By Scott Morris
The robotic voice brings an ominous message: The Internal Revenue Service has filed a lawsuit against you for unpaid taxes and issued a warrant for your arrest. For more information, call back immediately. The call can come weekly, daily, or even more often, though it might come from a different number each time. Call back and you might learn they already have your personal information, such as your name, address, and date of birth.
The calls are a scam designed to trick victims into giving the caller thousands of dollars over the phone. Such scams have been around for years, but returned to the Bay Area in force this tax season. The elaborate hoax makes terrifying threats of becoming caught in a Kafkaesque system with no due process, no access to the evidence against you, and no access to an attorney until after 15 days of incarceration.
The area codes of the calls rotate, so it's difficult to tell where they originate. But a 56-defendant indictment filed in federal court in 2016 targeted a large organization in India that the U.S. Department of Justice said stole hundreds of millions of dollars from tens of thousands of victims. One of the defendants in that case, Jerry Norris, was an Oakland resident who gathered information in the United States and provided it to his co-conspirators in India. Norris pleaded guilty to conspiracy last year and is scheduled to be sentenced in June.
The San Pablo Police Department issued a warning about the scam in March. "These thieves then prey on residents by calling and demanding immediate payment using pre-loaded debit cards, gift cards, or wire transfers," the department's warning stated. "Consumers are told if they do not pay right away, penalties can include arrest, deportation, or suspension of a business or driver's license."
Victims of the scam are essentially held hostage. After getting the calls numerous times, I played along with the scam twice, spending up to an hour on the phone while getting specific instructions from the caller, including at one point being told to drive to a bank and withdraw thousands of dollars. The "officer" told me to keep my phone in my pocket on speakerphone so he could verify my interaction with a bank teller.
While many scam callers will blindly fish for information, such as asking for credit card numbers while pretending to provide debt assistance, the IRS scam is more sophisticated because the callers already have access to personal details, bolstering their credibility as a law enforcement agency. When I first reached one of the scammers, I provided a fake ZIP code when asked, and was surprised when they accused me of lying and read back my name and address, although I no longer lived at the address they had on file.
Both times, the caller read a long list of information, instructing me to stay quiet while he gave me the details of his case. One "officer" identified himself as Officer William Sanchez and another identified himself as Phillip Edwards. The calls were often noisy—the "officers" were obviously in a very large room with many people making phone calls.
Each time I was told I owed the IRS approximately $8,000 from the last several years of taxes. I was provided with badge numbers for each agent, my own case number, and nonsensical legal jargon ostensibly telling me what section of the law I had violated. In one case, I was told that local law enforcement officers would arrive at my home within an hour to arrest me.
"This is not the very first attempt by the IRS to contact you," the agent who identified himself as "Sanchez" told me. He said that an agent had gone to my home on Jan. 17 and was unable to reach me. At this point, the agency had determined that I was trying to evade my taxes. "The situation is very serious and time sensitive," he said.
He said that once I was arrested, I would be jailed for 15 days before a court hearing, and only then would I be provided with an attorney and allowed to view the evidence against me. But I still had one option: I could take care of it that day on the phone and then I wouldn't ever need to go to court. Once I agreed to take care of it outside of court, I was transferred to a supervisor.
The supervisor told me that I would need to get a "tax voucher" from a store like Walmart or CVS. One told me to drive to the bank first and make a cash withdrawal for the amount I owed, $7,930, and insisted that I keep him on speakerphone in my pocket in the process. I didn't go to the bank, I didn't even drive anywhere, I just sat in my car with the engine running and then told him that I'd arrived. Later I had a conversation with myself as if I was talking to a bank teller.
Eventually he told me to purchase 16 Google Play gift cards worth $500 each at a CVS store. Once I told him I did that, he told me to read back the numbers on the back of the card for each of them. When I read back a made-up number, he hung up.
The IRS has been warning taxpayers about this scam for years. Agents with the U.S. Department of Homeland Security and U.S. Department of the Treasury spent three years investigating a similar scheme starting in 2011, which led to federal charges against 56 people and five companies in 2016. Many of the people charged were based in Ahmedabad, India, including 32 people who worked at five call centers.
Their victims included Suresh M., a resident of Hayward who was scammed out of $136,000 by phony IRS agents in January 2014. Scammers instructed her to purchase 276 Green Dot MoneyPak cards—reloadable debit cards that don't require a bank account—and to transmit the PINs for the cards to them, according to the federal indictment. In total, hundreds of millions of dollars was stolen from about 15,000 victims. An additional 35,000 people had their personal information stolen.
In Oakland, Norris, 48, acted as a "runner" for the conspiracy, helping launder the funds by purchasing reloadable cards in the U.S. to transfer stolen funds as well as retrieving cash payments for wire transfers.
When the indictment was unsealed in October 2016, Norris was not arrested, and he remained a fugitive until March 2017. After his arrest, he was denied bail because U.S. Magistrate Judge Frances Stacy of the Southern District of Texas determined he was a flight risk. Stacy wrote in her order that Norris had collected information online about potential victims and helped develop leads for the call centers in India. In total, Norris had accessed 162 cards with $335,000 in victim funds, according to investigators.
He was arrested after his ex-wife contacted law enforcement and said he was planning to leave the United States for India. She said he was behind on child support payments, didn't have a passport, and had other outstanding warrants, including a failure to appear citation for a case when he allegedly abandoned his 14-year-old daughter on the side of the road, according to Stacy. He also had warrants in Colorado, Georgia, and Arizona.
Norris pleaded guilty to conspiracy in September. He remains in federal custody in Houston and faces up to five years in prison when he's sentenced in June.