The
U.S. District Court for the Eastern District of New York entered orders
in two separate civil actions, barring eight individuals and entities
from continuing to facilitate the transmission of massive volumes of
fraudulent robocalls to consumers in the United States, the Department
of Justice announced today.
In one of the matters,
United States v. Nicholas Palumbo, et al.,
the District Court entered a preliminary injunction that bars two
individuals and two entities from operating as intermediate
voice-over-internet-protocol (VoIP) carriers during the pendency of the
civil action. In the other matter,
United States v. John Kahen, et al.,
the District Court entered consent decrees that permanently bar an
individual and three entities from operating as intermediate VoIP
carriers conveying any telephone calls into the U.S. telephone system.
“These massive robocall fraud schemes target telephones of residents
across our country, many of whom are elderly or are otherwise
potentially vulnerable to such schemes,” said Assistant Attorney General
Jody Hunt of the Department of Justice’s Civil Division. “The
department is committed to stopping this unlawful conduct and pursuing
those who knowingly facilitate these schemes for their own financial
gain.”
“This office will take all appropriate measures to stop fraudulent
robocalling schemes responsible for causing catastrophic losses to
victims, including seeking to permanently shut down the U.S.-based
enablers of such schemes,” said United States Attorney Richad P.
Donoghue for the Eastern District of New York. “Protecting elderly and
vulnerable individuals from being conned by foreign call center scammers
remains a priority of this office and the Department of Justice.”
As alleged in the complaints, the defendants in both cases operated
as VoIP carriers, receiving internet-based calls from other entities,
often located abroad, and transmitting those calls first to other
carriers within the United States and, ultimately, to the phones of
individuals. Numerous foreign-based call centers are alleged to have
used the defendants’ VoIP carrier services to pass fraudulent
government- and business-imposter robocalls to victims in the United
States. The defendants also sold U.S. phone numbers to foreign
entities, which were used as victim call-back numbers as part of massive
robocalling fraud schemes.
As also alleged, the defendants were warned numerous times that they
were carrying fraudulent robocalls — including calls impersonating
government agencies, such as the Social Security Administration, the
IRS, and legitimate businesses, such as Microsoft — and yet continued to
carry those calls and facilitate fraud schemes targeting individuals in
the United States. Many of the robocalls were made by foreign
fraudsters impersonating government investigators and conveying alarming
messages, such as: the recipient’s social security number or other
personal information has been compromised or otherwise connected to
criminal activity; the recipient faces imminent arrest; the recipient’s
assets are being frozen; the recipient’s bank and credit accounts have
suspect activity; the recipient’s benefits are being stopped; the
recipient faces imminent deportation; or combinations of these threats.
Each of these claims was a lie, designed to scare the call recipient
into paying large sums of money. These calls led to massive financial
losses to elderly and other vulnerable victims throughout the United
States.
“The court’s decision sends a clear message to gateway carriers who
knowingly do business with scammers targeting Americans from overseas,”
said Gail S. Ennis, Inspector General for the Social Security
Administration. “We will continue to pursue those who facilitate these
scam calls by allowing them into the U.S. telephone network. I want to
thank the Department of Justice for its support throughout this
investigation and its commitment to protecting Americans from this
insidious form of fraud and theft.”
United States v. Nicholas Palumbo, et al.
In the first case, the District Court issued a preliminary injunction
against spouses Nicholas and Natasha Palumbo of Scottsdale, Arizona,
and the Arizona companies they own and operate, Ecommerce National LLC
d/b/a TollFreeDeals.com and SIP Retail d/b/a sipretail.com. The
District Court held, in a written opinion, that the evidence presented
by the United States demonstrated probable cause to conclude that the
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.”
The preliminary injunction issued by the court bars those defendants
from carrying any VoIP calls destined for phones in the United States
and providing any U.S. telephone numbers (often used as call-back
numbers in the fraudulent robocalling schemes) to any individuals or
entities during the pendency of this litigation. The court noted that
though defendants had been warned more than 100 times of specific
instances of fraudulent calls being transmitted through their network,
they never severed their business relationship with any entity they
learned was associated with fraudulent call traffic, prior to the United
States’ filing of its lawsuit. The court further noted that “the
telecommunications ‘intermediary’ industry is set up perfectly to allow
fraudulent operators to rotate telephone numbers endlessly and blame
other parties for the fraudulent call traffic they carry,” that the
United States “demonstrat[ed] probable cause to conclude that
defendants’ business is permeated with fraud,” that “multiple individual
victims in the United States suffered significant fraud losses,” and
that “[e]very day that the defendants’ actions in this vein continue,
the public is at risk of harm in the form of additional high-dollar
fraud losses.”
The claims in the
United States v. Nicholas Palumbo,
et al. matter are allegations only, and there has not been any final determination of liability or wrongdoing.
United States v. John Kahen, et al.
In the second case, the District Court entered consent decrees
permanently resolving the matter against five individuals and entities
who were also operating intermediary VoIP carriers. The court entered a
consent decree on March 2, 2020 against Jon Kahen, a/k/a Jon Kaen of
New York, and New York corporations Global Voicecom Inc. and Global
Telecommunication Services Inc., permanently barring those defendants
from, among other things, 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 addition, the
defendants are permanently barred from serving as employees, agents, or
consultants to any person or entity engaged in these activities. In a
second consent decree, entered on March 24, 2020, the District Court
barred KAT Telecom Inc., a New York corporation, from conveying or
causing any other person or entity from conveying fraudulent telephone
calls, fraudulent recordings, and unauthorized “spoofed” telephone
calls. In the event that KAT Telecom, Inc. resumes operations, it must
also implement strong anti-fraud measures, including anti-fraud
monitoring, mitigation, and know-your-customer measures.
The claims resolved by the settlement in the
United States v. Jon Kahen,
et al. matter are allegations only, and there has not been any final determination of liability or wrongdoing.
These cases are being handled by Trial Attorneys Ann F. Entwistle and
Charles B. Dunn of the Civil Division’s Consumer Protection Branch and
Assistant U.S. Attorneys Bonni Perlin, Dara Olds, and Evan Lestelle of
the U.S. Attorney’s Office for the Eastern District of New York, in
coordination with the Social Security Administration Office of the
Inspector General and the U.S. Postal Inspection Service. Investigative
support was also provided by the U.S. Treasury Inspector General for
Tax Administration, U.S. Immigration and Customs Enforcement’s Homeland
Security Investigation’s El Dorado Task Force and U.S. Secret Service.
The Federal Trade Commission and the Federal Communications Commission
also provided pertinent data.
Additional information about the Consumer Protection Branch and its enforcement efforts may be found at
http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Eastern District of New York, visit its website at
https://www.justice.gov/usao-edny.
