Back in June, the Federal Trade Commission (FTC) formally filed a complaint alleging that TelWeb, a telemarketing system, used multiple shell companies to bypass laws against telemarketing robocalls. TelWeb has been the target of other lawsuits by the FTC. The investigation alleges that the system was used to conduct billions of illegal phone calls by telemarketers through an enterprise of shell companies.
The fact that this same system has been the target of so many separate investigations is evidence of a larger problem — companies can be formed in the United States without disclosing their beneficial ownership information (the people who truly own them), allowing criminals to quickly rebrand and jump right back into doing the same illegal activities under a fresh new corporate name. TelWeb was able to use multiple shell companies throughout its scamming system, and the men in charge of connecting TelWeb to telemarketers have a history of being named in previous FTC lawsuits. Yet they were able to continue in the industry under different names.
TelWeb is by no means an anomaly — according to a recent report, over 30 billion robocalls were made in 2017, around half of which were illegal.
While, for many, robocalls are small annoyances, they can in some cases have devastating consequences. In one scheme a group using shell companies to hide their telemarketing activities were recently found to have stolen over $50 million while targeting churches, schools, and homeless shelters. This is one of many examples of scams perpetrated through robocalls. As anyone with a phone can attest, these schemes are becoming annoyingly prevalent. In the modern era, cell phones allow thieves to steal from a distance, but anonymous shell companies allow them complete anonymity and zero accountability.
Illegal robocall systems such as TelWeb add to the ever growing list of examples where beneficial ownership disclosure could have real, positive impacts on people’s lives. In addition to heinous crimes like human trafficking and terror-financing, anonymous shell companies allow illicit companies and bad actors to get away with harassing and scamming ordinary Americans on a daily basis. As is the case with TelWeb — even those fraudsters that are caught can simply form a new company with a different name and try again. Shining a light on the true owners of companies has the power to hold perpetrators accountable and protect our communities.
Adam Felsenthal is an advocacy intern with the FACT Coalition.