What if you got home today and found a letter in your mailbox telling you that you won thousands of dollars in a Canadian lottery?
It sounds like great news, but it's actually a scam that's costing Americans millions of dollars every year.
Too Good To Be True
This is the scam we get the most calls and e-mails about. And it's very convincing because the letter comes with a check that looks real.
So a Pennsylvania TV news crew went to Canada to find out how the scam works and where your money is going.
Every day, thousands of Americans receive letters telling them they've won a lottery. It says that they've won a share of $96,000 and that the money has been deposited in an escrow account pending claim. The letter has a check for thousands of dollars.
The letter goes on to say that to assist in paying the necessary fees and foreign access taxes, the recipient should deposit the check in their bank account and immediately wire transfer the money to pay Canadian taxes.
The catch is that the check is bogus. It bounces and victims lose thousands of dollars that they wired to the scammers.
Zach Heverling of Lebanon received one of these letters and wants to know how "Exceed Management" determined he won a lottery.
"You have to wonder, 'What's going on?' I didn't work for it," he said.
The TV news crew also wanted to know what's going on, so they decided to take the sweepstakes notification letter to Toronto, Canada to try to find Exceed Management along Elgin Mill Road. The reporter and a photographer were able to find the address, but it led to a cemetery.
The address on the letterhead was real. It just happened to be the address for the Elgin Hills Cemetery and Crematorium north of Toronto. The cemetery director was surprised to learn that his address was being used for a scam.
"We certainly don't have $96,000 to give to anyone and this has nothing to do with the cemetery," said Andre Arndt.
The news came as no surprise to the Toronto police, which has special fraud unit to investigate these scams.
"It's ghosts and shadows. These people hide behind a level of anonymity. They use false names, everything about them is false," said Detective Gary Brennan, of Toronto police.
The phone number on the lottery letter was real. When a producer called, a man answered. He tried to con the producer into believing he really won until the man on the other end was told that the news team had discovered his so-called office was really a cemetery.
The office phone number was untraceable. It could be any one of a number of stolen or pre-paid phones he's using.
"An office can be as little as a pocket with a handful of SIM chips for cell phones," Brennan said.
It's estimated that scams run through Canada rip off Americans for hundreds of millions of year, which is a conservative figure. Law enforcement officials in the U.S. believe that 60% of victims don't even report the crime because they're too embarrassed they fell for the scam.
Americans do report close to $100 million lost to these scams each year, but postal inspectors tracking the scam mail say that may only be a fraction of the real loss.
"It's the most prevalent scam going right now. It's the priority investigation of this particular office we're working," said postal inspector Nick Alicia.
Conning Through Canada
Toronto is the economic capital of Canada, and it's believed that much of the money swindled in the Canadian lottery scams flows through the city.
"However when it comes to Canada, it doesn't necessarily mean it stays here and the head of the snake is here. It simply means we are part of the process that is being used," said Detective Gary Brennan of the Toronto police.
Fraud investigators for the Toronto police said the lottery scams run through Canada often operate like small corporations. Someone outside the country may create the phony lottery letters and send them into Canada.
"Where the recipient in Canada will take them out of the courier package and put them into the Canadian mailing system," Brennan said.
With a Canadian postmark, the lottery letter gains authenticity. And the fake check that comes with the letter — it can fool just about anybody.
"Some people work at banks. And they saw this and said, 'You got to be kidding. Nobody's going to send you a check for nothing.' So it's got to be legit cause the checks in there," said U.S. Postal Inspector Jim Wilson.
Most of the time, the checks are real good fakes. And sometimes they are real checks that have been stolen, drawn on business accounts that are not even in Canada.
"But people don't look at that. They only look at the $3,600 on that check and that check is going to pay the taxes for that $300,000 prize," said U.S. Postal Inspector Nick Alicia.
After depositing the fake check, the "lottery winner" or victim is supposed to call the lottery office. The lottery office probably is someone sitting in a room using a number of temporary cell phones.
But scam artists can only hide behind temporary telephone numbers, phony letterheads and fake addresses for so long. Eventually they need to surface to collect the cash they're trying to scam. And most often, in Toronto, that happens along Weston Road. Lining the road, are a lot of small shops that allow people to send and receive Western Union and Money Gram wire transfers. Convenience stores, even beauty shops, offer wire transfer services.
"A lot of the people that own these Western Union and Money Gram outlets are collusive agents of the organization," Alicia said.
Victims in the lottery scam are asked to wire the money because it's immediate. It can be picked up anywhere in Canada, and then it turns to cash.
"But that's where the trail goes cold. Once it turns to cash, it's very difficult to follow," said Brennan. "Does the money stay in Canada? I'd have to think not because of the volume. I believe that it goes elsewhere."
Some investigators said that more than half the wire transfers going from the U.S. to Canada are involved in fraud. Once it's picked up by someone in Canada, it's believed some of the money goes to Europe. But most of it goes to western Africa.
Many scam victims often ask, 'How did they get my name and address to begin with?'
Scammers can simply buy lists of names and addresses from marketing companies. Most often they target lower-income individuals.
One thing to keep in mind to help spot a Canadian lottery scam — they tell you these checks are provided to pay taxes. If you win the lottery in Canada, the winnings are tax-free.
Crooks "borrow" popular web site names
An ever-growing number of these lottery scams try to lend credibility to their deception by placing the names and graphics of popular lottery web sites in the scam letters.
USA Mega (www.usamega.com) and Lottery Post (www.lotterypost.com) are two of the scammers favorite "identity thefts".
Because the two popular lottery web sites are well-known to players worldwide, someone seeing the familiar name and graphics will assume the letter is legitimate.
Todd Northrop, the creator of both web sites, said dealing with the enormous amount of e-mails and questions about fake prizes can be overwhelming at times.
"Even with big warnings about the scams right on the contact page I still receive dozens of e-mails a day from people trying to claim a fake prize," Northrop said.
"I imagine the warning message stops a lot of people from writing, so the fact that I still get so many e-mails says to me that the number of victims falling for this must be astronomical."
Northrop created a page at USA Mega that shows some of the actual scam letters with USA Mega logos. (http://www.usamega.com/lottery-scams.asp)
What will it take to stop these thieves? Certainly law enforcement will play a big role, but Northrop thinks public awareness is the key.
"Victims of lottery scams generally are not regular players of the lottery, because lottery players see scam warnings all the time, thanks to efforts of the lottery associations and web sites like Lottery Post."
"Consumer advocacy groups need to find better ways of letting everyone else know."