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Date: 04-01-2020
Case Style:
United States v. Nicholas Palumbo, et al.
Case Number: 20-CV-473
Judge: Not Available
Court: United States District Court for the District for the Eastern District of New York (Kings County)
Plaintiff's Attorney: Not Available
Defendant's Attorney: Not Available
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Brooklyn, NY - The United States sued Nicholas Palumbo, et al. seeking to enjoin the making of robocalls to millions of consumers.
The Department of Justice announced that the U.S. District Court for the Eastern District of New York entered orders in two separate civil actions barring eight individuals and entities from continuing to facilitate the transmission of massive volumes of fraudulent robocalls to consumers in the United States. In one of the matters, United States v. Nicholas Palumbo, et al., the court entered a preliminary injunction that bars defendants Nicholas and Natasha Palumbo and two entities from operating as intermediate voice-over-internet-protocol (VoIP) carriers during the pendency of the civil action. In the other matter, United States v. Jon Kahen, et al., the court entered consent decrees that permanently bar defendants Jon Kahen and three entities from operating as intermediate VoIP carriers conveying fraudulent robocalls into the U.S. telephone system.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, Jody H. Hunt, Assistant Attorney General of the Justice Department’s Civil Division, and Gail S. Ennis, Inspector General, Social Security Administration (SSA), made the announcement.
“This Office will take all appropriate measures to stop fraudulent robocalling schemes responsible for causing catastrophic losses to victims, including seeking to permanently shut down the U.S.-based enablers of such schemes,” stated United States Attorney Donoghue. “Protecting elderly and vulnerable individuals from being conned by foreign call center scammers remains a priority of this office and the Department of Justice.”
“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,” stated Assistant Attorney General Hunt. “The Department is committed to stopping this unlawful conduct and pursuing those who knowingly facilitate these schemes for their own financial gain.”
“The Court’s decisions send a clear message to gateway carriers who knowingly do business with scammers targeting Americans from overseas,” stated SSA Inspector General Ennis. “We will continue to pursue those who facilitate these scam calls by allowing them into the U.S. telephone network. I want to thank the Department of Justice for its support throughout this investigation and its commitment to protecting Americans from this insidious form of fraud and theft.”
As alleged in the complaints, the defendants in both cases operated as intermediate VoIP carriers, receiving internet based calls from other entities, often located abroad, and transmitting those calls first to other carriers within the United States, and ultimately to the phones of individuals. Numerous foreign-based call centers are alleged to have used the defendants’ VoIP carrier services to pass fraudulent government and business imposter robocalls to victims in the United States. The defendants also sold U.S. phone numbers to foreign entities, which were used as victim call-back numbers as part of massive robocalling fraud schemes.
As also alleged, despite numerous warnings that they were carrying fraudulent robocalls—including calls impersonating government agencies such as the Social Security Administration, the Internal Revenue Service and businesses such as Microsoft—the defendants continued carrying those calls and facilitating fraud schemes targeting individuals in the United States. Many of the robocalls were made from foreign-based call centers by individuals impersonating government investigators and conveying alarming messages, such as: the recipient’s social security number or other personal information has been compromised or otherwise connected to criminal activity; the recipient faces imminent arrest; the recipient’s assets are being frozen; the recipient’s bank and credit accounts have suspect activity; the recipient’s benefits are being stopped; the recipient faces imminent deportation; or combinations of these threats. Each of these claims was false and designed to scare the call recipient into paying large sums of money. Many times the numbers that appeared as the originating or caller-ID numbers for these calls were “spoofed” to make it appear that they originated from legitimate government or business offices in the United States, when in reality the calls were made by overseas scammers, often located in India. The defendants also sold toll-free and other U.S. numbers to foreign call centers that were left in fraudulent robocall messages on victims’ phones to further deceive them into believing that the calls were legitimate and originated in the United States. These calls led to massive financial losses to elderly and other vulnerable victims throughout the United States.
United States v. Nicholas Palumbo, et al.
In the first case, the court issued a preliminary injunction against spouses Nicholas and Natasha Palumbo of Scottsdale, Arizona, and the Arizona companies they own and operate, Ecommerce National LLC d/b/a TollFreeDeals.com and SIP Retail d/b/a sipretail.com. The court held, in a written opinion, that the evidence presented by the United States demonstrated probable cause to conclude that the defendants were engaged 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 preliminary injunction bars the defendants from carrying any VoIP calls destined for phones in the United States and providing any U.S. telephone numbers (often used as call-back numbers in the fraudulent robocalling schemes) to any individuals or entities during the pendency of this litigation. The court noted that, although the defendants had been warned more than 100 times of specific instances of fraudulent calls being transmitted through their network, they never severed their business relationship with any entity they learned was associated with fraudulent call traffic prior to the United States filing of its lawsuit. The court further noted that “the telecommunications ‘intermediary’ industry is set up perfectly to allow fraudulent operators to rotate telephone numbers endlessly and blame other parties for the fraudulent call traffic they carry,” that the United States “demonstrat[ed] probable cause to conclude that Defendants’ business is permeated with fraud,” that “multiple individual victims in the United States suffered significant fraud losses” and that “[e]very day that the Defendants’ actions in this vein continue, the public is at risk of harm in the form of additional high-dollar fraud losses.”
United States v. Jon Kahen, et al.
In the second case, the court entered consent decrees permanently resolving the matter against five individuals and entities who were also operating intermediary VoIP carriers. The consent decree entered on March 2, 2020 against Jon Kahen, a/k/a Jon Kaen of New York, and New York corporations Global Voicecom, Inc. and Global Telecommunication Services Inc., permanently barred those defendants from, among other things, using the U.S. telephone system to: deliver prerecorded messages through automatic means, carry calls to the United States from foreign locations, and provide calling and toll-free services for calls originating in the United States. In addition, the defendants are permanently barred from serving as employees, agents, or consultants to any person or entity engaged in these activities. In a second consent decree entered on March 24, 2020, the court barred KAT Telecom, Inc., a New York corporation, from conveying or causing any other person or entity from conveying fraudulent telephone calls, fraudulent recordings and unauthorized “spoofed” telephone calls. In the event that KAT Telecom, Inc. resumes operations, it must also implement strong anti-fraud measures, including anti-fraud monitoring, mitigation and know-your-customer measures.
The claims resolved by the settlement in United States v. Jon Kahen, et al. are allegations only, and there has not been any final determination of liability or wrongdoing. The claims in United States v. Nicholas Palumbo, et al. are allegations only, and there has not been any final determination of liability or wrongdoing.
The government is represented by Assistant U.S. Attorneys Bonni Perlin, Evan Lestelle and Dara Olds of the U.S. Attorney’s Office for the Eastern District of New York, and Trial Attorneys Ann Entwistle and Bart Dunn of the Civil Division’s Consumer Protection Branch. The SSA’s Office of Inspector General, the USPIS, the Office of Inspector General for Tax Administration and U.S. Immigration and Customs Enforcement’s Homeland Security Investigation’s El Dorado Task Force provided investigative support. The Federal Trade Commission and the Federal Communications Commission provided pertinent data.
Outcome: Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Eastern District of New York, visit its website at https://www.justice.gov/usao-edny.
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