Millions of Americans have fallen for a ruse claiming they owe back taxes and must pay immediately. On the other side of the globe, one dogged inspector finally delivered justice.
Madan Ballal sat down in a conference room with 48 other officers of the Thane Crime Branch, the criminal investigation wing of the police department in a city on the outskirts of Mumbai, India.
As monsoon rain crashed against the room’s windows, the gathering of police officers, holding half-full cups of sweet tea, learned about a type of “cold-blooded crime that had the potential to wreck the Indian economy.”
The offenders, the officers were told, were English-speaking Indians who worked in a sprawling network of bogus call centers in western India. They called American citizens, pretending to be officials of the Internal Revenue Service, and demanded immediate payment of tax arrears, threatening imprisonment and deportation. Thousands of Americans had been cheated in the nine months of the network’s operation, collectively swindled out of close to $250 million.
Ballal, a 45-year-old inspector with an upswept pompadour and an appearance of genuine sincerity, was disturbed that India’s global reputation was at stake – roughly three million Indians work in the outsourcing sector, catering to the Western operations of multinational companies. This scam was making them look bad. But Ballal did not fully understand how the fraud worked. At this stage, in September of 2016, few officers in the room did.
A tip had been received a few days earlier, and the department’s youngest officers were ordered to get a makeover – a swift stripping of avuncular moustaches, a new uniform of low-hanging jeans and backpacks, and hair styled into wild disarray – to prepare for an undercover mission.
For six consecutive evenings, the newly-casual officers arrived at a tea stall under a glass-paneled complex in Mira-Bhayandar, a gentrifying neighborhood where one of the bogus call centers operated, pretending to be college students looking for jobs. When call center employees stepped outside to smoke and stretch their legs, the officers approached them, first with flattery – where did they buy that latest smartphone? Was that a sports bike? That is a cool pair of jeans.
Slowly, they began asking about the call center and confirmed that those luxuries came from working eight hours a day at a desk, by simply calling Americans and reading a script. The phone operators bragged about a boss named Shaggy, a flamboyant man who roamed with bouncers, gifted his girlfriends luxury cars, and promised his employees that his friendships with important people guaranteed impunity.
That evening, when the squad was briefed in the conference room, the four-hour meeting concluded with a tentative plan to raid the centers on the weekend. They had learned that three centers operated in a five-mile radius in the Mira-Bhayandar area. Ballal made a note of the terms that confused him – direct inward calling, burner systems, spoof numbers, Internet protocol static domains. He scribbled them on his palm to look them up later.
In his 24-year career, Ballal had investigated a dramatic billion-dollar counterfeit stamp scam, nabbed a gang of armed robbers, and helped set up the state’s first child protection team to unite missing children with their families. He rose from sub-inspector to a high-ranking post with the crime branch in-charge. He achieved those milestones without having to be computer-savvy.
Surely, he was good at his work. But in this moment, he felt frustrated by his ignorance. At home, he sat in his living room, in front of a television soap opera, but watching his seven-year-old son create a landscape drawing in Microsoft Paint, amazed. His daughter, a college senior, would likely know what those terms meant. He had watched how swiftly her thumbs skittered over her smartphone. But before he picked up the phone to call her, something shifted within him.
“The kind of people who worked there were tenth fail and twelfth fail,” Ballal later explained, meaning high school dropouts. “If these losers can cheat qualified Americans, we are also smart enough to catch them.”
On the first Tuesday in October, after dinner, Ballal led a team of fifteen officers into Oswal House, one of the three centers that were busted simultaneously. “Had I walked in not knowing what was happening here,” Ballal said, “I would have enjoyed the air-conditioning and walked out.” The floors were carpeted, there were countless rows of small cubicles, each containing a swiveling chair and a desktop computer with headphones; there were sliding glass doors and “five-star bathrooms.”
The call center workers appeared to be confused by the police presence, until Ballal took a supervisor aside and explained that a raid was underway. There were 92 present, including phone operators, supervisors and tech support staff. They were asked to step aside, as Ballal and his team began inspection. First they took down mundane details about computer models, then the names, ages and addresses of each of the employees there, then the questioning began. The suspects began crying. Some said they didn’t know what they were doing; some said they were carried away by the perks. One executive asked earnestly whether scamming Americans was punishable in India; no Indians were scammed.
Around midnight, Ballal found a hard drive containing archived tape of previous calls – “I’m (Insert Name) from the Internal Revenue Service. The reason behind this call is to take down your criminal attorney information as there is a lawsuit filed under your name regarding tax evasion or tax fraud.” In minutes, as the threats of imprisonment and deportation mounted, the Americans on the other end of the line became desperate.
“They were ruthless,” Ballal said. “One lady was having a heart attack.”
Slowly, the modus operandi was becoming clear: A database of the records of American taxpayers had been acquired on the black market through partners in the United States. Each evening, when the sun rose on the east coast, a text message was sent out to thousands of Americans accusing them of tax evasion and instructing them to call back on a number that was routed back to the call center in India. (Ballal called the process simply, “Magic Box”). The call center employee who answered the call was known as a “dialer” and his job was to use personally identifiable information, confront the American with tax liability and threaten imprisonment, deportation and fines. Eventually, the American would be told that he or she was required to pay up immediately using a “federal card” and to drive to a supermarket without disconnecting. The dialer would explain that a federal card would likely be associated with a store commission, and so it was better to buy prepaid iTunes, Walmart or Target cards instead, as they were companies the IRS tied up with. The prepaid code would be noted, and the phone operator would promise that another IRS agent would soon issue a receipt. The call center worker who carried out final negotiations was called a “closer.” The prepaid codes were then used to buy Apple products that were either distributed as incentives or sold.
By the morning after the raid, a crowd of worried relatives and TV crews gathered under the building. After lunchtime, executives who were released after primary questioning began leaving, their faces covered with handkerchiefs, bandanas, scarfs and their palms.
Meanwhile, in the U.S., twenty arrests were announced in late October across Illinois, California, New Jersey, Florida and Texas. More than 1.8 million people have reported to the Treasury Inspector General for Tax Administration that they received an impersonation call, and more than 9,600 victims reported that they paid the criminal impersonators a total amount that exceeds $50 million, according to a statement from the Treasury Department. The largest single amount paid as a result of the IRS impersonation scam was $136,000, by a victim in California.
Ballal got home after nine p.m., 24 hours after the raid began. As he settled down with a cup of tea, his phone rang. It was his daughter calling to say she heard about his investigation on television. “I told her how we caught them,” he said. “She was impressed with my computer knowledge.”