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[whitespace] A Multimillionaire, Eh?

Convincing Canadian Lottery scam bilks millions from local elderly, while organized crime perpetrators elude police

By Loren Stein

WILLIAM KOOREMAN thought it was his lucky day, his lucky year and the crowning moment of his long and successful life. The 86-year-old former plumbing and heating contractor had miraculously been selected to be the recipient of a $2.5 million prize in the Canadian Lottery sweepstakes. All it would take for him to collect his big prize was a few details--some fees and taxes paid upfront. Over two months, he dutifully wired more and more money to a special bank account in Cyprus. It wasn't until a suspicious Bank of America teller called the police on July 30, 2002, and told them that Kooreman was about to wire his last $70,000--cleaning out his retirement savings--that the authorities stepped in and froze his account.

His family then learned that Kooreman had already paid as much as $100,000 to one of the biggest and most sophisticated international telemarketing scams in business, and that recovering the money would be next to impossible. "Dad knew he was being swindled but he didn't want to face it," recalls his son, Phillip Kooreman. "We were totally shocked; we couldn't believe that he had cashed out all his CDs and mutual funds and given up money that Mom and he had saved for years." When he realized he'd never see the money again he deteriorated rapidly and was hospitalized within a week, says Phillip. Still, the dream died hard, says Contra Costa County Deputy District Attorney Dana Filkowski, recalling the day Kooreman came into her office holding a bag bursting with hundreds of lottery entries and asked, "Can you tell me which ones of these I can still play?"

Telemarketing and mail-fraud crooks prey on the gullible and the greedy, but the Canadian Lottery hucksters are true masters. "These are the best-trained scam artists in the world," says Santa Clara County FAST (financial-abuse-specialist team) Manager Jamie Buckmaster. In Palo Alto, a 75-year-old woman recently lost $590,000 to a Canadian company calling itself Windfall Investments Ltd. before she called the FBI. (She was told she had won $49.1 million.) A San Francisco woman was bilked out of $800,000, a portion of which she collected from unknowing friends or relatives, and she still thought she was going to win, says San Francisco Assistant District Attorney Diane Knoles. There are currently two open cases in Los Altos, one for more than half a million dollars.

Since 1995, Americans have lost more than $100 million to phony telemarketers operating out of boiler rooms in Montreal and other Canadian cities, says detective staff Sgt. Barry Elliot of the Ontario Provincial Police. They single-mindedly target the old, the sick and the wealthy in English-speaking countries. On any given day, 300 to 500 criminal telemarketing groups are operating throughout Canada, Elliot says, many with ties to organized crime. "You have to be naive to think they're not funding terrorists," he adds. (There is a real Canadian Lottery, by the way, but only Canadian citizens can play.)

Each year, thousands of letters are bulk-mailed out of Canada telling recipients that they're finalists in a lottery jackpot or sweepstakes that doesn't exist. Those who send in the $20 registration fee are put on a shortlist of potential marks or, in other words, a "suckers list." Soon after, a "lawyer" or "Canadian judge" will call the victims and tell them they've won million of dollars, which will be delivered in a lump sum as soon as they pay the international duty tax or some other made-up fees of several thousand dollars.

Demanding confidentiality, they ask that the money be sent quickly by Western Union or wired to an offshore account, where it is then cashed and moved around the world. Then they put on the squeeze--saying yet more money has to be sent so the prize and the money already invested aren't forfeited. When the prize isn't paid out, they may go so far as to pose as U.S. or Canadian Customs officials, requesting more money to investigate the lottery. Victims are given bogus award numbers and temporary telephone contacts with forwarded numbers; no one ever answers, but calls are quickly returned, always by cell phone, as Canadian calls can't be traced. "These guys are very sophisticated and very smart, and [they are] multinational in scope," says Elliott. They're also not afraid of the Canadian criminal justice system, which metes out light penalties for telemarketing fraud, usually a fine or a short prison term.

What victims don't know is that it's illegal for Americans to purchase foreign lottery tickets and that it's against the law to charge fees or taxes upfront to claim winnings. Elliot, who coordinates Phonebusters, Canada's national task force to fight telemarketing fraud, says the chances of catching the telemarketers are pretty slim. There are too many rooms operating and not enough resources devoted to the job. What's more, the difficulty in tracing the money and extraditing suspects makes cases virtually impossible to solve or bring to court. The bottom line: Buyer beware. Getting the cash back is definitely not worth betting on.

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From the November 21-27, 2002 issue of Metro, Silicon Valley's Weekly Newspaper.

Copyright © Metro Publishing Inc. Metroactive is affiliated with the Boulevards Network.

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