Over the past few months, tax fraud schemes – especially those targeting the elderly – have been in the news. With all of the emphasis on tax-related schemes, it’s easy to forget that financial schemes targeting the elderly aren’t restricted to those involving Internal Revenue Service (IRS) impersonation calls or tax refund fraud. Today, the Department of Justice served up a reminder in the form of a civil complaint alleging multiple international mail fraud schemes that have defrauded elderly and vulnerable U.S. victims out of tens of millions of dollars.
According to the complaint, U.S. residents received fraudulent direct mail solicitations that falsely claimed that individual victims had won, or would soon win cash, prizes or other bonus. The solicitations appeared to be personalized even though they were really form letters mailed to hundreds of thousands of potential victims. The solicitations typically matched one of three types:
- False claims that the victim is the winner of a lottery or sweepstakes and will receive winnings if they pay a processing fee;
- False claims that the victim has won a large sum of money and should purchase a “guaranteed,” “secret” method for winning lotteries and other games of chance; or
- Solicitations allegedly from a psychic who has “seen” the victim winning large sums of money through the lottery or other contest which will only happen if with the purchase of various supernatural and divinatory objects or services.
In some instances, the solicitations claim that the recipient has already been confirmed the winner of a prize in bold, prominent lettering, but then explain in smaller text that the prize drawing has not yet taken place or that there is no prize drawing. Potential prizes touted were said to be in excess of $20,000 and included cash, checks, amounts held in trust, and cars (one solicitation specifically promised a 2015 Audi A6 sedan).
The typical fee requested with each of these types of solicitations was between $15 and $55. To claim the prize or find out how to win more, the victim was required to send the fee by bank check, certified check, money order, or credit card together with a response card using a pre-addressed envelope to one of a number of P.O. boxes in the Netherlands maintained by defendants Trends Service in Kommunikatie B.V. (Trends) and Kommunikatie Service Buitenland B.V. (KSB), and owned and operated by defendant Erik Dekker, 54, of Langbroek, Netherlands.
(You can find out more about the actions taken by Dutch authorities against the defendants here.)
As the response cards rolled in, the defendants would review and sort the cards, taking note of the victim’s response and payment method. And as with most schemes, those victims who responded were noted in a customer database: that information is used to peg the victims for additional, similar solicitations in the future.
The U.S. government estimates that, with this particular scheme, victims mailed over 530,000 payments to the defendants each year, totaling $18 million.
So how can you stay safe? A good rule of thumb is not to be tricked into believing that you must pay to collect a prize. “No one should ever be told they must pay a fee, or make a worthless purchase, to collect a prize,” said Inspector in Charge Regina L. Faulkerson of the U.S. Postal Inspection Service’s Criminal Investigation Group. “When that happens, it’s fraud – plain and simple – and Postal Inspectors work to keep those falsehoods out of the U.S. mail.”
If you or a loved one is contacted with an opportunity that seems too good to be true, it probably is. Don’t engage with the scammers – but do report them.
You can contact TIGTA to report IRS impersonation scam calls by calling 1.800.366.4484 or by using the “IRS Impersonation Scam Reporting” form on their website. You can report an IRS impersonation scam – as well as other kinds of scams – to the Federal Trade Commission by using the “FTC Complaint Assistant.” You can also find a great list of resources for reporting elder abuse, including financial scams, here.
Tips from the public have helped authorities make arrests. Those arrests were said to be the direct result of information provided by a fraud investigator with the Senate Aging Committee’s Hotline after a caller tip.
While the government is seeking an injunction to stop the defendants in this case from using the U.S. mail or causing the U.S. mail to be used, to distribute the fraudulent solicitations or to collect victim payments, and from selling lists of American victims who have responded to the solicitations, the claims made in the complaint are, at this point, allegations only, and there has been no determination of liability. For more details about the charges, you can read the entire complaint here.
