The Modus Operandi Of The Multi-Million Dollar Mira Road Call Center Scam

On Tuesday October 4, 200 personnel of the Thane police raided three call centers operating out of suburban Mumbai's Mira Road area. They looked, felt and operated like any conventional call centre and even kept recordings of every call they made, according to Thane Police Commissioner Param Bir Singh.

The police went on to raid 6 other call centers and it emerged that the work that the 772 people they employed did was anything but conventional. An ingenious modus operandi had been adopted to con thousands of American citizens out of millions of dollars, in a 2 month period.

The Modus Operandi

Step one : The first step in this racket was to procure tax records of American citizens, which according to Singh were available for a price on the black market in the U.S.

Step two : A call center employee would then contact a victim posing to be an officer of the Internal Revenue Services (IRS), which is India's equivalent of the Income Tax department, confront them with their tax arrears and threaten them with immediate arrest, imprisonment, fines or deportation. They would also be told that the IRS was authorised to keep them in custody for two months, and that they could face a jail sentence of up to three years.

Step three: The victim would then be told that he or she was being given one last opportunity to make things right and avoid prosecution, by making a payment immediately. As is evident in a recording of a conversation accessed by BloombergQuint, the victim would be asked to drop everything she was doing and go to the nearest supermarket to purchase a ‘federal card' so as to make a payment via an ‘electronic federal tax payment system' or eftps. If she succumbed to the pressure she was then told where the nearest store was and to drive there immediately without disconnecting the call.

Step four: On reaching the store the victim would first be told that it was essential to keep the call confidential and not reveal any information about why she was buying these cards. She would then be asked to buy a prepaid card, such as a Walmart, Target or ITunes cards worth the extent of her tax liability. She would be told that if she asked for a federal card, the store would charge a commission and that the call center agent was doing her a favour by suggesting another card. Those that questioned the use of such cards would be assured that the IRS had a tie up with the issuing company.

Step five: The call center employee would then ask the victim to reveal the 16 digit prepaid card code, and she wasn't allowed to disconnect the call until the code was verified. She would then be told to keep the card safely and that an IRS agent would meet her soon to scan the card and issue a receipt for the money paid.

The final step: The Indian call center employees, working with a network of U.S. co-conspirators, would then launder the extorted funds via hawala networks.

The Indian Investigation

Thane Police Commissioner Param Bir Singh told BloombergQuint that the total sum of money extorted is still not clear, though the U.S. Department of Justice says tens of thousands of persons in the United States were victimised resulting in hundreds of millions of dollars in losses.

Singh said that investigation had revealed that that there were more such fake call centers that continue to operate in Delhi and Gujarat and that the police was in the process of investigating and shutting them down. He also added that they had reasons to believe that American citizens weren't the only ones duped using this modus operandi and that citizens of other nationalities may also have been targeted.

The American Investigation

On October 27, the U.S. Department of Justice said, in a statement on its website, that 61 individuals and entities had been indicted (charged) in this scam after a three year multi-agency investigation. Of them 20 individuals were arrested in the U.S. and 32 individuals and five call centers in India were charged for their alleged involvement.

According to the indictment, one of the call centers extorted $12,300 from an 85-year-old victim from San Diego, California, after threatening her with arrest if she did not pay fictitious tax violations. On the same day that she was extorted, one of the U.S.-based defendants allegedly used a reloadable debit card funded with the victim's money to purchase money orders in Frisco, Texas.

In another case cited by the U.S. Department of Justice the scamsters ‘extorted $136,000 from a victim in Hayward, California, who they called multiple times over a period of 20 days, fraudulently purporting to be IRS agents and demanding payment for alleged tax violations. The victim was then directed to purchase 276 stored value cards which the defendants then transferred to reloadable debit cards. Some of the victim's money ended up on cards which were activated using stolen personal identifying information from U.S.- based victims'.