Anatomy of a Scam Investigation: Chapter Six

[Wondering what's going on here? Check out the Chapter Index on this series.]

Welcome to Chapter Six of "Anatomy of a Scam Investigation." A quick review:

 

  • In Chapter One I talked about first contact by UST Development, Inc., and explained why their bogus invoices are clearly fraudulent;
  •  In Chapter Two I discussed online search methodology and Google search techniques.
  • In Chapter Three I examined some Google search results and tried to chase down different entities.
  •  In Chapter Four I pointed to some signs that the Better Business Bureau and the public have caught on to the UST Development scam, and further discussed the reason for this series.
  • In Chapter Five, I talked about searching state court records for UST Development and its principals and affiliates, including David Bell, and also examined PACER records for corroboration of fraudulent intent and trends of con-man behavior.

 

In this Chapter of the series, I'm going to discuss effective reporting of scams, using the UST Development, Inc. fraudulent invoice scam as a model. Our goal, throughout, is to get appropriate authorities to investigate and prosecute crime, to prevent further victimization, and to assist past victims in getting compensation.

In Chapter Two I pointed out that a methodical approach is the key to effective Google hunt for scammers. The same goes for effective reporting of scams and their perpetrators. I'll break reporting down into federal agencies, state agencies, litigants, private agencies and private online information clearinghouses and review sites, and your own publications.

First, you'll need to prepare to make an effective report.

1. Make sure you have a copy of the fraudulent solicitation you've encountered, whether it was delivered by mail, fax, or email. Make copies to preserve it. Scan it so you will have it in digital form. Make sure you keep a clean copy without notes on it. If it came in an envelope, keep that (the envelope may contain important data like a bulk mailing permit number — something that a helpful reader pointed out was missing from earlier chapters). If the scam came by email, make sure you keep a copy of the email in a saved folder — that will have metadata that a scan or hard copy will not preserve.

2. If you have engaged in written communications with the scammers, follow the procedures above for those communications.

3. If you have engaged in telephone communications with the scammers, take contemporaneous notes and keep them. [Edit: As Patrick points out in the comments, NEVER record the call without telling the person on the other end you are recording FIRST and getting their permission.] The notes should keep a record of what number you called (or what number appeared on caller ID if they called you), the date and time, how the person on the other end identified themselves, what you said, and what they said. Note: it's often helpful to call the scammer's 800 number, make a complaint, and make a record of what excuse they offer. As the Better Business Bureau's discussion of the UST Development scam shows, scammers often offer divergent and inconsistent excuses, which are highly probative of fraudulent intent.

4. If the scammers left you a voice mail, figure out how to save it, so you can turn it over to authorities.

5. If you have found corroborative complaints online through your searches, keep copies of the web pages showing those complaints. My favored method is to print the web page to pdf and save it in a folder. Don't rely on simply bookmarking links; web pages disappear, some scammers bully or con sites into taking complaints down, and some complaint sites are a scam themselves that accept money to take complaints down.

6. Draft your report to the different authorities and other recipients. I'm going to give the same advice I gave in my post on how to cold-call a lawyer: you'll be the most effective if you are brief, to the point, and non-crazy. Don't send something that makes the authorities fear that if they want to interview you they'll need to bring a dart gun full of ketamine. Below, I talk about how to frame your report for each type of recipient.

All right. Let's look at where we are going to report the scam, and what language we're going to use to do so.

1. Federal Authorities

There are three principal federal law enforcement agencies that investigate scams like the UST Development, Inc. fraudulent invoice scam: the Postal Inspectors, the Federal Trade Commission, and the FBI.

Postal Inspectors

I love the Postal Inspectors. They were the investigating agency on some advance fee cases I prosecuted when I was a fed. I found them to be competent, professional, thorough, motivated, and unassuming, and lacking in the institutional aggression and hubris seen in certain other agencies. And, if you are speaking to them on effective search warrant preparation and are extremely nervous and accidentally use the phrase "go postal" not once but twice, they will be very cool about it. Or so I hear.

One sphere of their responsibility is investigation of fraud schemes using the U.S. mail. Note: that includes investigation of schemes that don't start with a mailing, but that involve a mailing, like when you send a scammer a check as a result of a telephone or email solicitation. Their site has a decent list of mail fraud schemes. More importantly, the Postal Inspectors have an online form making it easy to report the fraud.

The Postal Inspectors gather and collate all the reports they get and track repeat complaints about particular businesses. They devote resources based on volume of complaints. So: report the scammers to them, and encourage others to do so as well, to maximize the chances that the postal inspectors will do something.

The Federal Trade Commission

The Federal Trade Commission is tasked with consumer protection. More than occasionally this leads to nanny-state silliness. But they are admirably aggressive against telemarketers and other scammers. When the FTC files suit, they generally persuade federal judges to give them broad injunctions and orders freezing all of the scammers' corporate and personal assets. As I've pointed out before, federal courts generally hate the defendants in FTC cases and cut the FTC every possible break, which is rather alarming if you are trying to defend accused telemarketers or if you are being fair-minded about the rule of law applying to everyone. Due process? My friend, a dark-skinned illegal immigrant who splits his time between selling gay porn and performing abortions and who strangles a cop with a desecrated American flag and the cut-off blond hair of a blue-eyed child beauty pageant winner in the town of Pluck-my-banjo, Texas is going to get more due process than the federal courts give to people sued by the FTC. Just sayin'.

So: you can report email fraud, telemarketing fraud, and mail fraud to the FTC. Like the Postal Inspectors, the FTC has databases that compile information about entities and individuals and scams. The more complaints they get, the more likely they are to take action. They have helpful taxonomies of types of fraud and a page leading to their online complaint system, which is supported by a cute video:

The FBI

Since 9/11 the FBI's resources have been shifted dramatically away from white-collar crime. But mail fraud and wire fraud remain in their jurisdiction. They offer informative lists of fraud types that are kept reasonably current. They direct citizens to file reports of internet fraud through IC3, the Internet Crime Complaint Center (a largely untested entity that forwards complaints to its constituent agencies). Other complaints (of mail fraud, for example) should go to their online tip report system. You could also send a letter to your nearest FBI office, care of their Fraud Section, but the online methods are likely to be more effective.

So. Those are the big federal three. The site StopFraud.gov has more information and links back to those agencies (and a few others). USA.gov also has useful information. So does the Justice Department.

As you probably know, the U.S. Attorney's Office of each federal district generally prosecutes federal crimes, except when attorneys from the Department of Justice step in themselves in special circumstances or special cases. Yes, you could also write a letter to the Major Frauds section (often called something else; it varies district to district) of your local U.S. Attorney's Office. But they don't have their own investigators; they're going to refer it out to an agency to investigate. So that part is probably not worth the effort. I mean, unless you happen to be a former prosecutor from that office, with a good relationship with that office, or something. You know?

So. What to submit online or send? An effective report submitted online might look like this:

I write to report a fraudulent invoice I received from UST Development, Inc. of 305 N. Sacramento Avenue, Ontario, California. They also use the name US Telecom, and the website www.us-telecom.com or www.ustdevelopment.com.

I believe that the invoice is fraudulent and that it is part of a fraudulent invoice scam, because it is designed to look like an invoice even though that company never provided any service to me. I believe the scam is widespread, as there are numerous complaints on the internet about it (you can find them by Googling "UST Development scam") and because the scam is discussed on the California Better Business Bureau's web site.

I have copies of the false invoice and the various web pages on which others report it. In addition, a man identifying himself as David Bell — who is identified online as a principal of UST Development — called me directly and attempted to convince me that the invoice was not fraudulent because it has a small disclaimer. I can testify about that call.

Please do not hesitate to contact me to obtain more information or any of the materials I have gathered.

The key points:

  • Be concise.
  • Don't be crazy.
  • Don't quote laws at them.  They know what law is relevant. If you feel the need to tell them what the mail fraud statute is, they'll think you are a dick.
  • Tell them the relevant names, web sites, and addresses.
  • Tell them if you had personal contact with the scammers, and (briefly) what the scammer's story was (remember that varying stories corroborate fraud).
  • Tell them you have additional documents or information for them.

2. State and Local Authorities

On the state and local side, you're generally going to be making reports to four places: the Attorney General's Office, Consumer Affairs offices, the applicable District Attorney's Office, and the applicable police.

First, go to the Attorney General of your state, and the state from which the fraud originates. ConsumerFraudReporting.org — which in general is an excellent resource for researching and reporting fraud — has a very helpful list of state Attorneys General. Because of their statewide scope, Attorneys General often address fraud that local prosecutors do not. In addition, they often have units devoted to consumer protection. Their contact methods and resources vary state to state; follow the links. So, in our case, we can go to the California Attorney General's Office and their online complaint system to submit our complaint against UST Development and its principals.

Second, see if your state has a separate consumer protection agency. USA.gov has a quite good array of links to the states' resources. In our case, we can follow that link to the California Department of Consumer Affairs, which in turn leads us to a useful State of California page about types of scams and where to report them. Whether your state's consumer protection agency can take reports will depend upon the type of scam and whether your state regulates the industry in question. Here, you might recall that the UST enterprise had a suspended contractor's license; we're going to follow the California Department of Consumer Affairs links to the California State Contractor's License Board and its complaint page, and report potential activity under a suspended license and fraudulent activity in connection with a license. (UST Development may come back and argue that their current activities promoted by the fraudulent invoices don't require a contractor's license, but they've deliberately made the nature of what they are doing obscure.)

Sometimes counties have their own consumer affairs departments. So do some cities, usually within the City Attorney's Office. In our case, USA.gov has links to some of them. Here, we visit the LA County Department of Consumer Affairs; San Bernardino County's site points us to their District Attorney's office for consumer complaints. We also visit the Los Angeles City Attorney's Office Consumer Protection Division , but the City of Ontario is too small to be of much help.

Okay. On to the District Attorney's Office. You'll want to send an email or letter copied to the fraud unit (called a million different things across the country) of the District Attorney of your county and the county where the fraud originated. Here that would be Los Angeles County and San Bernardino County. Once again, that USA.gov link lacks some contact information, but Google makes the relevant offices easy to find. We're going to make reports to both. Remember that we know in this case that David Bell, a participant in the UST Developement scam, is currently charged with a crime by the San Bernardino County District Attorney's Office. A fraud crime, if you can believe it. We're going to mention that in our communication, with a reference to a case number. In fact, the specific Deputy District Attorney handling the case might like to know about our complaint. It might impact how he or she prosecutes the existing case — for instance, leading to a tougher plea-bargaining stance. But a look at the docket shows that the preliminary hearing is not until November, an insider tells me that the Deputy D.A. listed on the case on the web site is just the arraignment deputy, and experience teaches us that most cases fall into a black hole for a while between arraignment and prelim and are only assigned to a deputy shortly before prelim. We'll look online or call in a few weeks to see if a deputy DA has been assigned for prelim, and then contact that person.

We can also use Google to find the police department (or, for unincorporated areas or towns patrolled by the Sheriff, Sheriff's Departments) for the fraud's city of origin and our own city. Sometimes those departments have fraud divisions, sometimes not. I recommend sending a written complaint labeled "Fraud Division." With budget cuts, understaffing, and emphasis on violent crime, police departments often won't do anything with this sort of fraud. Calling them on the phone is usually a frustrating and thankless exercise. But sending the report won't hurt. If the department has an online crime reporting feature, use it; otherwise, use mail. Attach a copy of the scam solicitation if you can.

What are we going to communicate to all of these agencies? The same sort of communication set forth above for the feds, with enough additional information (where the scammers are, where I received the scam) to establish whose jurisdiction it is.

Now — are all of those agencies going to do anything? No. But if more people complain, the complaints will pile up, provoking action. Plus, the various agencies may refer the complaint to the lead agency — maybe the Attorney General or the San Bernardino DA in this case — and those referrals will tend to be reviewed more carefully than citizen complaints.

3. Litigants

Next, we're going to contact some litigants: people who already have criminal or civil lawsuits pending against the scammers.

The first example is the San Bernardino County District Attorney's Office which, as is discussed above, has a pending criminal case against David Bell.

Next, state civil litigants. In Chapter Five I talked about cases we found by searching for cases on County Superior Court sites. Even if the cases are stayed by bankruptcy — as they often are — the attorneys for those litigants may be able to use the information that the defendants are engaging in new and different fraud. It may help them prove fraud in their own cases, it may reveal patterns of conduct that are probative, it may impeach the credibility of defendants in their cases, and it may help to establish that the debts reflected in their cases are non-dischargeable in bankruptcy because of fraud. So, using the docket information we were able to obtain, we're going to contact the attorneys suing the scammers and provide some information.

Finally, federal court. Our PACER search in Chapter Five revealed both open and closed bankruptcy cases and multiple adversary proceedings. We're going to provide the same information to the attorneys suing the scammers in those cases. In addition, we're going to contact the court-appointed bankrupty trustees identified on the bankruptcy dockets. Knowing that the debtors are engaged in a fraudulent scheme may help trustees locate assets, may change the trustees' stance as to the proper distribution of assets and treatment of debts, and may lead the trustees to make appropriate reports to the bankruptcy court. If the United States Trustee has filed anything in the case, we're going to send the report to them as well. Optimally, the trustee will report the scam to the bankruptcy court and both the bankruptcy trustee and the bankruptcy judge will refer the matter to the U.S. Attorney's Office or District Attorney's Office. A referral from a judge gets immediate attention and goes to the top of the pile. Moreover, note that bankruptcies can be reopened — so as long as the bankruptcies are not too stale (and the UST cases are not), we're going to report the matter to past trustees and U.S. Trustees as well.

In a future chapter, I'm going to discuss risks — specifically, the risk that a scammer will accuse you of libel for making a report to authorities or to litigants. For now, just note this: in reporting to litigants, you should emphasize that you write as a potential witness able to provide information that is potentially relevant to the recipient's case. We'll discuss why that's relevant next time. Otherwise, make your communication short and to the point. For instance:

Dear [attorney],

From online records of [case], I see that you represent a party suing UST Development and David Bell, and that you assert fraud in that case. I write as a potential witness with potentially relevant evidence. I have received what I believe to be a fraudulent invoice from UST Development even though that company has not provided services to me. Google searches and an examination of the Better Business Bureau site reveal that many others have received such invoices. Moreover, when I wrote to complain, a man identifying himself as David Bell called me directly and attempted to convince me that the invoice was not fraudulent because it had a disclaimer. I have the invoice and the material I have gathered on the internet, and I will be happy to provide it to you, along with my testimony as a witness, if you believe that it is relevant to your case.

4. Private Entities, Clearinghouses, and Review Sites

Earlier in the series I discussed the reports available on the Better Business Bureau site. Although the BBB is not without problems, many people check it first, and reports there are more widely seen and considered than reports on lesser-known sites. Report the scam there, making sure to submit reports for each business entity, and taking a minimalist approach. You want to make sure to mention the business name, address, and phone number, who you talked to, and what they said:

I received an invoice for $350 from UST Development, Inc. at 305 N. Sacramento Avenue, Ontario, California. Though it had a small and misleading disclaimer, as a whole it appeared to be an invoice to be paid. When I wrote and complained, I received a phone call from a man identifying himself as David Bell, who argued that the invoice was not fraudulent because it had the disclaimer. I note many reports of this company on the internet.

There are also many independent sites out there that collect reports of scams of all sorts. I linked examples in Chapter Three. There are also "review" pages associated with search engines like Yahoo! and Google, online yellow pages, business directories, and the like. I linked some of those, too. Making reports to them — carefully worded, like the BBB example above — services to make warnings about a scammer more widespread on the internet and therefore more prominent in Google results, which in turn makes it less likely that other people will be victimized. However, many are for profit, some allegedly make a profit out of charging businesses to take down negative reviews, and it is difficult to determine the provenance of others. Therefore, for the purpose of today's chapter, I will not be listing or reviewing them. Perhaps if I get enough input from readers, I will do so. (For what it is worth, the Museum of Hoaxes, which covered the scam, looks cool.) However, for the purposes of making reports to such sites, don't forget that some are generic, some are targeted at email or mail fraud, and some (like 800notes.com) are indexed to phone number.

There are also private consumer fraud agencies and sites out there that are useful for two reasons: they provide significant resources for detecting, reporting, and countering fraud, and sometimes they compile their own scammer databases. Fraud.org is a good resource and has a complaint form; they transmit your complaint to the agencies they deem appropriate. I've already mentioned ConsumerFraudReporting.org, which has an amazing array of educational anti-fraud resources and links including links for how to report various types of fraud.

5. Blogging

Finally, you can do what I have done here — blog the scam yourself, posting the invoice, linking to other reports, and naming the scammers. This has risks. We'll discuss those risks in a future chapter. The benefit, again, is that it makes it easier for potential victims to find warnings about the scam.

That's all for this chapter. As always, feel free to make suggestions. More chapters to come. Remember: scammers are scum.

Important Note Regarding This Series.

Last 5 posts by Ken White

Comments

  1. Clark says

    > note this: in reporting to litigants, you should emphasize that you write as a potential witness able to provide information

    It's good to see that the law SOMETIMES allows arbitrary fine-print at the bottom to change the meaning of something, even if it doesn't work for fake invoice peddlers! ;-)

  2. Stephen says

    Great as always.

    One little point – You have a dangling paragraph at the end of the Postal Inspectors section.

  3. Patrick says

    If you have engaged in telephone communications with the scammers, take contemporaneous notes and keep them. The notes should keep a record of what number you called (or what number appeared on caller ID if they called you), the date and time, how the person on the other end identified themselves, what you said, and what they said. Note: it’s often helpful to call the scammer’s 800 number, make a complaint, and make a record of what excuse they offer.

    Since we're giving advice here, I'll just make explicit the thought that popped into my head on reading this: DO NOT, EVER, record anyone over the telephone without first obtaining that person's permission, and recording them giving you permission, unless you are an expert in Federal and State (the State where you reside, and the State where the person being recorded resides) wiretapping law. Otherwise you could be charged with a felony.

    To be explicit, by "keep a record", "record", and the like, Ken means "keep a written record, made contemporaneously with the conversation", i. e. "take notes".

  4. says

    One trick I learned a while back when I want to prove some website existed was to print it out, and then sign and date it as soon as I take it off the printer. If you're a n00b, it means you won't get a "maybe that computer file you wrote got corrupted" or "maybe as a non-lawyer you didn't know how to follow proper chain-of-evidence procedures."

  5. Rowan says

    Another way to preserve what a webpage looked like on a specific day is to use a free site like FreezePage to take a snapshot. Along with the main Web page, they download and save all the elements on the page (images, stylesheets, script files, etc.

  6. says

    For anyone considering saving files using Mozilla (Firefox & Seamonkey) and having a complete forensically sound record of that webpage that includes all graphics, metadata, sound, video, CSS Styles and Javascripts you can not go past the amazing addon "Mozilla Archive Format"

    It allows you to not only load and save files in the Internet ExploderExplorer Format of MHT but also in the MAFF format that is a single zip format, that can appear EXACTLY, and verifiable, as shown by the original.

    As Ken states, PDF's are great for printing, but if you really think the web page might be interfered with, or is a dynamic page (which are problematic evidence wise) then I would suggest using this add-on [The direct mozilla add-on link is here]

  7. Erica says

    Not for nothing, but I agree with Postal Inspectors being very competent, professional etc. Back in the day when ebay first started, someone took my payment (by mail) and never sent me an item. I got the ball rolling on an inspection (thru the Postal Service) that ended up in federal court. I can't remember a lot of the details, but it turned out that he took much more money from a lot of other people who stepped forward. As a law student at the time, the money he took from me was less than three figures, so I watched the case but (as it will) I lost interest when I quit Law school :D

  8. says

    > [Edit: As Patrick points out in the comments, NEVER record the call
    > without telling the person on the other end you are recording FIRST
    > and getting their permission.]

    Or unless your state explicitly permits it, like Oregon. Woo-hoo!

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