The Eastern District of New York has ruled in the case "United States v. Nicholas Palumbo, et al" effectively putting TollFreeDeals.com and SIPRetail.com out of business. These are the "Voice Over IP" companies that have allowed millions of overseas calls per day to be routed to Americans, often for the purposes of facilitating fraud, often by imitating either the Social Security Administration or the IRS. The case, originally filed 28JAN2020 ( 1:2020cv00473) announced their final "permanent injunction" ruling on 26AUG2020, as conveyed by the Office of the Inspector General of the Social Security Administration.
In the 62-page criminal complaint against the two companies, the government explains that the major fraud types facilitated by the Palumbos were:
a. Social Security Administration ("SSA") Imposters
b. Internal Revenue Service ("IRS") Imposters
c. United States Citizenship and Immigration Services ("USCIS") Imposters
d. Tech Support Imposters -- often claiming to be Apple or Microsoft
e. Loan Approval Scams
Through the use of the Palumbos' companies, the callers were able to spoof their caller ID to seem to originate from a U.S. Federal government agency, local police department, or technical support organization.
From October 1, 2018 to September 30, 2019, the SSA received more than 465,000 complaint related to these types of calls and documented losses of more than $14 million. The Federal Trade Commission's Consumer Sentinel Database documented 166,000 such calls with losses of $37 million just in calendar 2019. When all types of government impersonation calls were included, the FTC Consumer Sentinel reported 255,223 complaints causing $128 Million in fraud losses in 2018 and 389,563 complaints resulting in $152 Million in fraud losses in 2019!
The Social Security Calls
The Technology
In just 23 days in May and June of 2019, TollFreeDeals transmitted more than SEVEN HUNDRED TWENTY MILLION calls! (720,000,000 calls!!!!) 425 million of these calls lasted less than one second. More than 24 million of these calls were placed to residents of the Eastern District of New York.
182 Million of these TollFreeDeals calls were originated from a single India-based VoIP carrier co-conspirator in the United States. One thousand different source numbers accounted for 90% of these calls. 79% of these 1,000 numbers were listed as fraudulent robocall numbers by a robocall blocking company (YouMail). Of these 143 million calls, 20% were Social Security imposter calls, 35% were loan approval scams, and 14% were Microsoft refund calls. Other calls imitated the IRS, the U.S. Treasury, and additional tech support scams.
In May 2017, Nicholas Palumbo was notified by AT&T and others that his company was routing fraud government imposter calls. Palumbo promised to block two particular telephone numbers, but continued to allow the others.
In February 2019, AT&T notified Palumbo that calls spoofing the USCIS and attempting to extort money had been traced to his company. Again, Palumbo blamed his India-based VoIP carrier customer, even though this was the same company for which he had already received many warnings.
A telecommunications industry trade association, USTelecom, provided an additional 144 notifications of fraudulent call origination to the Palumbos' companies from May 2019 to January 2020, including 83 SSA Imposter fraud call cases, 24 Tech Support imposter fraud cases, 10 IRS imposter fraud cases, and 1 USCIS impersonation fraud calls. USTelecom's notices estimated that TollFreeDeals was placing "more than 1 million fraudulent calls per day." Palumbo logged in to the USTelecom portal and repeatedly indicated the calls had been placed by the same India-based customers of TollFreeDeals.
USTelecom also formally notified SIP Retail of similar traffic, including 35 traceback investigations from August 2019 to January 2020, including 19 SSA Impersonation cases, 3 Tech Support impersonation cases, and 1 USCIS Impersonation case.
Elder Fraud Task Force Reports
To put a human face on the crimes, a Postal Inspector working for the Elder Fraud Task Force in the Consumer Protection Branch of the Department of Justice investigated many example calls facilitated via the Palumbos' companies.
Palumbo received at least nineteen large cash deposits into Wells Fargo Bank accounts that he controlled from May 28, 2019 to September 11, 2019, totalling $130,250. The deposits were made in Minnesota, South Carolina, Florida, Alabama, and New Jersey. After each cash deposit, Palumbo would move the funds to his Ecommerce National LLC accounts at JP Morgan Chase. These activities are characterized by the Postal Inspector as "Interstate Funnel Account" transactions, a form of laundering money.
Some of the victims interviewed by the Postal Inspector included:
J.K - an 84 year old veteran of the US Marine Corps from Belle Harbor, NY. He received a call claiming to be from the U.S. Marshals Service with a wrarant for his arrest. He then was told by a "SSA Employee" that someone had used his SSN to rent a car in Texas and that the car was used in drug trafficking and money laundering. The "SSA Employee" then forced J.K to wire all of the money in his bank accounts to him - $9,800.
C.E. - a 36 year old man who was a brand-new U.S. citizen. He was told be "George" from SSA that he was being investigated for money laundering. He was told to drive to a Best Buy in Queens, NY and buy $700 worth of Hotels.com gift cards.
L.U. - a man in his 40s from Roosevelt, NY lost $2,200 in an SSA Imposter scam
More on Call Routing
Another Affidavit related to this case was the Declaration of a Special Agent of the Social Security Administration's Office of the Inspector General, who provided the diagram above to explain the complication of Least-Call Routing Tracebacks.
From 2016 to 2020, TollFreeDeals.com was offering VoIP termination services specializing in servicing foreign call center call originators. Their website specifically stated:
"TollFreeDeals.com is your premier connection for call center and dialer termination. We are always looking for the best call center routes in the telecom industry. We specialize in short call duration traffic or call center traffic. We understand there is a need for it and we want to help you find all the channels you need!"
They were proud of the number of call minutes they had "terminated" (which means, facilitated the call from VoIP to a Common Carrier call completion.) As of January 23, 2020, they boasted that they had helped to completed 10,491,500,323 minutes of calls! That's TEN BILLION MINUTES of mostly fraud calls!
One of the calls documented by the SSA OIG Special Agent stated:
"We have been forced to suspend your social security number with immediate effect. Due to this, all your social benefits will be cancelled until further clearance. In case you feel this is due to an error you may connect with legal [unintelligible] Social Security Administration. In order to connect with a Social Security Administration office, press One now. In case we do not hear from you, your social will be blocked permanently. To connect with an officer now, press One and you will automatically be connected with the concern departments. We did not receive any input. Dear citizen, in order to speak with Social Security personnel regarding your social security, press One and this automated system will connect you with the officials."
This affiant establishes that those 1,000 top phone numbers identified by YouMail and confirmed as fraud based on complaints in the FTC Consumer Sentinel database came from 29 unique TollFreeDeals customers.
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