Department of Justice Shuts Down Warranty Robocall Scammers

Consent decree bars Ecommerce National LLC and SIP Retail from transmitting calls into US

Posted by Tony Russell

August 26, 2020

The U.S. District Court for the Eastern District of New York entered a consent decree imposing a permanent injunction barring two individuals and two companies that transmitted massive volumes of fraudulent robocalls from conveying any telephone calls into the U.S. telephone system, the Department of Justice announced today.

As alleged in a civil complaint filed earlier this year in United States v. Nicholas Palumbo, et al., spouses Nicholas and Natasha Palumbo of Scottsdale, Arizona, and their companies, Ecommerce National LLC d/b/a TollFreeDeals.com and SIP Retail d/b/a sipretail.com, received millions of fraudulent internet-based calls every day from other entities, often located abroad. Those calls were then transmitted, initially to other carriers within the United States and ultimately, to the phones of individuals. The defendants are alleged to have knowingly allowed numerous foreign-based individuals and entities to transmit fraudulent government- and business-imposter robocalls through defendants’ network and on to victims in the United States. These fraudulent robocalls included millions of calls impersonating the Social Security Administration, threatening the recipients of the calls with arrest or asset seizure if they did not immediately transfer funds to the caller. The defendants also sold U.S. telephone numbers to foreign entities, which were used as victim call-back numbers as part of massive robocalling fraud schemes, to give the impression that the fraudsters were located in the United States. These calls led to massive financial losses to elderly and other vulnerable victims throughout the United States.

The consent decree is a milestone in protecting the public, especially elderly and other vulnerable persons, from predatory robocall schemes that can cause catastrophic losses to victims in this district and throughout the country.

“The Department is committed to protecting vulnerable Americans, particularly America’s seniors, from those who seek to steal their hard-earned savings,” said Acting Assistant Attorney General Ethan Davis of the Department of Justice’s Civil Division. “The Department will pursue not only those who place fraudulent robocalls, but also those who knowingly facilitate such calls. The Department recognizes the exceptional work of the Social Security Administration and Postal Inspection Service in investigating this case.”

“The consent decree is a milestone in protecting the public, especially elderly and other vulnerable persons, from predatory robocall schemes that can cause catastrophic losses to victims in this district and throughout the country,” said Acting U.S. Attorney Seth D. DuCharme.

“We are pleased that all five companies named by the Department of Justice in this civil matter are now permanently enjoined from facilitating Social Security scam calls. The facts clearly show these companies, and their owners, knowingly did business with government imposter telephone scammers, resulting in financial and emotional harm to unsuspecting consumers,” said Inspector General Ennis. “I want to thank DOJ’s Consumer Protection Branch, the U.S. Postal Inspection Service, and our other law enforcement partners who provided assistance and support throughout this investigation.”

In a written opinion issued in March of this year, the District Court found that, despite being warned more than 100 times of specific instances of fraudulent calls being transmitted through their network, the defendants 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 held that “at the very least… defendants’ failure to take meaningful action in response to these complaints demonstrates reckless indifference to the fraud they were enabling. Over time, it became increasingly clear that they knew or should have known the complaints evidenced a widespread pattern of fraudulent calls being transmitted over their network.”

Under the terms of the consent decree entered today by the District Court, the defendants agreed to be permanently barred from, among other things, using the U.S. telephone system to: deliver prerecorded messages through automatic means, carry voice-over internet protocol calls destined for phones in the United States, and not to provide any U.S. phone numbers to other individuals or entities. In addition, the defendants are permanently barred from serving as employees, agents, or consultants to any person or entity engaged in these activities.

This case was handled by Trial Attorneys Ann F. Entwistle and Charles B. Dunn of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorneys Bonni Perlin and Dara Olds of the U.S. Attorney’s Office for the Eastern District of New York, in coordination with the Social Security Administration Office of the Inspector General and the U.S. Postal Inspection Service. Investigative support was also provided by the U.S. Treasury Inspector General for Tax Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigation’s El Dorado Task Force and U.S. Secret Service. The Federal Trade Commission and the Federal Communications Commission also provided pertinent data.