FTC Settlement Puts a Stop to Money Mule Who Profited from India-Based Scams Targeting U.S. Consumers

Telemarketers at Indian call centers conned consumers into paying hundreds or thousands of dollars each for taxes they did not owe or fees for services they did not receive

FTC Settlement Puts a Stop to Money Mule Who Profited from India-Based Scams Targeting U.S. Consumers
Image: Pixabay
February 20, 2017

A Florida man charged with helping telemarketers in India defraud cash-strapped American consumers will be banned from aiding any telemarketers in a proposed settlement with the Federal Trade Commission (FTC).

The proposed settlement resolves an FTC complaint against Joel S. Treuhaft and his company, PHLG Enterprises, LLC, who collected more than $1.5 million from about 3,000 consumers in a scheme that helped Indian call centers collect money from victims of IRS tax scams, government grant scams, and advance-fee loan scams, among others.

"The scammers behind these call centers relied on PHLG and its runners to get consumers' money," said Jessica Rich, Director of the FTC's Bureau of Consumer Protection. "Stopping companies that assist and facilitate fraud remains a top FTC priority."

According to the FTC, telemarketers at Indian call centers conned consumers into paying hundreds or thousands of dollars each for taxes they did not owe, or fees for services they did not receive. They often pretended to be affiliated with government agencies, telling people they owed money to the IRS, or that they would get a government grant after they paid a fee. The consumers paid via Western Union or MoneyGram cash money transfers, making it difficult for them to trace their payments or obtain refunds. The defendants paid "runners" to collect the money at retail stores that offer money transfer services.

According to the complaint, Indian call center coordinators managed the collection process via text messaging. They assigned a runner to each transaction and provided the consumer's name and location, the payment amount, and the transaction number, which the runners then used to obtain the money from the stores.

The FTC alleges that Treuhaft told the runners to pick up payments as soon as possible, so that consumers would not have time to cancel or reverse the money transfer. Some runners lied to store employees to retrieve a consumer's money, including saying they were the consumer's friends or relatives. The runners went to various stores every day, for eight to 10 hours per day, to collect consumers' money. The FTC says that the defendants and their runners kept a portion of the money and delivered the rest to the India-based scammers through a complex series of transactions designed to avoid detection by law enforcement.

The defendants are charged with violating the FTC Act and the FTC's Telemarketing Sales Rule. The stipulated order obtained by the FTC bans Treuhaft and PHLG from aiding or facilitating any telemarketing, including the use of money transfers, cash reload mechanisms, gift cards, or other payment methods as payment for goods or services sold via telemarketing. It imposes a $1.5 million judgment that will be suspended based on the defendants' inability to pay. The full judgment will become due immediately if they are found to have misrepresented their current financial condition.