Robocall crackdown: Justice Department accuses several U.S. companies of being complicit in foreign scams

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WASHINGTON – The Justice Department on Tuesday asked a federal court for restraining orders against three home-based operators of telecommunications companies who, authorities allege, patched hundreds of millions of foreign-based robocalls into the United States.

In what officials described as a first-of-its-kind action, the department asked a federal court to block the companies and those who run them from carrying the fraudulent calls, alleging that they were essentially co-conspirators in a scheme to defraud those who picked up the phone.

The companies, Justice Department officials said, had been warned that the calls they were transmitting – most of which originated in India and lasted less than a second because the recipients hung up – were fraudulent, but did so anyway.

The result, officials said, was that fraudsters were able to swipe hundreds of millions of dollars by posing as government officials or employees of trusted businesses and threatening arrest or other financial harm to mostly elderly victims who responded on the phone.

“Not only are the calls an annoyance, but for elderly and vulnerable Americans, they are a serious problem,” Assistant Attorney General Jody Hunt said in a press call to announce the action.

Robocalls have surged in recent months – sparking Congress late last year to pass legislation that it hopes will cut down on the irritating interruptions and prevent fraud. Hunt said the Justice Department’s move Tuesday should “serve as a warning” to other telecommunications companies that they could be in federal authorities’ crosshairs if they do not do their part to crack down on possible fraud.

The department filed two civil cases in federal court in Brooklyn. One is against Nicholas Palumbo, 38, and Natasha Palumbo, 33, of Scottsdale, Arizona, who ran TollFreeDeals.com and sipretail.com. The other is against Jon Kahen, 45, of Great Neck, New York, who ran Global Voicecom Inc., Global Telecommunication Services Inc., KAT Telecom Inc.

None of the three people returned messages seeking comment. A federal judge in Brooklyn on Tuesday afternoon issued a temporary restraining order against Kahen and his companies.

“They are the link between scammers and consumers,” Social Security Administration Inspector General Gail Ennis said.

Authorities alleged Kahen and the Palumbos operated what are known as “voice over internet protocol carriers,” which use an Internet connection rather than a cooper phone line to carry telephone calls and pass foreign calls into the U.S.

They operated out of their homes, officials said, and needed relatively few resources. But they were still able to carry hundreds of millions of calls, officials asserted. Those who did not hang up were then met with alarming – though fake – messages, such as that their social security numbers had been compromised, their assets were being frozen or they faced imminent arrest and needed to pay large sums of money to get out of trouble, authorities said.

Neither the companies nor the people named in the civil filings were charged with any crimes, though the Justice Department asserted in court documents there were part of wire fraud schemes.

Hunt, who runs the Justice Department’s Civil Division, said the restraining orders would “stop the fraudulent conduct immediately,” but that the Justice Department was also continuing to investigate and working with authorities in India to identify those behind the calls.