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Inside ICE: Volume 3, Issue 3

Agents Dismantle Fraud Ring that Scammed U.S. Victims Out of Millions

WASHINGTON, D.C.— Twenty-four individuals in Costa Rica and the United States have been charged with criminal violations pursuant to a three-year investigation into an international sweepstakes scam that defrauded more than 2,000 U.S. victims out of at least $20 million. To date, 19 individuals have been arrested in the investigation, which was conducted by ICE, the U.S. Postal Inspection Service, the Commerce Department and other agencies. Five suspects remain at large.

The investigation began in September 2003 when ICE agents in Miami received information from ICE officials in Montana about victims of a sweepstakes scam that was allegedly being perpetrated by individuals in Miami. ICE agents began working closely with their counterparts and developed evidence to execute federal search warrants at the Miami offices of Knot Data, LLC and Columbia Productions Inc. in August 2004.

Evidence from the searches indicated that these businesses re-sold Voice over Internet Protocol (VoIP) technology, manufactured by Vonage, to individuals in Costa Rica. VoIP technology allows individuals to make phone calls that appear to be from any U.S.-based area code chosen by the caller, regardless of the actual location from which the call originates. Further investigation revealed that those purchasing VoIP technology in Costa Rica from the Miami companies were operating fraudulent telemarketing boiler rooms.

Working closely with Costa Rican authorities, ICE agents and their counterparts determined that the operators of the telemarketing boiler rooms in Costa Rica were calling thousands of victims throughout the United States and using VoIP technology to make it appear as though their calls were coming from Washington, D.C., area codes and other locations in an effort to add validity to their fraudulent solicitations.

Bogus Foreign Sweepstakes Winnings

During their pitch to victims, the fraudsters in Costa Rica typically claimed to be a “U.S. Customs” official or a representative of another federal agency. They would then tell the victims that they had won second prize in a foreign sweepstakes and that, to collect the prize money, the victims needed to send via Western Union anywhere from $1,000 to several thousand dollars to an “insurance entity” in Costa Rica as a “refundable insurance fee.” Victims sent wire transfers to Costa Rica to claim the prizes, but never received any money.

Once the victim had wired the money to Costa Rica, the fraudsters would often call the victims back and inform them that they had actually won first prize and that they needed to wire thousands of additional dollars in fees in order to ensure the safe delivery of the prize money. The defendants and their co-conspirators continued to call victims with this pitch as long as the victims continued to wire money to Costa Rica. None of the victims ever received any prize money.

It is believed that more than 2,000 U.S. victims were defrauded out of at least $20 million through this international sweepstakes fraud.

Professional Victim List Brokers

During the course of the investigation, ICE agents also identified so-called “list brokers” who sold lists of individuals in the United States who had been targeted and/or successfully scammed by deceptive contests, lotteries, sweepstakes and other offers. The investigation revealed that these brokers had leased or sold lists of fraud victims to operators of the telemarketing boiler rooms in Costa Rica.

INSIDE THIS ISSUE

Fugitive Operation Nets 179 Illegal Aliens in Las Vegas Area

Agents Dismantle Fraud Ring that Scammed U.S. Victims Out of Millions

Los Angeles Man Pleads Guilty to Attempting to Ship Sensitive Technology to Iran

Los Angeles Man Charged in ICE Probe for Having Sex with Minors in Thailand

ICE Observes National Police Week

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