The corona virus pandemic has presented new opportunities for fraud, particularly against the elderly and vulnerable, and these fraudulent schemes are often carried out through robocalls.
The EDNY U.S. Attorney’s Office recently obtained civil injunctions against defendants alleged to be facilitating massive volumes of fraudulent robocalls to consumers, through a preliminary injunction decision issued by EDNY District Judge Eric Komitee and consent decrees issued by EDNY District Judge Brian Cogan.
The EDNY filed two civil complaints in January against multiple individuals and companies under 18 U.S.C. § 1345, a statute that permits the government to commence a civil action to enjoin an ongoing fraud. These two cases marked the first time the Department of Justice has sought to enjoin telecommunications companies from participating in robocalling fraud schemes under the fraud injunction statute.
The complaints alleged that defendants were operating as intermediate voice-over-internet-protocol (VoIP) carriers. As intermediate VoIP carriers, defendants were alleged to have received internet based calls from entities abroad and transmitted those calls to other carriers and then to the phones of individuals. The fraudulent robocalls carried by defendants included calls impersonating government agencies such as the Social Security Administration and the Internal Revenue Service and businesses such as Apple and Microsoft.
The government alleged that individuals making the foreign-based call center robocalls impersonated government investigators and sent alarming messages such as:
- the recipient’s social security number or other personal information had been compromised or otherwise connected to criminal activity;
- the recipient faced imminent arrest;
- the recipient’s assets were being frozen;
- the recipient’s bank and credit accounts had suspect activity;
- the recipient’s benefits were being stopped; and
- the recipient faced imminent deportation.
Many of these calls were also “spoofed” to appear as if the call were coming from U.S. government or business offices. The government alleged that the calls led to massive financial losses to elderly and other vulnerable victims throughout the United States.
In United States v. Palumbo, Judge Komitee found probable cause to conclude that 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,” and that there was “no narrower avenue reasonably available to enjoin the fraudulent call traffic on Defendants’ network.” The Court enjoined defendants from operating as intermediate VoIP carriers during the pendency of the civil action.
In United States v. Kahen, Judge Cogan entered a consent decree that permanently barred certain defendants from operating as intermediate VoIP carriers conveying fraudulent robocalls into the U.S. telephone system. The consent decree permanently barred those defendants from 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 a second consent decree, Judge Cogan barred another defendant from conveying fraudulent telephone calls, fraudulent recordings and unauthorized “spoofed” telephone calls.
While these two cases are the first two DOJ section 1345 civil complaints targeting robocalls, we can expect DOJ to expand its use of the fraud injunction statute for robocalls, particularly in light of fraud concerns presented by the coronavirus pandemic.