Markey, Frank and Sestak succeed in pushing for change in reimbursement process to ensure 740,000 fraud victims nationwide receive total of $150 million

WASHINGTON, D.C. – Representative Edward J. Markey (D-MA), a senior member of the House Energy and Commerce Committee and Co-Chairman of the Congressional Alzheimer’s Task Force, today applauded the reimbursement of hundreds of thousands of Americans, many of them frail, elderly consumers, who were victimized by a $150 million telemarketing fraud. More than 740,000 consumers were victimized as part of this large-scale scheme, including more than 16,000 Massachusetts residents who will receive more than $3.4 million in reimbursement checks to be mailed today.

"Financial fraud of this type is an insidious scourge that preys upon some of the most vulnerable among us.  Because this multi-million dollar telemarketing scheme targeted elderly Americans with Alzheimer's and other serious chronic diseases, it was essential that the reimbursement process be straightforward so that all eligible victims would receive the reimbursement they are due," said Rep. Markey.

"When the initial reimbursement process was announced by the Treasury Department's Office of the Comptroller of the Currency, I was concerned that its structure created a significant risk that, after being ripped off by these slick fraudsters, consumers would be victimized again by a complicated restitution process that thwarted widespread reimbursement. I am pleased that all parties involved agreed with me that the initial plan to require victims to file and return paperwork to get reimbursed should be changed to simply mail checks directly to the affected consumers."

The initial  reimbursement process agreed to by the Office of the Comptroller of the Currency (OCC) and Wachovia Bank, which served as the bank used by the fraudsters to deposit the proceeds from their illegal schemes, required victims to file claims in order to be reimbursed and permitted Wachovia to keep any unclaimed reimbursement funds.  Believing that this process would likely result in few claims being filed due to the population victimized by the fraudsters, Rep. Markey objected to the filing requirement and urged that all victims be directly reimbursed through the proactive mailing of checks.  Rep. Markey was joined by Rep. Barney Frank (D-MA) and Rep. Joseph Sestak (D-PA) in the effort to persuade the OCC and the U.S. District Court for the Eastern District of Pennsylvania to utilize a reimbursement process that mailed checks directly to victims without the need for completing and returning paperwork.

Rep. Sestak said, "I am pleased that the victims finally will achieve the restitution they deserve.  Particularly in times like this, it is important to restore the public trust in our institutions.  This reimbursement will be important for the constituents involved - many of them elderly individuals who had their scarce resources drained from their bank accounts and also then had to pay overdraft fees." 

Rep. Markey expressed his concerns about the structure of the restitution process in a letter to Comptroller John Dugan <available here> and received the following response from the OCC <available here>. The OCC's response notes that "if the court determines to make changes in the claims procedure, we will certainly revisit this aspect of the Agreement." ‘The court' refers to the U.S. District Court for the Eastern District of Pennsylvania case Faloney et. al. v. Wachovia, which was on-going at the time.

Reps. Markey, Frank and Sestak then filed an amicus brief <available here> with the court calling for a restitution process that proactively identified fraud victims and mailed them reimbursement checks. This is the process that is being implemented today. In Rep. Markey's district alone, about 1,500 checks will be sent out, totaling about $321,000.

"This is an appropriate resolution to a disturbing story of fraudsters targeting vulnerable seniors in fragile health.  Many of these victims are on fixed incomes and urgently need the reimbursement funds.  Sending checks today, particularly as Americans continue to struggle with the economic slowdown, is an important development.  When Congress reconvenes next year, I look forward to continuing to work to establish safeguards that thwart schemers seeking to rip off consumers in the future," added Rep. Markey.

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