The U.S. Justice Department released the below
information:
The U.S. District Court for the Eastern
District of New York entered orders in two separate civil actions, barring
eight individuals and entities from continuing to facilitate the transmission
of massive volumes of fraudulent robocalls to consumers in the United States,
the Department of Justice announced today.
In one of the matters, United States v. Nicholas Palumbo, et al.,
the District Court entered a preliminary injunction that bars two individuals
and two entities from operating as intermediate voice-over-internet-protocol
(VoIP) carriers during the pendency of the civil action. In the other
matter, United States v. John Kahen, et
al., the District Court entered consent decrees that permanently bar an
individual and three entities from operating as intermediate VoIP carriers
conveying any telephone calls into the U.S. telephone system.
“These massive robocall fraud
schemes target telephones of residents across our country, many of whom are
elderly or are otherwise potentially vulnerable to such schemes,” said
Assistant Attorney General Jody Hunt of the Department of Justice’s Civil
Division. “The department is committed to stopping this unlawful conduct
and pursuing those who knowingly facilitate these schemes for their own
financial gain.”
“This office will take all
appropriate measures to stop fraudulent robocalling schemes responsible for
causing catastrophic losses to victims, including seeking to permanently shut
down the U.S.-based enablers of such schemes,” said United States Attorney
Richad P. Donoghue for the Eastern District of New York. “Protecting
elderly and vulnerable individuals from being conned by foreign call center
scammers remains a priority of this office and the Department of Justice.”
As alleged in the complaints, the
defendants in both cases operated as VoIP carriers, receiving internet-based
calls from other entities, often located abroad, and transmitting those calls
first to other carriers within the United States and, ultimately, to the phones
of individuals. Numerous foreign-based call centers are alleged to have
used the defendants’ VoIP carrier services to pass fraudulent government- and
business-imposter robocalls to victims in the United States. The
defendants also sold U.S. phone numbers to foreign entities, which were used as
victim call-back numbers as part of massive robocalling fraud schemes.
As also alleged, the defendants
were warned numerous times that they were carrying fraudulent robocalls —
including calls impersonating government agencies, such as the Social Security
Administration, the IRS, and legitimate businesses, such as Microsoft — and yet
continued to carry those calls and facilitate fraud schemes targeting
individuals in the United States. Many of the robocalls were made by
foreign fraudsters impersonating government investigators and conveying
alarming messages, such as: the recipient’s social security number or other
personal information has been compromised or otherwise connected to criminal
activity; the recipient faces imminent arrest; the recipient’s assets are being
frozen; the recipient’s bank and credit accounts have suspect activity; the
recipient’s benefits are being stopped; the recipient faces imminent
deportation; or combinations of these threats. Each of these claims was a
lie, designed to scare the call recipient into paying large sums of
money. These calls led to massive financial losses to elderly and other
vulnerable victims throughout the United States.
“The court’s decision sends a
clear message to gateway carriers who knowingly do business with scammers
targeting Americans from overseas,” said Gail S. Ennis, Inspector General for
the Social Security Administration. “We will continue to pursue those who
facilitate these scam calls by allowing them into the U.S. telephone network.
I want to thank the Department of Justice for its support throughout this
investigation and its commitment to protecting Americans from this insidious
form of fraud and theft.”
United States v. Nicholas Palumbo, et al.
In the first case, the District
Court issued a preliminary injunction against spouses Nicholas and Natasha
Palumbo of Scottsdale, Arizona, and the Arizona companies they own and operate,
Ecommerce National LLC d/b/a TollFreeDeals.com and SIP Retail d/b/a
sipretail.com. The District Court held, in a written opinion, that the
evidence presented by the United States demonstrated probable cause to conclude
that the defendants were engaged in “widespread patterns of telecommunications
fraud, intended to deprive call recipients in the Eastern District of New York
and elsewhere of money and property.”
The preliminary injunction issued
by the court bars those defendants from carrying any VoIP calls destined for
phones in the United States and providing any U.S. telephone numbers (often
used as call-back numbers in the fraudulent robocalling schemes) to any
individuals or entities during the pendency of this litigation. The court
noted that though defendants had been warned more than 100 times of specific
instances of fraudulent calls being transmitted through their network, they
never severed their business relationship with any entity they learned was
associated with fraudulent call traffic, prior to the United States’ filing of
its lawsuit. The court further noted that “the telecommunications ‘intermediary’
industry is set up perfectly to allow fraudulent operators to rotate telephone
numbers endlessly and blame other parties for the fraudulent call traffic they
carry,” that the United States “demonstrat[ed] probable cause to conclude that
defendants’ business is permeated with fraud,” that “multiple individual
victims in the United States suffered significant fraud losses,” and that
“[e]very day that the defendants’ actions in this vein continue, the public is
at risk of harm in the form of additional high-dollar fraud losses.”
The claims in the United States v. Nicholas Palumbo, et al. matter are allegations only,
and there has not been any final determination of liability or wrongdoing.
United States v. John Kahen, et al.
In the second case, the District
Court entered consent decrees permanently resolving the matter against five
individuals and entities who were also operating intermediary VoIP
carriers. The court entered a consent decree on March 2, 2020 against Jon
Kahen, a/k/a Jon Kaen of New York, and New York corporations Global Voicecom
Inc. and Global Telecommunication Services Inc., permanently barring those
defendants from, among other things, using the U.S. telephone system to:
deliver prerecorded messages through automatic means, carry calls to the United
States from foreign locations, and provide calling and toll-free services for
calls originating in the United States. In addition, the defendants are
permanently barred from serving as employees, agents, or consultants to any
person or entity engaged in these activities. In a second consent decree,
entered on March 24, 2020, the District Court barred KAT Telecom Inc., a New
York corporation, from conveying or causing any other person or entity from
conveying fraudulent telephone calls, fraudulent recordings, and unauthorized
“spoofed” telephone calls. In the event that KAT Telecom, Inc. resumes
operations, it must also implement strong anti-fraud measures, including
anti-fraud monitoring, mitigation, and know-your-customer measures.
The claims resolved by the
settlement in the United States v. Jon
Kahen, et al. matter are
allegations only, and there has not been any final determination of liability
or wrongdoing.
These cases are being handled by
Trial Attorneys Ann F. Entwistle and Charles B. Dunn of the Civil Division’s
Consumer Protection Branch and Assistant U.S. Attorneys Bonni Perlin, Dara
Olds, and Evan Lestelle of the U.S. Attorney’s Office for the Eastern District
of New York, in coordination with the Social Security Administration Office of
the Inspector General and the U.S. Postal Inspection Service.
Investigative support was also provided by the U.S. Treasury Inspector General
for Tax Administration, U.S. Immigration and Customs Enforcement’s Homeland
Security Investigation’s El Dorado Task Force and U.S. Secret Service.
The Federal Trade Commission and the Federal Communications Commission also
provided pertinent data.
Additional information about the
Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch.
For more information about the U.S. Attorney’s Office for the Eastern District
of New York, visit its website at https://www.justice.gov/usao-edny.
