SWAMPSCOTT — It was shortly after 8 on a mid-October morning when Vivian Mandell’s cellphone rang. She was rushing out the door, on her way to her appointment at the beauty salon, but decided to answer the call.
At that moment she didn’t realize she was about to become one of the hundreds of thousands of Americans who fall victim to financial scams each year. But unlike most of those victims, Mandell eventually became one of the few who will get her money back.
The person on the phone identified himself as Mandell’s grandson, and although she didn’t think it sounded like him, she kept listening. “He said, ‘I’m in trouble. You need to help me but don’t tell anybody, because I want to tell the family.’ He said he was in an accident and he needed money,” she said.
By then, Mandell’s heart was racing, and another voice on the phone was giving her instructions. The man idenified himself as Frank, her grandson’s attorney. He told her that her grandson had been in a car accident, needed $2,500 in order to have the charges dropped, and that the money needed to be sent as soon as possible by wire transfer to the Dominican Republic. He instructed her to drive to a Walmart and transfer the funds by MoneyGram.
Within minutes, Mandell was standing in front of a bank teller, withdrawing $2,500 as quickly as she could. “I told her it was an emergency,” she said.
Mandell, who grew up in Lynn and is now in her mid 80s, drove to the Walmart in Lynn and rushed to the MoneyGram center, where she wired the $2,500 to the man in the Dominican Republic. She then drove home and was unsuccessful in her attempts to reach her son and grandson, who live in California. Around 4 p.m., her cellphone rang and it was Frank on the line again. The judge, said Frank, would let her grandson out of the driving under the influence charge if she would send another $2,800.
“I couldn’t wait to run down to the bank; I didn’t want to see him go to jail. I even ran a red light,” she said, taking note that she had cleared out her life savings in one day. Returning to Walmart, she wired an additional $2,800 to the same address.
When she arrived home, she sat down at her kitchen table and got a feeling that something wasn’t right. That’s when her phone rang. It was her grandson on the line, who told her that he was fine.
Sitting in her living room, Mandell began to grasp the fiscal and emotional impact of the scam. With her life savings gone, her children sought to have the money returned to her by Walmart and MoneyGram. Mandell, who reported the fraud to the Swampscott police, was told there was little chance she could get it back.
MoneyGram is the second largest money transfer company in the world, and in the last decade it has been rocked by an internal theft scandal, which was settled earlier this month. According to a Department of Justice statement, the company agreed to forfeit $100 million and admitted “to criminally aiding and abetting wire fraud and failing to maintain an effective anti-money-laundering program.”
Court documents revealed that from 2004 to 2009, MoneyGram violated US law “by processing thousands of transactions for MoneyGram agents known to be involved in an international scheme to defraud members of the US public. MoneyGram profited from the scheme by collecting fees and other revenues on the fraudulent transactions.”
The Department of Justice identified one scheme where scammers targeted the elderly, posing as victims’ relatives in urgent need of money. It has been widely called the “Grandma scam.”
The $100 million fine follows a 2009 ruling in which the Federal Trade Commission fined MoneyGram $18 million over similar consumer complaints. That fine also ordered the company to properly train and monitor its agents, and fire or suspend any agent who does not take appropriate steps to stop fraudulent money transfers.
After the Globe contacted MoneyGram, the company conducted a four-day investigation regarding Mandell’s money transfers. “When we learned about this situation, we immediately conducted a thorough investigation. We confirmed the MoneyGram compliance systems did not fail; the breakdown occurred at the point of sale,” said Patty Sullivan, a MoneyGram spokeswoman. “MoneyGram has addressed this with our agent and additional training will be provided. As a result, the victim’s money will be refunded by Walmart and MoneyGram.”
For elderly victims of fraud who don’t get the same results, the road toward filing charges is filled with stop signs. Grant Woodman, a spokesman for Martha Coakley, said the attorney general issues scam advisories warning the elderly about fraud but does not prosecute or track the scams.
“We give leads on where people can go in certain situations. We reference the [Federal Trade Commission] and also suggest they contact the wire agency used, although there may be little recourse to get the money back,” said Woodman.
Carrie Kimball-Monahan, a spokeswoman for Essex District Attorney Jonathan Blodgett, said it was up to local law enforcement agencies to respond. “The local police do the investigation. . . . We wouldn’t get involved until there are charges filed,” she said.
Swampscott Police Detective Tim Cassidy, who investigated the Mandell case, said his department lacked the funds to probe the fraud and thinks it’s unlikely the case would he prosecuted.
“We don’t have the funds to fly every other week to the Dominican Republic or Canada to investigate the scams. Is it frustrating? Extremely,” said Cassidy.
Swampscott police eventually turned the investigation over to the FBI. In an interview, FBI Special Agent Greg Comcowich said victims of elderly fraud are referred to a website. “We refer them to our Internet Crime Complaint Center and that is our way of aggregating. Because, normally, one criminal victimizes hundreds or thousands of people. So we aggregate; we use [www.ic3.gov] to aggregate victims across the country to come up with a larger sum, and use that to come up a with a perpetrator.”
Until MoneyGram and Walmart decided to refund her money, that was little help to Mandell, who is among the 42 percent of Americans over the age of 65 who do not use a computer, according to the Pew Research Center.
According to the website, 314,246 complaints were filed in 2011, amounting to $485 million in losses across America. The scams ranged from criminals posing as FBI agents to defraud victims, to identity theft, pyramid schemes, and auction, credit card, and lottery scams.
According to state law enforcement officials, Mandell fits the profile of a victim of a “Grandma scam,” where an imposter takes advantage of an elderly person by posing as a relative in trouble, and scares them into sending money.
According to the crime complaint center, 5,059 complaints were filed by Massachusetts residents last year, amounting to $6.18 million in losses to scams.
Meanwhile, Mandell is pleased the companies are returning her money. She advises people to think twice before falling victim to any scheme.
“Think with your head, not with your heart,” she said.Steven A. Rosenberg can be reached at firstname.lastname@example.org. Follow him on Twitter @WriteRosenberg.