Inside an IRS scam run in India call center
U.S. taxpayers paid hundreds of millions of dollars.
THANE, INDIA — Nearly an hour into the phone call, the woman began to get suspicious.
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 s poke wi t h a f o re i g n accent and mangled basic phrases.
“Yo u r n a me i s D a n i e l 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.
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.
O n t h e s u r f a c e , l i t t l e 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.
Thi s ye a r, t he Fe de r a l Trade Commission described Indian call centers as “the source of various impostor frauds that have reached consumers throughout the English-speaking world.”
In October, 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.
“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 invest i g a t i o n a n d t h e f e d e r a l indictments showed how the scam went on for several years despite growing concern in both countries.
T h e me s s a g e s s e n t t o 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 Engli sh- speaking colle ge 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.
In Thane, most of the callers operated out of a ninestory 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.
S t a r t i n g i n J u l y, l a r g e g r o u p s o f e mp l o y e e s — mostly men in their 20s — be g a n a r r iv i ng a round 7 every evening, typical working hours for call centers that deal with customers in the United States. They would wrap up around 6 a.m. and return that night to start a new shift.
“There was nothing suspicious that we saw in that time,” said Prem Bahadur, the building’s caretaker. “It looked like a normal c all 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 land- lord said they did not know the identities of the tenants.
Authorities believe these two offices and a third nearby b r o u g h t i n $ 1 5 0,0 0 0 t o $225,000 a day.
“They knew they were cheating people,” Manere s a i d . “But p e r h a p s t h e y didn’t care because the victims were foreigners.”
At one of the offices, police found a six-page script used to train employees. In long, convoluted passages filled with mistakes, it demanded the target make an immediate payment or police would show up “at your doorsteps” within 30 minutes.
If the person sounded ready to pay, the call would be handed to a more experienced “closer ” to complete the deal. But if he or she expressed suspicion, the script suggested a sharp response:
“I will promise you will gonna lose everything what you have and you will end up paying bills to IRS to your rest of your life.”
Some victims described in the federal indictment paid tens of thousands of dollars using gift cards, such as iTunes cards.
Once they obtained the c ard number, sc ammers transferred the money to a prepaid debit card, which t hey us e d t o purchase a money order, authorities said. That money was deposited into a U.S. bank account and wired to India.
U.S. and Indian agencies have made arrests before in similar cases. Last year a Pennsylvania man, Sahil P a t e l , was s e n t e n c e d t o 14 years in pri son for his role in an India-based IRS scam, though the kingpins remained at large.
The Thane b u s t c oul d 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.