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Organized Crime Gangs Earn Big Bucks in Shift to Fraud

Gangs around the globe fuel billion-dollar underground economy

phone scammers
John Ritter

Smelling huge profits in targeting older Americans, organized gangs —the underworld syndicates that once focused on drug trafficking, gambling and other high-profile crimes —are increasingly entering the consumer fraud business, according to interviews with several law enforcement officials.

These syndicates, often based overseas, are using impersonation, intimidation and, in rarer cases, violence to steal from older people, according to the officials. Their elaborate structures and finely honed scams have made these criminal rings highly successful and difficult to catch.

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“This is a billion-dollar underground economy run by highly organized groups in the United States and abroad. These are not lone wolves sitting in their basements,” says Scott Pirrello, a San Diego County deputy district attorney who helped develop the FBI-led San Diego Elder Justice Task Force.

In 2020, the task force uncovered a domestic crime ring that prosecutors say stole more than $2 million from Americans, most of whom were 70 or older, as part of an elaborate grandparent scam.

Grandparent scams —​in which a criminal claims a grandchild is in dire legal trouble and needs help — have been around for years. But officials say this one was run by an organized crime ring that targeted victims in multiple states.

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The scam was developed by bosses who built a hierarchical structure. They hired actors who rehearsed scripts and pretended to be doctors, lawyers and bail bondsmen when calling the older marks. Other actors were dispatched to homes to pick up funds, which other members quickly converted to cryptocurrency, according to investigators.

The investigation culminated in what’s believed to be the first indictment for elder abuse under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, once commonly associated with the prosecution of Mafia figures.

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Federal law enforcement officials say organized-crime figures are going after older Americans because it’s a safer bet than other criminal enterprises, like drug trafficking, that expose members to higher potential criminal penalties.

Department of Justice ​officials say that over the past two decades, the leadership of fraud rings targeting seniors has migrated overseas to countries and regions as varied as West Africa, India and Costa Rica. That has made catching and prosecuting the top-level perpetrators far more difficult and expensive, law enforcement officials say.

Dayna Kendall, a supervisory special agent at the FBI, says organized groups often run multiple scams at the same time, and in some cases also engage in identity theft.

Although violence is rare, law enforcement officials say the threat of danger is real and the scams are marked by psychological abuse. In order to persuade some potential victims to hand over money, scammers must first convince them that something bad will happen to them or to their loved ones.

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In late 2021, federal law enforcement zeroed in on so-called money mules, the men and women in the U.S. who help move money abroad that was stolen via fraud. Federal prosecutors charged more than 30 individuals with forwarding or laundering fraud proceeds, according to the Department of Justice.

Felix Salazar, an investigator specializing in elder abuse at the San Diego County District Attorney’s Office, says catching money mules often provides police with the best chance of breaking up an international crime ring targeting older Americans. But cases are often dropped by local police departments, which do not have the budget or staff to go after criminals based overseas or across state borders. “Organized criminals have shifted to​ elder fraud because it’s​ easier to get away with it,”​Salazar says. “It’s very hard to hold these people accountable, and they know it.”

Joe Eaton is a writer, professor and former investigative reporter for the Center for Public Integrity.

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