Police Say India-Based IRS Collection Scam Targeted Americans


Minaz Husain Ladaf couldn't believe his luck this summer when he was offered a 40% bump in salary and other perks to work for what he thought was the U.S. government. But when he went to his new workplace to pick up his paycheck this week, he was picked up by the police instead.

Mr. Ladaf and dozens of fellow call-center workers have been locked in dusty jail cells in this booming Mumbai suburb since Wednesday. Police say they managed a telephone "scam center" where close to 700 workers called targeted Americans, pretending to be from the U.S. Internal Revenue Service, and raking in an estimated $150,000 a day.

They would follow a precise script, police said, trying to trick people into believing they owed thousands of dollars in taxes and were facing all kinds of ruinous penalties or even jail, in the latest example of what U.S. authorities say is a recent wave of tax-related swindles.

"Your 401(k) [retirement] plan will be frozen and confiscated, all your wages and benefits would be frozen," one script went, according to a phone recording released by police here. "Your passport will be seized along with your state ID and if you belong to a country other than the United States then you will be deported...your Social Security number will be blocked for the next seven years and you will not be eligible for any benefits such as disability benefits, unemployment benefits, child-protection income or retirement or pension."

The Inspector General for Tax Administration in the U.S. says it has fielded more than 1.7 million complaints from victims who have lost a total of more than $47 million to such scams in the last three years.

Police arrested Nasreen Bano Iqbal Bale Sahib and her two sons, Nadeem Iqbal Balasaheb and Shain Iqbal Balasaheb, who were listed as owners of the company, MAC Outsourcing Services Private Limited, that managed the floor in the 7-story building that hosted the call center.

There wasn't any immediate reply to a request for comment sent to an email address included with the company's registry. A phone number couldn't be located and police said they didn't have a contact for the family's lawyer.

Police said they were investigating the individuals who managed the other floors to determine if they had any involvement.

Of the 772 people in the building at the time of Tuesday's raid, deputy police commissioner Parag Manere said 70 so far were being charged with "cheating by impersonation" and forgery. Another 72 were questioned and released and the rest were asked to come to the police station to be questioned starting Friday.

Speaking on Thursday through the bars of a jail cell at the Thane police station, the 25-year-old Mr. Ladaf said he would plead innocent to any charges.

"We didn't want to cheat people," he said.

Mr. Ladaf said he found the job through a flier with bright-red letters advertising "An Urgently Huge Requirement" for call-center workers. With his strong English and experience at other call centers, he was offered the top salary as well as promises of bonuses and regular days off, he said.

When he started work Aug. 1, he said, the owner informed him and the other new recruits that the company had won a contract with the U.S. government.

"He said that we just had to collect money," said Mr. Ladaf. "He said we were getting data from a U.S. government department and that we were partners with them."

He was given a long list of people to call, he said, but as almost every customer swore at him before slamming down the phone, he realized he was probably not actually working for the U.S. government. He was planning to quit after getting his paycheck on Tuesday, but when he got to work police were raiding the office.

According to Indian police, the scam operators received phone numbers and other details about U.S. taxpayers from a contact in the U.S. The call-center workers directed the victims to nearby stores to buy $500 gift cards.

The victims were then instructed to disclose the registration numbers of the cards, giving the call-center worker access to the cash.

According to the recordings released by police, some victims were told they only had hours to make some kind of payment or they would be arrested and face years in jail and a $100,000 fine.

Closers, as the most skilled workers were known, would keep their victims on the phone for as long as three hours, police said, threatening them with immediate imprisonment if they hung up.

Police Inspector Nitin Thakare said he snatched a headset from one dialer during the raid and heard what sounded like an elderly woman on the other end. "She was weeping," the inspector said. "We felt so bad about it."

Every dollar squeezed from a victim would bring the employee a bonus of one rupee, or 1.5 cent. Police say one victim lost $88,000, earning the dialer more than $1,300.

When one employee made a big score, the others would applaud and bonuses were immediately handed out in cash, police said.

But the job could be tough, Mr. Ladaf said, as 99% of the people they called weren't fooled by the scam. "It was extremely frustrating," he said. "We took abuse for hours on end."

Write to Gabriele Parussini at gabriele.parussini@wsj.com and Debiprasad Nayak at debi.nayak@wsj.com