A Los Angeles man was among two arrested this week after allegedly targeting elderly people in a telemarketing timeshare scheme, one of the latest incidents in what the FBI warns is an increase in elder fraud.
The men, Michael Farole, 44, of West Los Angeles, and Christopher Lang, 42, of Hays, Kansas, said they represented companies that provided advertising and other services to current and former timeshare owners, and allegedly convinced victims to pay advance fees in return for services that involved selling or securing the sale or rental of timeshares, officials said.
They were charged in U.S. District Court in Los Angeles with conspiracy to commit wire fraud.
After the victims paid initial fees for services that were never provided, the defendants allegedly kept contacting the victims by phone, text and emails in efforts to charge more fees.
An investigation revealed that at least 370 elderly people lost more than $4.5 million as a result of the fraud, officials said.
“The victims used funds from their social security income, investment and retirement accounts, as well as their savings, to pay the fraudulent companies,” according to the FBI. “Despite the recurring fees that each victim paid, often reaching the hundreds of thousands over several years, none received the timeshare-related services or proceeds promised.”
According to evidence seized during the investigation, the men used proceeds from the scheme to pay for personal expenses and luxury items.
The FBI provided other recent examples of elderly fraud including a Burbank man who was charged with embezzling $2.2 million in money and real estate from an elderly person in April.
In February, a Fresno hairstylist, Anthony David Flores, and an actress, Anna Rene Moore, were charged in an indictment after allegedly defrauding an elderly doctor out of more than $2.7 million before his death. The defendants then allegedly attempted to defraud the victim’s estate out of an additional amount exceeding $20 million, officials said.
In January, a former Orange County-based banker, Lana Pathos, 59, of Anaheim, pleaded guilty to a federal charge of stealing $1.2 million in savings from elderly people by using one of the victims’ identities to fraudulently open a bank account and impersonating the victim in order to transfer the stolen money to different bank accounts, officials said.
By the numbers
Last year, adults over the age of 60 reported 88,262 complaints to the FBI, making up a total loss of more than $3.1 billion, the FBI said. The total represents an 84% increase in losses compared to those reported the previous year.
The average loss per victim was more than $35,000 and more than 5,000 victims lost over $100,000.
California leads the U.S. in the number of elderly victims of fraud, with the collective amount of losses reported in the state coming in at more than $624.5 million last year, according to the FBI.
Also last year, the FBI’s internet crime complaint center received nearly 10,000 complaints from victims over 60 involving the use of cryptocurrency, including Bitcoin, Ethereum, Litecoin and Ripple. Losses from those types of victims totaled more than $1 billion, as the FBI pointed out that cryptocurrency is becoming a preferred payment method for all types of scams.
Most common elder fraud schemes
The FBI provided information about the most common elder schemes.
- Investment fraud: Examples include advance fee fraud, Ponzi schemes, pyramid schemes and market manipulation fraud.
- Business email compromise/email account compromise: The FBI called these schemes “sophisticated” and indicated they are carried out by fraudsters compromising email accounts through social engineering or computer intrusion techniques to conduct unauthorized transfer of funds.
- Confidence fraud/romance scams: In this kind of scheme, a victim is led to believe they are in a relationship and are tricked into sending money and/or personal and financial information to the perpetrator(s) or are convinced to launder money to assist them.
- Tech support fraud: Con artists can pose as tech support agents and use scare tactics to trick older adults int paying for unnecessary support services to fix non-existent tech issues or to renew fraudulent software or security subscriptions, officials detailed.
- Government impersonation: Though this type of fraud isn’t reported as often, millions of dollars are lost by the elderly to people impersonating government officials, according to the FBI. Criminals extort victims with threats of physical or financial harm to obtain personal information.
How to avoid being a victim
The FBI offered the following tips on how to avoid falling victim to fraud:
- Recognize scam attempts and end all communication with a perpetrator.
- Be cautious of unsolicited phone calls, mailings, and door-to-door services offers.
- Perpetrators create a sense of urgency to produce fear and lure victims into immediate action, so resist pressure to act quickly and call police if you feel you’re in danger.
- Protect your personal information and shred important financial documents.
- Check your financial statements each month for suspicious activity.
- Make your computer’s antivirus and security protections are up to date.
- Understand that con artists often pose as interested romantic partners online. Never send money to someone you don’t know personally.
- Always consult with a family member or friend you trust when in doubt.
Anyone who believes they may have been a victim of fraud, or knows a senior who may be, should report the incident to the FBI by calling 1-800-CALL-FBI or by submitting a tip to the Internet Crime Complaint Center at www.ic3.gov.
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