CRIME: infoUSA Implicated In Telemarketing Scam

[UPDATE, 5/26: POLITICS: NYT's Latest infoUSA Story Looks at Clinton Connection.]

[UPDATE, 5/21: BIZ: infoUSA Responds to the 5/20 NYT Article]

[UPDATE, 5/21: This story is the most-e-mailed story of the last 24 hours on NYTimes.com + photo of former president Clinton with Vin Gupta added below.]

Two desi connections to a sad, maddening investigative story in Sunday's NYT story by Charles Duhigg - "Bilking the Elderly, With A Corporate Assist" - about lonely old people (including a 92-year-old army veteran named Richard Guthrie) being cheated by scam artists. The first connection is in the opening sentence:

The thieves operated from small offices in Toronto and hangar-size rooms in India. Every night, working from lists of names and phone numbers, they called World War II veterans, retired schoolteachers and thousands of other elderly Americans and posed as government and insurance workers updating their files.

The second is the company that is implicated (though not formally charged) in this, infoUSA.

InfoUSA was founded by Vinod Gupta in 1972 as American Business Information with a $100 initial investment. Today it's a "$600-million public company  with 4 million customers" and 600 employees. It offers information on 14 million U.S. businesses and 210 million U.S. consumers. On Friday, May 18, 2007, the last day of trading before this story, infoUSA's stock closed at $10.64 (see latest price here).

Gupta,who is still chairman and CEO after all these years, is a well-known Indian-American business executive, philanthropist and Democratic Party donor (he was appointed to the Kennedy Center by Bill Clinton, who also nominated for him U.S. Consul General to Bermuda and Ambassador to Fiji (but never served). Here is a YouTube video about the Clinton Science & Technology Center in a village in India, which Gupta built and Clinton himself inaugurated in 2001 (see Clinton-Gupta photo below). It's just one of several multimillion-dollar donations to education Gupta has made; beneficiaries include the Vinod Gupta School of Management and the Rajiv Gandhi School of Intellectual Property Law at IIT Kharagpur, his alma mater - see a full list at VinGupta.com).

He is so closely identified with the company that the Wikipedia entry for infoUSA redirects to the one for Vinod Gupta (as of this writing; and has been since July 2006 when it was created) and VinGupta.com redirects to a page off infoUSA.com. You can see a "60 Minutes II" interview with Gupta here.

Among points the NYT story makes:

• Mr. Guthrie, who lives in Iowa, had entered a few sweepstakes that caused his name to appear in a database advertised by infoUSA, one of the largest compilers of consumer information. InfoUSA sold his name, and data on scores of other elderly Americans, to known lawbreakers, regulators say.

  InfoUSA advertised lists of “Elderly Opportunity Seekers,” 3.3 million older people “looking for ways to make money,” and “Suffering Seniors,” 4.7 million people with cancer or Alzheimer’s disease. “Oldies but Goodies” contained 500,000 gamblers over 55 years old, for 8.5 cents apiece. One list said: “These people are gullible. They want to believe that their luck can change.”

• ...neither that bank nor infoUSA stopped working with criminals even after executives were warned that they were aiding continuing crimes, according to government investigators. Instead, those companies collected millions of dollars in fees from scam artists. (Neither company has been formally accused of wrongdoing by the authorities.)

• But infoUSA has also helped sell lists to companies that were under investigation or had been prosecuted for fraud, according to records collected by the Iowa attorney general. Those records stemmed from a now completed investigation of a suspected telemarketing criminal.

• But internal infoUSA e-mail messages indicate that employees did not abide by those standards. In 2003, two infoUSA employees traded e-mail messages discussing the fact that Nevada authorities were seeking Richard Panas, a frequent infoUSA client, in connection with a lottery scam. “This kind of behavior does not surprise me, but it adds to my concerns about doing business with these people,” an infoUSA executive wrote to colleagues. Yet, over the next 10 months, infoUSA sold Mr. Panas an additional 155,000 names, even after he pleaded guilty to criminal charges in Nevada and was barred from operating in Iowa.


• Senior executives at infoUSA were contacted by telephone and e-mail messages at least 30 times. They did not respond."

[You can listen to audio excerpts of chilling phone calls to learn how the scammers deal with elderly folks in this audio feature on the NYT site.]

Here's an excerpt from infoUSA's code of conduct:

infoUSA's commitment to the highest level of ethical conduct should be   reflected in all of the Corporation's business activities including, but   not limited to, relationships with employees, customers, vendors, competitors,   the government and the public. All of our employees, officers and directors   must conduct themselves according to the language and spirit of this Code and   seek to avoid even the appearance of improper behavior.

[Unconnected to this particular story, Vinod Gupta and the board of directors of infoUSA (which has two other desis out of nine in all, Anshoo  Gupta, president of JAG Operations, LLP and Dr. Vasant Raval
professor and chair, Creighton University) are in the midst of a major shareholder battle with  Dolphin Limited Partnership, a hedge fund. Here's infoUSA's side of the story, here is Dolphin's (they have a whole website dedicated to this). The last two links include items from as recently as Thursday, May 17, 2007. The NYT's Gretchen Morgenson wrote about the dispute on Aug. 27, 2007, saying, in part, that he "seems not to recognize that he is running a public company and needs to look out for his non-Gupta shareholders."]

Even though India is mentioned in the first sentence of this story, the writer never explains how the crimes happen via India. Anyone familiar this type of scam? Has this been covered in India?

What do you make of all this? Do you know more about any or all of it? Reax? Please post in the comment section below.

APRIL 8, 2001: Former President Bill Clinton greeted by a group of students as he arrives at "The William Jefferson Clinton Science & Technology Center" near Saharanpur, India, the village where Vinod "Vin" Gupta,(left, with sunglasses) comes from. Photo: Jay Mandal/On Assignment (contact for more pix: jay[at]jaymandal.com)

EARLIER ON SAJAforum:

• PHILANTHROPY: Largest Donations by Desis In The U.S.

 

Comments

[Jaya Kamlani]

SHOCKING! SHOCKING! SHOCKING!

We Indians should stop hero-worship of our Indians executives and movie stars. We don't know how many of them are corrupt. We thought there was only greed among CEO's of ENRON, WorldCom and others. It appears, some of our Indians CEOs are no less. They give the good hard-working CEOs a bad name. It is hard to know who to trust anymore.

Jaya Kamlani

[Anonymous]

This is a rather old, recurring story that's been reangled with database companies selling the info to the scammers.

There have been several cases of Canada-based telephone scams, but a Nexis search did not turn up
any connection to India.

Since the NYT does not identify those involved in the
scam, one presumes they are referring to Xtel
Marketing, Inc., and/or Millenium (sic) Consulting and
Med Supply, which were busted in an joint
U.S.-Canadian operation in 2004.

http://www.ftc.gov/opa/2004/11/millineum.shtm

http://www.seniorjournal.com/NEWS/Alerts/5-08-02TelemarketersBanned.htm

The operators of the scam had names spelled the way
Indians from West Indies do (Navin Baboolal, and
Annilla Ramkissoon). But there was no mention of any
connection to India in the stories about them or in
the Federal Trade Commission announcement.

Most of the reports describe these scams as
"boilerroom operations" -- which aren't exactly the
type that would require hangar-sized rooms.

This story has problems:

1. Why weren't the scammers identified? (Possibly
because there are too many to list?)

2. If no company or group was identified because there
were too many, then why bring in a specific country
and description of the place they allegedly operate
from? What is the source for the reporter's
description? (This gap leads one to wonder if the
reporter was practicing Blairism -- embellishing a
report based on popular images, both of where call
centers are supposed to be and how they are: There's
such a description in a Reuters story that mentions
the Archbishop of Bangalore worrying about the morals
of call center workers: " ... Still, Pradeep
Narayanan, executive director at the hangar-sized 24/7
Customer call centre..."
http://in.news.yahoo.com/061113/137/69bex.html

(There's an Indian-sounding name, ergo there must be
an Indian operation from a "hangar-sized room.")

3. If indeed there is a hangar-sized room housing the
operators it would be logical that there would be
several hundred operators (it wouldn't make sense to
rent such a huge place for ten operators -- although
it could be possible). If it is such a huge operation,
it should have called for more investigations into the
Indian operation. It should also have led to the
question why the US authorities have failed to bust
them and instead concentrated on only the Canadians?

The bottom line seems to be the presumption that if
there was a telemarketing or call center scam, it
should involve operations in India and it is so
obvious that a reader needs no further information --
something that is standard practice for well-known and
accepted facts that don't need sourcing.

While indeed there may be "hangar-size" operations in
India, by putting that in the lede and not giving any
more information, a reader could justifiably wonder
about its credibility -- especially if any
corroboration is not readily available in databases.

And this is one of the weaknesses of feature-style
writing: Trying to make the lede a grabber -- here the
contrast of "small offices" and "hangar size rooms"
and the mention of a country identified with call
centers and telemarketing. And when reporters resort
to it, they're usually asked to explain it somewhere
in the story.

Here's a look at some other reports on the scams:

Another case of similar fraud was busted earlier this
year; but it did seem to hint at any Indian connection
-- even remotely.

http://losangeles.fbi.gov/pressrel/2007/la011707.htm

[Jaya Kamlani]

Latest news on InfoUSA and Vinod Gupta:

“Suit Sheds Light on Clintons' Ties to a Benefactor”
By MIKE McINTIRE
Details have emerged about the relationship of former
President Bill Clinton and Senator Hillary Rodham Clinton
with Vinod Gupta, the founder of infoUSA.

http://www.nytimes.com/2007/05/26/us/politics/26clinton.html?th&emc=th (Full Story)

When former President Bill Clinton and Senator Hillary Rodham Clinton took a family vacation in January 2002 to Acapulco, Mexico, one of their longtime supporters, Vinod Gupta, provided his company’s private jet to fly them there. The company, infoUSA, one of the nation’s largest brokers of information on consumers, paid $146,866 to ferry the Clintons, Mr. Gupta and others to Acapulco and back, court records show. During the next four years, infoUSA paid Mr. Clinton more than $2 million for consulting services, and spent almost $900,000 to fly him around the world for his presidential foundation work and to fly Mrs. Clinton to campaign events.

Those expenses are cited in a lawsuit filed late last year in a Delaware court by angry shareholders of infoUSA, who assert that Mr. Gupta wasted the company’s money trying “to ingratiate himself” with his high-profile guests….. In addition to the shareholder accusations, The New York Times reported last Sunday that an investigation by the authorities in Iowa found that infoUSA sold consumer data several years ago to telemarketing criminals who used it to steal money from elderly Americans. It advertised call lists with titles like “Elderly Opportunity Seekers” or “Suffering Seniors,” a compilation of people with cancer or Alzheimer’s disease. The company called the episodes an aberration and pledged that it would not happen again……

Jaya Kamlani

[Jaya Kamlani]

More news on the subject. Vinod Gupta slept in the White House Lincoln bedroom.......

“Lawsuit cites plane trips for Clintons”
http://news.yahoo.com/s/ap/20070526/ap_on_el_pr/clintons_contributor (full story)

WASHINGTON - A longtime Clinton benefactor used corporate jets to fly the former president and Hillary Rodham Clinton on business, personal and campaign trips that a lawsuit brands as wasteful company spending… Messages left Saturday with lawyers for infoUSA and for Dolphin Limited Partnership, a hedge fund that brought the suit, were not immediately returned Saturday. Stamford, Conn.-based Dolphin owns 3.6 percent of infoUSA stock…

The suit offers a glimpse into the personal and political relationships between the Clintons and a contributor who was willing to spend more than $145,000 to fly himself and the Clintons to Acapulco, Mexico, on a vacation in 2002… Gupta has been a major donor to Democrats over the years and especially prominent as a Clinton fundraiser. He was rewarded with a night in the White House's Lincoln bedroom during Clinton's presidency. He also donated at least $1 million to Bill Clinton's presidential library in Little Rock, Ark.

Before suing, Dolphin had tried unsuccessfully to place three directors on the infoUSA board… Both in its suit and in its quest to alter the board, Dolphin has maintained that Gupta squandered company money not only on the Clintons but on a stadium skybox and on a private yacht with an all-female crew….

Jaya Kamlani