The Department of Justice announced Friday that two telecom carriers have been dealt with injunctions for facilitating hundreds of millions of fraudulent robocalls that have led to “massive financial losses to elderly and other vulnerable victims throughout the United States.”
The two separate civil actions entered by the U.S. District Court for the Eastern District of New York—United States v. Nicholas Palumbo, et al., and United States v. John Kahen, et al.—seek to bar eight individuals and entities from helping scammers transmit “massive volumes” of scam calls.
“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,” Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division said in a statement. “The department is committed to stopping this unlawful conduct and pursuing those who knowingly facilitate these schemes for their own financial gain.”
The defendants in both cases allegedly operated as intermediate voice over internet protocol (VoIP) carriers to relay internet-based calls from other entities, often located abroad.
The fraudulent government- and business-imposter calls are then transmitted to other carriers within the United States and ultimately to victims’ phones in the country. The calls included ones that impersonated government agencies, such as the Social Security Administration, the IRS, and legitimate businesses, such as Microsoft.
Many of the calls involved people pretending to be government investigators telling victims false claims such as how their social security number or other personal information has been compromised or connected to criminal activity, or they are facing imminent arrest or deportation, or that their assets are frozen, or their bank and credit accounts have suspicious activity, and so on. Each of the claims are designed to scare the victims into paying large sums of money.
The defendants also allegedly sold U.S. phone numbers to foreign entities, which were used as victim call-back numbers as part of widespread scam robocall operations.
The Justice Department noted that both cases involved allegations only and that “no final determinations of liability or wrongdoing have been reached.”
In the first case, the U.S. District Court for the Eastern District of New York issued a preliminary injunction against spouses Nicholas and Natasha Palumbo of Scottsdale, Arizona, for engaging 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 District Court alleged that the couple were warned more than 100 times that scam calls were being transmitted through their two VoIP companies but they never cut off business ties with any entity they learned were linked to the scam calls.
“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,” the Justice Department noted.
In the second case, which was resolved via settlements, John Kahen of New York and a number of companies have been barred from conducting or facilitating robocalls, and from “serving as employees, agents, or consultants to any person or entity engaged in these activities.”
President Donald Trump in December 2019 signed a measure aimed at deterring robocalls to Americans.
The Pallone-Thune TRACED Act, or S. 151, adds a forfeiture penalty for violations of the prohibition on certain robocalls.
It also requires voice service providers to develop call authentication technologies and mandates the Federal Communications Commission to create rules outlining when a provider can block a voice call based on info from the technologies.
The Federal Trade Commission in 2019 received nearly 400,000 complaints regarding alleged imposter fraud claims of $152.9 million, which the Justice Department said “substantially underestimates the extent” of fraud, because many do not report losses.
Zachary Stieber and Reuters contributed to this report.