Jerry prepares four new workers for their boiler
Words to live by. Words to sell by. Words by Jerry —and
he guards them like a holy manuscript.
"These do not leave this address; this office; this building;
181 Eglinton Ave. East. Two reasons: Number one, any of you guys
could be working for the competition. You ain't getting my script.
"The second is, we deal with private information. We deal
with bank account numbers from people. When people put pieces of
paper in their pockets, or purses, I start to get a little nervous.
"Now, let me show you a few things here," Jerry says,
glancing at his papers.
He reads in a steady drone, breaking his monotone only with a
"If you read it like that, I'm not going to put you near
a phone. I've got to have some kind of personality."
Something along the lines of infomercial tycoon Susan Powter,
he suggests, brandishing her picture.
"She is totally obnoxious," Jerry says. "She says
she used to be 380 pounds. Now she's a pin. She's full of shit,
excuse my language.
"She's obnoxious, she's intense, she's got energy. Is she
rich? Tons of money."
There's that word again. Money always brings a smile to Jerry's
When he says it, thin lips curl upward naturally on the second
His green eyes glimmer beneath the low visor of a New York Yankees
Jerry leads them into a small room about half the size of a high
school portable, where three operators sit at Spartan desks, phones
pressed to their ears. An operator hands him the phone.
"Mrs. Provost?" he asks in bright tone with a newly
minted twang. "Bear with me, Mrs. Provost. My computer's got
With one hand, he taps the surface of the empty desk, as though
typing feverishly at an invisible computer. With the other, he
flicks through a stack of papers, each containing names, addresses
and phone numbers of other potential customers in the same state,
"Oh, you're from Ladson," Jerry says. He tells her about
a road trip, an aunt who lives in the area and an excursion to
the local reservoir. No one knows if Jerry's married. Or even has
an aunt. But there isn't a town in the United States that doesn't
boast one of his relations.
The only real hurdle for fraud-bent telemarketers is their moral
compass. And even religion can be exploited for the pitch.
Luke doesn't separate church from the state of his wallet. The
Pentecostal Christian sells a little of his soul with each call.
"My soul is with thee," he sings to himself, while punching
keys on the phone.
A Bible sits open next to him.
"My soul is with theeee ... Hello is Melanie there?"
His rich preacher's voice breeds familiarity.
"Hello, is Olivia there?" he croons into the receiver. "Do
you know when she will be back?" May I ask who I'm speaking
"Oh, you're Chianna. You're the main one I was looking for.
... Do you have a pen and paper handy there, angel?
"You sound fine," he purrs. "I got to come down
there. I want to be in your presence."
She hangs up.
"My soul is with thee," he sings in a low, milky drawl. "My
soul is with thee."
"Hi there, big guy," he greets his next potential customer. "I
see you're in Alabama. Beautiful state. How's the weather down
Slowly, he works into the pitch.
"I'm just calling you today with some good news. It says
here on the computer that you've been approved for the Gold MasterCard
you applied for."
Luke has neither a computer in front of him nor any indication
that his customer had ever applied for a MasterCard.
But the approach is a proven ice-breaker, agents say.
"I just need to confirm some details, including the spelling
of your name, address and a couple of other things. Sound good
Then comes the killer moment in each pitch —the point where
agents have to reveal the big $199 upfront catch.
Luke is having a tough time getting over that hump today.
"Now there is a one-time membership fee of $199 for the card,
which I can arrange to have paid for out of your bank account."
He pulls the phone receiver away from his face and smiles. "He
hung up on me. Oh well."
Spencer, another office ace, has a slick way around that awkward
moment when he has to request a customer's bank account number.
"Okay sir, I have your bank account number in front of me
here on the computer," he says, despite having no computer
or bank account number before him.
"I just need to verify it with you. It all came in with your
application. Can you read it back to me in order to process the
order? Can you do that now, please?"
The target hesitates.
"No, I can't read it out to you, sir, because we're not allowed
to read people's account numbers out over the phone. You have to
read it back to me .... Okay, the information is confidential.
We have to confirm the account number by you reading it. Our security
office will read it back to you in 20 minutes."
All too often, the telemarketer's victim responds by reciting
a bank number.
Later, when a newcomer asks Spencer about the job and his particular
pitch, he shrugs his shoulders.
"I just say what I have to say to sell them, you know? You
have to sell yourself. I don't talk about the details or how the
card works. Sometimes I say it's 4.9 per cent interest rate just
because it sounds good... This is life, man. I don't feel shitty.
I don't care."
And that sentiment rings true when angry customers call.
A ringing telephone always means an irate client. They didn't
receive their credit card. Their account was debited on the wrong
date. The bank didn't approve their card.
One telemarketer recalls how he finally picked up only to listen
to a furious client. The customer had been systematically hung
up on every time he called.
"Sir, I apologize for how we treated you," the telemarketer
"Then I hung up," he snickers.
A woman from Tuscon, Ariz., gets her call answered. She complains
that the card she agreed to pay for hasn't arrived, even though
some of the $199 has been removed from her account.
A reporter working undercover in the boiler room, who takes her
call and contact information, asks Dale what to do.
"Just tell her you'll ask your supervisor to look into it
and get back to her. But you don't have to give it to anyone. Don't
worry about it."
A couple of cubicles away, someone gets a call from a dissatisfied
customer asking for a supervisor.
"A supervisor? Sure, just one moment. I'll try to find someone."
He waves another telemarketer over to take the call. He isn't
"Yes, hello," the man tells the caller. "Okay,
just call our customer service telephone number. It's based in
But that number is disconnected.
In the afternoon, Rocco, one of the managers, offers to show some
new recruits the company's big Yonge St. office. The office car
is a shiny new PT Cruiser.
"Do you like Eminem?" he calls to the recruits in the
Music up. Windows down.
The car wedges abruptly out into the middle of a busy intersection.
"In telemarketing, there are no stops," he continues. "You
can make as much as you want."
Rocco turns into an unmarked alley near Wellesley and Yonge. Scarcely
out of the car, he is hailed by three young men shouting down from
a fire escape. He returns the greeting and climbs the steps.
"I'm giving them a tour," he points back. "I want
to show them how a team works."
Wall-to-wall windows catch every last ray of the afternoon sun
in the large, open office. In the far corner, a smaller office
is walled in glass.
Like the Danforth office, pictures and slogans provide stark inspiration.
"Persistence: Chance favours those who persist."
This office, Rocco says, generates 150 sales per day; the entire
family of offices, under the same Ontario numbered company, makes
something like 750.
He introduces everyone, along with their earnings.
Dave, one of three young men playing cards in a corner, makes
about $2,000 a week. Tax-free. Greg hunches over a phone, a 50-something
in a suit and tie. He smiles when he sees Rocco —and holds
up a finger: He's in the middle of a sale.
"He's got the bank account number right now," Rocco
beams with pride.
Unlike most other offices, there's an air of permanence here.
Photographs of smiling young children adorn the space above a desk.
There are no rookies. These are the top sellers —proven
people who worked their way up from other offices.
"It's a real team," Rocco enthuses. "It's what
I'm trying to build in my office."
Alan sits a few desks down. He's a 100-sales-a-week man. A juggernaut.
"These guys are all focused, man," the boss looks on,
an approving smile stamped across his broad face.
High flyers thriving in a low-life industry
By Christian Cotroneo and Robert Cribb
Staff reporters 11/03/02
Domenic Capogreco flashes a sly grin at Josephine "the sex
His head swivels from the poker table, where chips are bought
with the toss of a $100 bill. Eyes move from the stripper's face
down her barely covered body.
Moments later, the boyish entrepreneur is getting a "wraparound" —Josephine's
ivory legs encircling his mid-section and delivering a faceful
It's the early hours at a stag party filled with some of the biggest
players in Toronto's seedy, multibillion-dollar telemarketing trade.
They're the high flyers in a low-life industry.
Sporting expensive clothes, gold chains and bulging wallets, these
young tycoons run telemarketing boiler rooms across Toronto —small,
high-pressure sales offices that can spring up and close down overnight.
Usually, the only desk furniture is a telephone.
Each day, hundreds of sales agents pitch misleading credit card
offers to poor, often elderly, Americans.
Canada has become the international headquarters of telemarketing
fraud —a reputation that is spreading around the world as
victims and their advocates blame lax Canadian enforcement for
their misfortune. Most telemarketers in this country run honest
operations, selling a wide array of goods and services. But police
and government experts estimate between 300 and 500 deceptive telemarketing
boiler rooms operate in Toronto alone —many more across the
Capogreco, 29, lives in a sprawling home in King City, north of
Toronto, complete with a three-car garage. He's the registered
owner of a posh silver Acura 32T and runs two telemarketing offices
pitching misleading credit card offers to Americans.
His targets are generally people with a lot of debt and little
chance at getting a credit card from their bank. They pay $249
(U.S.) for what they believe will be a major card. It never comes.
What they receive by mail is a "benefits" package containing
application forms for products or services such as cell phones
and satellite dishes —all with hefty service charges —and
a plastic card only good for buying items from an included catalogue.
The package also includes an application for a "stored value" credit
card that, if obtained, amounts to little more than a debit card —users
have to provide their own money up front.
Thousands have complained to governments and consumer advocates,
saying they'd been misled.
Capogreco is listed in public records as sole director of IMD
Marketing and FCE Marketing, both run out of nondescript Toronto
FCE is in a second-floor office at 1980 Yonge St., south of Eglinton.
A sign out front beckons new recruits: "Wanted: Telemarketers;
Guaranteed Wage; $ Big Bonuses $."
IMD is located on the third floor of a retail building near the
corner of Eglinton Ave. and Yonge St. Inside, telemarketers spend
their days dialing for dollars across the U.S.
Hundreds of such offices are spread across the city's downtown
core, many run by young, wealthy owners, like the ones celebrating
at the stag.
"If the police raided this place tonight," mused one
partygoer, "the whole industry would be shut down."
Toronto telemarketers have quietly collected millions, helping
finance affluent lifestyles at the expense of the most vulnerable
of U.S. citizens. Susan Tepfer, a 46-year-old grandmother in Texas,
liked the sound of a credit card with a $2,000 limit when a company
called in June.
The call came from a Toronto boiler room, it's not clear which
among several in the city marketing a "benefits package" under
the name American Capitol.
Susan and her husband, Jack Tepfer, live on a plot of land on
a dirt backroad of a small town called Whitney —a middle-of-nowhere
place that Toronto telemarketers somehow found.
The Tepfers moved to the country for the low property taxes. But
there's no work.
That's why Susan works two days a week in Dallas, a 90-minute
drive. The rest of the time, she works from her computer at home.
Because of chronic illness, Jack is unemployed.
He has suffered three heart attacks, a hip replacement, and back
surgery. The hip cost $10,000, a recent cardiogram ran up a bill
Financial constraints and a pile of medical bills made the credit
card offer sound attractive.
"I was vulnerable," she says, digging out a stack of
unopened medical bills.
"We got 20 medical bills for Jack last week alone.
"Some of them are little bills, some of them are bigger,
but I thought I could pay for them all at once on that card."
Susan's brother, who didn't have medical coverage, recently suffered
a heart attack too. She has been supporting him and has her own
health concerns. She suffers from a fatigue disorder that causes
chronic aching and sleep problems.
After giving telemarketers her account information on the telephone,
she was mailed a package full of coupons and application forms
for other credit cards. Some of the paperwork asked for more money.
"It sounded good on the phone," she said. "They
told me I could move the balance from my other cards on to this
one. They gave me a contract number and a pin code. But when I
called back, the number was disconnected."
She kept calling, trying other numbers. "I finally did get
through to someone and said, `This doesn't look good. I want my
money back.' And they said no.
"I'll never see that money again. It's gone. The Better Business
Bureau couldn't help us because it's all been out of state."
"It's the principle of it," says husband Jack. "Not
the money. It's all been a lie."
Once telemarketers complete a sale, they tell the customer to
stay by the phone because a "verification officer" will
be calling shortly. In that second conversation, the verification
officer simply confirms details such as the customer's name, address,
bank account number and bank address. The conversation is recorded
as evidence of the customer's permission to withdraw funds.
By all accounts, telemarketing in Toronto is a freewheeling industry —decentralized,
with many overlapping networks. Police crackdowns tend to net a
handful of players, leaving unscathed a host of other telemarketers
who offer the same, or similar, misleading packages. Those police
busts haven't put a dent in this booming trade.
Among the boiler rooms selling American Capitol, until recently,
were Capogreco's FCE and IMD.
Emerging from his Yonge St. office last week, Capogreco walked
across the street and into a Canada Trust branch. A few moments
later, he re-emerged with a roll of cash, counting it as he sauntered
into a bagel shop, then back into the office.
It was the same day Sarah Nash lost her job at FCE.
The 27-year-old had only been there a week when she realized "something
underhanded was going on."
It started when a customer called to complain and put a stop to
the payment she'd made to FCE.
"The customer had been trying to get in touch with us for
a while. I told a manager and he just crumpled up the piece of
paper with her number and name. A reputable company would follow
up with customer complaints."
Nash started asking questions about the "package" FCE
sends out to customers.
She didn't get any answers.
"I told them I wanted to research the company and tell customers
where the package was mailed from. Domenic (Capogreco) said, `New
York, I think,' which was weird. I said I wanted the number. They
said there was no number and it wasn't any of my concern and to
just do my job."
A day later, she confronted management.
"I couldn't complete the day knowing I'd be taking money
from these people," says Nash, the daughter of an Anglican
minister. "I told them, `You're ripping people off and I hope
you believe in karma because it will come back and hit all of you.'
Then I just said, `Shame on you.' That's when they fired me.
"I think it's horrible that there are so many of these companies
(in Toronto). They have to crack down on it. These are vulnerable
people on hard times, trying to restore their credit. It's horrible
to prey on them like this."
In an interview with The Star, Capogreco said he wasn't familiar
with the product his agents sell to Americans.
"I haven't seen it," he said. "Basically, we're
selling the benefits package. You're getting the credit card with
the package. And the package is being sent out to them. We have
a customer service department ... They do all the back-end stuff.
I do none of that stuff."
He says he doesn't know where the customer service department
What about customers who say they were misled?
"You get that from time to time. The only control we've got
is if the customer calls customer service department. Then they'll
take care of it from that point ... I usually give (agents who
are the subject of customer complaints) three chances. It depends
on how bad it is. If it's extremely, extremely, extremely bad,
I'll get rid of them right away. But if it's something that's minor,
I give them three chances."
Inside one of Capogreco's boiler rooms, it's clear agents will
do whatever it takes to make a sale. Slips of paper with key sales
slogans are tacked on cubicle walls. Sales staff are given a script
approved by lawyers, but that's just a starting point once they
go to work.
"It's a dirty, lying profession," says Tom Adams, an
IMD manager, speaking to a Star reporter who worked at the company
"I'll sell it to a single mother of four who lives in a trailer
park and know her kids won't have clothes to go to school. And
I'll sleep well," says Adams, whose office is inconspicuously
located above a Swiss Chalet restaurant at 181 Eglinton Ave. E.
"As far as I'm concerned, if you're stupid enough to give
me your account number, you deserve to get screwed."
Recently, Adams pitched the credit card offer to a man who was
having his home phone redirected to his hospital room.
"He has asbestos poisoning and bronchitis. He was telling
me his life story. His wife died five years ago."
Adams sold him the package.
"He said `Thank you, Jesus.' Everyone knows what they're
doing is wrong. No one uses their real names. I use Tom Adams when
I'm on the phone."
Telemarketers generally earn an hourly wage with bonuses for good
sales numbers, or a $20 commission per sale, or a blend of both.
Until recently, IMD and FCE telemarketers have represented themselves
to customers as agents of Delaware-based American Capitol. Now
they're selling a package from Missouri-based Royal Star Benefits.
Both are grand sounding corporate names for companies with U.S.
addresses. But those addresses only serve as a mail drop, allowing
Canadian telemarketers to represent themselves as Americans.Both
American Capitol and Royal Star have plenty of complaints registered
against them in the United States.
After logging more than 1,000 inquiries about American Capitol,
Delaware's Better Business Bureau issued a statement in May, saying, "according
to our research, funds are withdrawn (from the accounts of customers)
but no credit cards have been issued ... Our file shows mail sent
to this company was returned by the post office as unable to locate.
The phone number is a number out of Canada."
The company's Wilmington, Del., address amounted to nothing more
than a rented telephone number and mail forwarding service. The
building's management cut American Capitol off in June on the grounds
that the firm "is in violation of state and federal laws," according
to documents obtained by The Star.
American Capitol is actually registered in Toronto under the name
First Beneficial Credit with two listed directors —Viktor
Golub and Armand Petrou. The corporate address on Yonge Street
is a postal box.
In August, American Capitol/First Beneficial Credit was sued by
the U.S. Federal Trade Commission in connection with more than
450 consumers who received misleading credit card offers.
"It's all closed down now," said Golub, who made newspaper
headlines earlier this year for having almost $800 worth of unpaid
parking tickets, landing him on the Toronto Parking Authority's "most
wanted" list. At the time, he said the parking authority had
Last week, he vowed to resist the U.S. Federal Trade Commission. "I've
got a lawyer. We're fighting."
Andrew Cove, a Florida lawyer representing Golub and Petrou, says
U.S. authorities were overzealous in charging American Capitol.
"(The FTC) will occasionally take action that is misplaced
or is in error or is unwarranted," says Cove, who represents
a "long list" of Canadian telemarketing firms facing
charges in the U.S.
"And with all due respect to the commission, we believe this
is one of those cases and we fully expect to be able to show that
Following the FTC action two months ago, American Capitol/First
Beneficial ceased operations, says Cove.
Since then, Toronto telemarketers such as Capogreco have been
selling Royal Star Benefits, a similar "benefits package" that
includes a major credit card offer.
Glenn Stevens, known as Gomer to his friends, runs a telemarketing
operation at 4632 Yonge St., just south of Sheppard Ave., called
He leans back in his black leather chair and spreads a comfortable
smile across his face as he speaks with reporters. Down the hall,
about 10 telemarketers work the phones selling the Royal Star package.
The L-shaped desk in front of him is dominated by two flat-screen
He glances from one to the other, then to the little white security
monitor that lets him keep an eye on his employees.
A stack of multi-coloured paper rises up in one corner of the
office. These are the leads —contact information for thousands
of Americans —that are bought and sold within the industry.
Asked about customer complaints regarding Royal Star's "benefits" package
and the way it is sold, Stevens insists his agents sell no illusions.
"We try the best we can to do it as clean as possible," he
"The bottom line is customers are going to be pissed off.
Some customers won't. Those customers that do get pissed off, because
they were promised something that they didn't receive, they will
receive their money back. That's it."
False promises do happen, he admits.
"Yeah, there (are) assholes that get on the phone and tell
the customer whatever they want to hear, just to make a sale and
to look good ... If they do that, if they do sell it like that,
there have to be controls."
Asked how he stops his agents from lying, Stevens says, "It's
very hard, very hard. That's the problem.
"All those people that do have a complaint should call customer
service and tell them, `I didn't get an unsecured card and I'd
like my money back,' and they'll get their money back." Customers
contacted by The Star say that doesn't happen. Stevens says the
head office for Royal Star Benefits is in St. Louis.
Royal Star does have a St. Louis address, but it's actually for
a company that supplies virtual offices to clients.
A Royal Star presence is nowhere to be found. And the Web site
associated with the company (http://www.yourbenefitz.com) contains
no contact information.
Asked about Royal Star's missing location in St. Louis, Stevens
says, "No, there's an office. There should be an office."
If there is, even the St. Louis Better Business Bureau can't find
it. "We are getting a lot of calls about them," says
Scott Thomas, of the St. Louis BBB.
"But they don't actually have a physical location down here.
I had heard the proprietors resided in Canada. We're looking to
gather information on them because we have had inquiries."
They're not the only ones.
Ed Madgedson, who runs a U.S.-based consumer watchdog Web site
called ripoffreport.com, has logged thousands of complaints about
Canadian-based telemarketers, including Royal Star Benefits.
"For telemarketing scams, Canada seems to be the place," he
says. "All the crooks from the United States locate their
business in Canada to save money, because it costs them less and
they also think authorities in the U.S. will have a tougher time
going after them."
The fact that telemarketers like IMD are located in Canada sometimes
compounds the loss for customers, he says.
"These people who order the credit card don't realize the
company they're dealing with is in Canada," he says. "They
start calling the number to complain but don't realize they're
calling Canada and have phone bills of $800 or more."
With hundreds of agents working the phones 12 hours a day, six
days a week, Americans are getting calls every few minutes from
Telemarketers "took my money and took me for a ride," says
Faye Balunsat, a 24-year-old living in San Francisco, who bought
the American Capitol package.
"I was collecting unemployment and I declared bankruptcy
when I was 22. After they took my money, I'd call every week asking
where my credit card was and they'd say next week, next week."
Then, the phone number she was given was disconnected.
"I cried. I really cried. It's so wrong."
James Craig, who lives near Cleveland, got a call from an American
Capitol marketer in April, after declaring bankruptcy.
"I took a chance and gave my account number and the money
was taken out as scheduled," he says.
The card never arrived.
"I went through three supervisors who didn't do anything.
Then I found out the 866 number I was dialing was a Sprint Canada
commercial number. That led me to the fact it was a Canadian."
Nadine Holmes, a 53-year-old single woman in Detroit, also fits
nicely into credit card telemarketers' target group. She fell for
American Capitol too.
"That money was real important to me. I live paycheque to
paycheque. Now I feel cheated and upset that the government would
let them keep doing this to people. Somebody should put a stop
The parking lot outside the Presidente Banquet Hall in Vaughan,
where the approximately 200 men are gathered for the stag party,
resembles a luxury car dealership, punctuated by Porsches and BMWs.
Two telemarketers are urging three others to join them elsewhere
at a private party.
"There's going to be Playboy bunnies, man," says one. "It's
going to be filled with Playboy bunnies. Just come. We'll meet
Inside, there's loud banter over the large speakers.
"What do you say to a woman with two black eyes?" the
MC bellows into the microphone. "Nothing. You already told
Hoarse laugher follows.
Just then, the room is filled with a pounding techno beat featuring
the same words repeated over and over: "Beat That Bitch With
Smiles all around.
With files from Christopher Hutsul
to this great article. If only temporarily, their original articles
were good enough to hit a nerve.
Telemarketers close down in wake of Star series
Robert Cribb and Dale Brazao, Staff reporters, Nov.
Telemarketing boiler rooms have abruptly shut across Toronto in
the wake of an investigation into Canada's multi-million-dollar
Shock waves rippled through that industry when The Star last weekend
unveiled widespread and shady telemarketing practices in the city.
Several bustling operations have fallen silent, no longer pitching
misleading credit card offers and other scams to vulnerable Americans,
often elderly or cash-strapped.
At dozens of locations starting Monday, telemarketing employees
reporting for work were told to go back home. Or they found an
abandoned workplace with locked doors and desks stripped of phones.
The closings have cost the industry "hundreds of thousands
of dollars," said Toronto Police Detective Jim White, of the
anti-fraud tactical unit.
But although battered by the shock of public exposure, Toronto's
shady telemarketers will bounce back, he added. There's simply
too much easy money to be made in this fly-by-night industry for
its practitioners to just walk away.
"They can shut down and open again overnight," White
Telemarketing firms closed for business include IMD Marketing
and FCE Marketing, both run by Domenic Capogreco, 29, of King City.
Public records list him as sole director for both companies.
FCE Marketing's Yonge St. office, just south of Eglinton Ave.,
was dark this week. In earlier days, its desks were filled, well
into the evening, with telemarketers pitching a misleading credit
card offer to Americans. Gone was a sign in front of the building
stating: "Wanted: Telemarketers; Guaranteed Wage; $ Big Bonuses
At Capogreco's IMD location, above a restaurant on Eglinton Ave.
near Yonge, a sign on the locked door stated: "Sorry folks,
we will be closed for a week."
Telephone calls to the companies went unanswered and Capogreco
could not be reached for comment.
Another telemarketing firm profiled by The Star, called RS Marketing,
was also shut. Run by Glenn Stevens, the company's Yonge St. office,
just south of Sheppard Ave., was locked and its door covered with
notices from couriers unable to deliver their packages.
Stevens could not be reached for comment.
The chill reached into boiler rooms across the city.
"I showed up Monday for work and the manager pulled me into
his office and said: `Did you see the paper on the weekend? We
have to shut down because of the heat,'" said Lowell Schrieder.
The 28-year-old actor had worked in a boiler room near Sheppard
Ave. and Dufferin St. since August and had secretly shot videotape
of the operation in hope of making a documentary.
"Once I became a regular at the office, I realized it was
completely wrong," Schrieder said, adding that the company
promoted a credit card offer similar to what was exposed by The
A telemarketing employee at yet another boiler room on St. Clair
Ave. W. said workers were abruptly sent home Monday.
"We had called the owner, on the weekend, about the stories
in the paper," she said, not revealing her name. "He
got back to us (Monday) morning saying, `You're fired, get off
the premises, all of you get out.'"
The office was subsequently abandoned - its phones removed and
sales "scripts" pulled from the wall. Left behind were
strips of masking tape, where the scripts had once been mounted,
and motivational posters with slogans such as: "Smile While
You Dial," "Sell Now Shag Later," and "Sell,
Sell, Sell, Sell, Sell."
A copy of Monday's Toronto Star was in the trashcan, opened to
a page with a story about the city's telemarketing industry.
One prospective employee, at still another boiler room, had hoped
to start work this week. Giving the nickname "Sharkey," he
said he was to be trained Monday but found the Yonge St. office,
just south of Bloor, had shut.
"The lights are off. I knew it was too good to be true," Sharkey
said, gazing at the company's blue and yellow sign. "I couldn't
believe how easy it was to be hired here. They just asked my name
and phone number and told me to start the next week."
An anonymous worker at another Toronto operation said: "Everybody's
shutting down. They've been destroying documents and getting rid
of anything suspicious that the police might find."
Canada is considered the international headquarters of telemarketing
fraud - an industry that finds a welcoming home here thanks to
relatively light sentences in the courts and scarce police resources.
Most telemarketers in this country run honest operations, selling
a wide array of goods and services. But police and government experts
estimate between 300 and 500 deceptive telemarketing boiler rooms
operate in Toronto alone - many more across the country.
Capogreco's companies targeted people who had high debt and poor
credit ratings, pitching them a major credit card for $249 (US).
After they paid, the card never came.
What they received by mail was a "benefits" package
containing application forms for products or services such as cell
phones and satellite dishes - all with hefty service charges -
and a plastic card only good for buying items from an included
The package also had an application for a "stored value" credit
card that, if obtained, amounted to little more than a debit card.
Stevens' firm marketed the same package.
Thousands have complained to governments and consumer advocates,
saying they'd been misled.
White, of the Toronto police, said he plans to investigate the
companies identified by The Star. But he warned limited resources
hamper police in their fight against deceptive telemarketers.
Detective-Sergeant Barry Elliott, an Ontario Provincial Police
officer who oversees a North Bay-based telemarketing complaint
line called PhoneBusters, says police efforts dedicated to stamping
out Canada's massive telemarketing industry are "a joke."
"These (deceptive telemarketers) aren't stupid," he
said. "They know there are only a few guys investigating them,
and the chance of getting charged and convicted is (the same chance
as) winning the lottery."
Police investigators say Malvern Crew
gang ran huge lucrative sideline - Americans lose millions to
local telemarketers scam
NICK PRON - COURTS BUREAU - Toronto Star
05/14/04 - Detectives are calling it the great untold story behind Wednesday's
dramatic police sweep to dismantle the Malvern Crew.
The street gang terrorized the northern end of Scarborough with
violence and intimidation, police say, but its power didn't come
only from the business end of a gun.
New members were seduced by the lure of easy money in what was
widely known in the criminal subculture as "the Firm" —a
telemarketing scam that generated millions of dollars, investigators
None of the 64 suspects arrested in Wednesday's sweep has been
charged with the telephone scam.
"The investigation continues and requires further investigation
to ensure all the dots are connected," said Detective Staff
Inspector Tony Crawford, head of the fraud squad.
He said that police will lay further charges, such as fraud and
identity theft, against the operators and ringleaders behind the
scam, whose victims were mainly elderly Americans.
Detectives with the Toronto police fraud squad say gang leaders
long ago realized that white collar crime was the way to go, because
of the huge profits to be made and the light jail sentences if
they were caught.
"Get nabbed walking around with a gun, and you're looking
at some stiff jail time," said Detective Jim White of the
"But if you get done for a fraud, you get a kiss from the
White said the unsuspecting Americans were duped into applying
for the phony
loans through ads in newspapers throughout the United States,
then calling toll-free numbers that led back to modern day "boiler
rooms" —equipped with mainly cellphones and laptops —in
Scarborough and throughout Toronto, he said.
The would-be applicants were then asked for personal information,
such as their addresses, driver's licence details and credit cards,
as if they were applying for a loan through a bank, he said.
Then came the hook. Before they could get a loan, they had to
pay an "insurance premium" in case they defaulted on
the payments. The upfront money, said White, ranged from $500 to
a high of $11,000.
The victims were told to send the cash in money orders via Western
Union to depots around the GTA.
Low-level members of the gang, known as "runners," were
then sent to pick up the money, he said. If they got caught, they
typically only knew the identity of the person who sent them on
the runs, not the more senior members of the gang, said White.
According to police figures, last year 12,192 people reported
they had been victims of the phony loan scam, losing a total of
more than $56 million. Up to the end of April this year, 4,285
people have reported losing a total of $19 million.
White said that many of the boiler room operations responsible
for the scam had connections with the Malvern Crew, either through
runners, those who ran the boiler rooms, or senior gang members
who set up the operations.
A typical recruit, he said, could make around $5,000 during the
summer for doing the runs to Western Union offices, as was the
case with one 15-year-old girl arrested earlier.
"Having all that money gave her instant status with her peers," he
said. "She was able to buy fancy clothes, treat her friends
and have a good time partying."
Runners who proved themselves to be trustworthy then moved up
to the next stage, selling small amounts of drugs like crack cocaine
or marijuana, he said.
Then comes the biggest status symbol of them all, "the privilege" of
buying a gun through the gang, he continued. Street prices for
the illegal firearms range from $1,800 to $2,000, he said.
The eventual goal of many gang members is to run their own loan
scam operations,which vary in size. One operation recently busted
by the police had five laptops and about a dozen cellphones.
In another, there were 28 cell phones.
The stolen information is used to buy cell phones, make bogus
credit cards, or even used to get loans, White said.