How India IRS scam cheated U.S. taxpayers

In recent years, investigators in the United States, Canada, Britain and other countries have traced several organized phone frauds to Indian call centers.

BY SHASHANK BENGALI
LOS ANGELES TIMES/TNS

THANE, India — Nearly an hour into the phone call, the woman began to get suspicious.

Police in October raided this nine-story tower in Thane, India, where scammers posed as IRS agents to extort money from U.S. taxpayers. (SHASHANK BENGALI/LOS ANGELES TIMES/TNS)
Police in October raided this nine-story tower in Thane, India, where scammers posed as IRS agents to extort money from U.S. taxpayers.
(SHASHANK BENGALI/LOS ANGELES TIMES/TNS)

The man on the line said he was with the Internal Revenue Service and that she owed a penalty for tax fraud. But to make the payment, he told her to drive to a nearby Food 4 Less grocery store in suburban San Diego and purchase an iTunes gift card.

Twice he said she owed “1,000 rupees,” before correcting himself to say $1,000.

Even the name he gave, Daniel Parker, seemed odd. He spoke with a foreign accent and mangled basic phrases.

“Your name is Daniel Parker? Are you sure?” she asked.

“Yeah, ma’am,” he replied. “I am sure.”

But it was too late. The National City, Calif., woman had already shared an iTunes card number worth $500 — becoming one of tens of thousands of Americans drawn in by an extensive, years-long scam in which callers from India pose as IRS agents to extort money.

Organized phone frauds
Indian call centers have built a reputation for handling customer service and tech support inquiries for major U.S. companies.

But in recent years, investigators in the United States, Canada, Britain and other countries have traced several organized phone frauds — involving callers posing as computer technicians, debt collectors, immigration officials or tax agents — to Indian call centers.

In recent years, investigators in the United States, Canada, Britain and other countries have traced several organized phone frauds — involving callers posing as computer technicians, debt collectors, immigration officials or tax agents — to Indian call centers.

Buildings raided
On the surface, little sets the illicit call centers apart from legitimate ones. They operate almost in the open, using the same corporate-style office spaces and recruiting from the same vast pool of English-speaking college graduates — allowing the crimes to persist for years.

This year, the Federal Trade Commission described Indian call centers as “the source of various impostor frauds that have reached consumers throughout the English-speaking world.”

Last month, police in the northern Mumbai suburb of Thane raided three office buildings suspected of being used to make the fraudulent IRS calls and rounded up more than 700 people for questioning. At least 70 remain behind bars as investigators have expanded the inquiry to include dozens of call centers in multiple Indian states.

Weeks later, the Justice Department announced the indictments of nearly 60 people in India and the United States for involvement in shady call centers that had conned more than 15,000 Americans out of hundreds of millions of dollars since 2012.

Blighted India’s image
The scheme — part of what the IRS described in 2014 as the largest phone fraud to target Americans— has exposed a dark side of India’s $30 billion call-center industry.

161209_world02b“It has blighted the image of India,” said Parag Manere, deputy police commissioner in Thane.

“Someone who does this kind of thing, they will not be tolerated.”

Yet the Thane police investigation and the federal indictments showed how the scam went on for several years despite growing concern in both countries.

College grads recruited
The messages sent to Americans would warn recipients that he or she was suspected of tax fraud, and tell the people to call a U.S. number — routed to one of the call centers in India.

Authorities believe dozens of calls a day were fielded at the offices set up this year outside Mumbai, India’s commercial capital, whose large numbers of unemployed English-speaking college graduates were prime candidates for recruiters.

Police said entry-level callers were paid about $300 a month, plus commissions — a typical call-center salary, though far less than the amounts they extorted from individual victims.

“Any large country where the employment opportunities are few but the number of available graduates is high, you will always have the risk of illicit activities,” said K.S. Viswanathan, vice president of industry initiatives at Nasscom, an industry group that has worked with U.S. authorities to call-center fraud.

‘Normal call center’
In Thane, most of the callers operated out of a nine-story tower called the Hari Om IT Park. When it opened this year, police said, suspects used the cover of an outsourcing company and signed a lease to occupy six floors, installing desks and partitions to house hundreds of employees.

“There was nothing suspicious that we saw in that time,” said Prem Bahadur, the building’s caretaker. “It looked like a normal call center.”

A second office opened a month later, in a basement below a bank branch. The 4,800-square-foot space was sublet from a tenant who had a five-year lease, and representatives of the landlord said they did not know the identities of the tenants.

Authorities believe these two offices and a third nearby brought in $150,000 to $225,000 a day.

“They knew they were cheating people,” Manere said. “But perhaps they didn’t care because the victims were foreigners.”

U.S. and Indian agencies have made arrests before in similar cases. Last year a Pennsylvania man, Sahil Patel, was sentenced to 14 years in prison for his role in an India-based IRS scam, though the kingpins remained at large.

The Thane bust could be the most significant yet. The Better Business Bureau, which used to field about 200 reports of tax scams every week, said that after the arrests in India it received just 11 complaints in a week.

Special correspondent Parth MN contributed to this report.

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