Articles

They'll swindle you by telephone

There’s a fifty-fifty chance you’re on the sucker lists of racketeers who use the phone to charm or shame you into supporting obscure good causes —and keep most of the money. Here’s how they operate and why they’re seldom caught

Eric Hutton March 15 1958
Articles

They'll swindle you by telephone

There’s a fifty-fifty chance you’re on the sucker lists of racketeers who use the phone to charm or shame you into supporting obscure good causes —and keep most of the money. Here’s how they operate and why they’re seldom caught

Eric Hutton March 15 1958

They'll swindle you by telephone

There’s a fifty-fifty chance you’re on the sucker lists of racketeers who use the phone to charm or shame you into supporting obscure good causes —and keep most of the money. Here’s how they operate and why they’re seldom caught

Eric Hutton

At the other end of every Canadian’s telephone line lurks a predatory character known as a “telephone man.” He may have called you last week, or his may be the next voice you hear. If you live in any of Canada’s dozen largest cities it’s a fifty-fifty chance that one of this strange brotherhood will dial your number before the year is over. He’s an expert in a single skill: getting your money by cheerful misrepresentation.

You won't recognize him as a professional cheat unless you’re forewarned, because he comes over the telephone in many estimable disguises:

He’s a jolly prosperous executive who has volunteered to help his lodge sell tickets and program advertise-

ments for the annual concert that finances its good works.

He’s a dedicated friend of youth, offering subscriptions to a sports yearbook to raise funds for equipment for boys in your very own neighborhood, thereby combating delinquency and even communism.

He can become in turn an earnest worker for the welfare of churches, veterans, the blind, the crippled, the old, firemen and even policemen. He’s a campaigner for traffic safety and a promoter of civic pride.

What he oilers over the telephone is something for your own pleasure or profit—tickets to a monster starstudded variety show, advertising space guaranteed to influence thousands of dedicated readers, or “invaluable publications” that you will consult repeatedly. In addition, there’s the satisfaction of contributing to a worthy cause that otherwise would languish, The way the telephone man presents it, it’s a deal that no person with a head or a heart could refuse, and a bargain at the price—three dollars to three hundred dollars, depending on the deal he’s promoting and how receptive the victim sounds. In fact, the only limit to the exaggeration and misrepresentation of the telephone man is the gullibility of the person at the other end of the line. Not long ago a telephone man canvassing for a “charity” concert to be held in a Toronto school auditorium was assuring prospects that Bob Hope had been signed to headline the show. The truth was that the total budget for the little series of acts was five hundred dollars, enough for about half a minute of Hope’s time.

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“A charity that gets ten cents of every dollar, wheedled by telephone men in its name, is lucky”

Although it is the telephone man's deceitful art that parts the victims from their money, his own share of the loot is never large, and often difficult to collect. Telephone men are supposed to collect twenty-five percent of the proceeds of their calls. Among themselves they sometimes boast of “hundred-dollar days,” but usually they receive about one tenth of that. It’s the promoter who controls collections, which, significantly, are made by men and women in “prowl cars.” They telephone in periodically for new lists of people who have been “sold,” and who collect sometimes within a few minutes of the telephone man’s call.

The telephone man is, in fact, an irresponsible but often pitiable participant in one of the crudest, most cynical and most widespread chicaneries being practiced in Canada today.

At worst, the telephone game is an outright swindle. What the canvasser sells, and the charity that allegedly benefits, are both simply nonexistent.

At best, the operation teeters just on the right side of the law; or, as Deputy Police Chief Archie McCathie of Toronto said recently, “They’re damned rackets, but hard to get the law’s hands on.” The “legal” telephone operations make a point of delivering a pitifully small facsimile of what the telephone men promise. A charity that gets ten cents of every dollar wheedled by telephone men in its name from the public is lucky. Two or three cents of the dollar is more usual.

To put this share into perspective, consider that the big ethical fund-raising organizations such as G. A. Brakeley and Co. Ltd. and the Wells Organizations of Canada Ltd. take three to five percent for their services, and that the directors of national volunteer bodies that depend on the public for their financing become concerned if their fund-raising costs approach ten percent.

What is the total impact of illegal telephone promotions? It’s difficult to estimate what percentage they share of the hundred and fifty mil-

lion dollars that the Better Business Bureau calculates is flimflammed from Canadians annually by various devices, but individual promotions show some big hauls.

During the fraud trial of thirty-one-year-old George S. Weston—who was sentenced to a year —a salesman testified that in 1952 canvassers for a bogus’“Ontario Police Safety Manual” were taking in seven hundred and fifty dollars a day from advertisers. Police who broke up an operation run by a Montreal couple estimated the couple took in a hundred thousand dollars in subscriptions and advertising space in nonexistent publications “to help the kids.” According to evidence at the trial of Leo Trottier, of Toronto, he took in forty thousand dollars for advertising in publications allegedly dedicated to the welfare of firemen, police, postmen, veterans and civil servants—publications that appeared once in three years or not at all. Trottier was sent to penitentiary for two years in 1953. In 1956 Trottier had taken in a mere two thousand dollars for a truck drivers’ journal when he was again arrested and sentenced to jail.

A telephone man who worked on a Toronto charity promotion until a few weeks ago estimated that the total take was $600 on bad days, and $1,000 on good days. Mondays and Fridays are considered poor yielders in the world of telephone canvassing.

Perhaps the most significant fact about telephone promotions, however, is that they work on more potential victims than all other methods combined. For one thing, they use the world’s biggest sucker list, the telephone directory.

Last year the Toronto Better Business Bureau (one of nine bureaus in Canada) received five thousand queries and complaints about telephone canvassers. Two thousand were from people who claimed they had been deceived. The bureau says only one such person in ten registers a complaint, and telephone men admit it takes them up to ten calls to make one sale. This leads to a rough calculation of two hundred thousand calls made in one year in one city with the objective of persuading or browbeating some unknown person into agreeing to buy something of little or no value by means of fantastic misrepresentation. That means that predatory telephone men reach into half the telephone-using homes and offices of Toronto in a year.

But because the telephone man deals with each “prospect” separately, using the telephone which is private and leaves no clues, the wholesale extent of their operations is seldom realized.

Occasionally a telephone promoter decides to handle one hundred percent of the take instead of ninety or ninety-five percent, and lands in court on fraud charges. Occasionally, a telephone-deal promoter gets involved with civic in-

stitutions and arouses the righteous indignation of a politician.

A few weeks ago Fred Gardiner, chairman of the Metropolitan Toronto council, characterized as “the highest class suckers’ game I’ve seen in years” a pair of charity concerts staged ostensibly for the benefit of a civic old folks’ home by a professional promoter. The tickets were sold, according to Robert Smith, Metro Toronto’s welfare commissioner, “by a high-pressure campaign by telephone,” which used the appeal that the proceeds would buy wheel chairs for elderly residents of Lambert Lodge, a civic institution.

Smith reported that the two campaigns based on concerts held in the spring of 1956 and the spring of 1957 brought in $17,553, but by the end of January 1958, Lambert Lodge had received a total of five hundred dollars. “The bulk of the money received is eaten up by expenditures,” Smith commented.

Metro’s decision was not to allow civic-supported organizations to lend their names to telephone charity promotions. Meanwhile, Toronto police were investigating another telephone deal because a judge was telephoned at home, and as a police official explained, “thought the whole thing sounded fishy.”

The Better Business Bureaus of Canadian cities, which receive scores of calls each week about various telephone promotions, do not pass judgment on their legality. They tell enquirers, however, that such projects are in the hands of professional fund-raisers (“the ethical fund-raising organizations hate us for using that phrase to describe the ninety-five-percent grabbers,” said one bureau official) and point out that a high proportion of the money raised does not get to the charity that supposedly benefits.

A typical telephone deal, say a charity show, works this way: a society, lodge, auxiliary, association or similar body is offered by a promoter the staging of an entertainment to raise money for the organization. From the promoter’s viewpoint a suitable organization must satisfy these criteria: (a) be in need of funds; (b) possess a name that sounds “deserving” and (c) have officers who are a trifle hazy about the meaning of gross and net percentages.

A typical agreement between promoter and organization provides that the latter will receive fifty, sixty or even one hundred percent of the net proceeds from tickets, donations and advertisements in the concert’s program. The promoter advances three hundred, five hundred, sometimes a thousand dollars which the charity keeps even if the net profit is less. How much of the net profit the promoter offers doesn’t really matter, however, because according to the Toronto Better Business Bureau the down payment is usually all the organiza-o

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How you can spot a telephone swindler

How can you tell a telephone swindler from a legitimate canvasser operating by telephone? According to the Better Business Bureau, the crook will usually reveal his dishonesty by offering to send a representative to pick up your money. The legitimate canvasser, on the other hand, will, as a rule, ask you to mail your cheque to his organization.

Apart from this it’s difficult to distinguish the racketeer, who goes to endless pains to make his spiel plausible. The racketeer who engages a staff to do the phoning often provides a written script. Sydney (Frank) Stern, of Toronto, who in 1956 was sentenced to eighteen months in reformatory for running a charity racket that exploited the plight of the blind, instructed his phone solicitors to start their pitch as follows:

“Good morning (or afternoon). This is Mr. (or Mrs.) (fictitious name given) for Canadian News for the Blind. As you have no doubt heard, we are in the process of purchasing lots 57 to 67 on Hilldale Avenue (that is just opposite the Acme Screw and Gear Company) where we are intending to build a new recreation centre for the blind, where they can carry on with their desires or hobbies and later on possibly manufacture articles for sale and give them a fairly good livelihood.

“This property is going to cost close to forty thousand dollars and in order to raise funds to help us with our building program we are putting out our annual publication in which we would like to have you donate or subscribe.”

After this opening gambit the solicitor was instructed to let the potential subscribei know subtly the amount expected from him and at the same time to make the amount seem small by saying: “You’d be surprised how the five dollars and ten dollars from the average householder add up at the end of the street. Could 1 put you down for five? A worker will be in your district tomorrow.”

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To a swindler even a charity concert is fair game: he’ll sell the same seats ten times over

tion ever receives for the use of its name in a high-pressure three-month campaign that will play on the sympathies and gather in the dollars of tens of thousands of householders and business people.

It may be that the officers of small charity organizations that get involved with telephone-promoted concerts do not realize the true nature of the deal. After all, if a concert is being held in an cighthundred-seat auditorium with tickets priced at $1.25 to $2.50, and the charity receives a cash advance of five hundred dollars, it would appear that on the surface there’s not much room for racketeering. What the charity officials perhaps may not understand is that the available seats will be oversold three to ten times—in the certain knowledge that only a fraction of people who get stuck with tickets will actually show up. And, of course, the really high-pressure telephone men con-

centrate on outrageously overpriced advertising space in a “souvenir program," plus straight donations with no strings attached.

That’s where the comparatively big money is for the canvasser. Routine canvassing of private homes for ticket sales is usually handled by squads of girls, enlisted via “blind” ads in daily newspapers. These teams of girl telephone canvassers often work day and evening shifts, but they are not expected to be talented. Their equipment is a page from the telephone book and a perfunctory “pitch,” which they read to everyone who answers his or her telephone. Volume, not virtuosity, is what the promoter expects of his girls. One young woman testified at the trial of a promoter that she had made six hundred calls in seven w'orking days.

Because the telephone is the basic ingredient of these promotions, the tele-

phone companies often are criticized for letting such people have telephones installed. Telephone - company officials maintain, however, that they have no choice in the matter. Their charter forces them to install telephones, when available, to any applicant who states his business is legitimate.

“And nobody,” said a telephone-company spokesman, “has yet admitted he wanted a telephone for crooked purposes. We cut off telephones immediately we are notified that illegal use has been proved. We don’t like phones to be used for dishonest purposes.”

The dishonest or barely honest telephone man belongs to a special and limited breed, of course. Many Canadians engage in the ethical if sometimes irritating occupation of selling everyday goods and services by telephone. Next, a sort of “middle class” of canvassers deluge householders with the glad news that they’ve won a prize, perhaps free dancing lessons — with an expensive course attached; or a twenty-five-dollar “cash award” — toward a $395 fur coat. But these are transparent ruses that should deceive practically nobody.

How close to the borderline of legality do telephone promotions come? Most promoters work on the basis of a duly signed contract, including cash consideration, between themselves and a legitimate organization of some kind for the use of the latter’s name. This may make the promotion legal — but court records hold this up to question.

In May 1940, Earl Walker and Sidney Finkelstein, both of Toronto, were arrested on charges of conspiracy and false pretenses in connection with a “charity” concert promotion that appeared to be of the standard pattern. They signed an agreement with an organization called the Canadian Veterans’ Bonus League whereby the league would receive a hundred dollars, plus a further sum if the concert were profitable, and the two men could use the league’s name to “sell” the concert.

Walker and Finkelstein paid a rent deposit on Odd Fellows Temple, a sevenhundred-and-fifty-seat hall on College St., Toronto, made arrangements for a number of acts to appear there on May 17. They rented a small office on College Street, had six telephones installed, hired six telephone men, ordered three thousand tickets, and launched the promotion.

A few days later when police opened the door of the little office the place was a bedlam of telephoning men. They seized cheques, unsold tickets — and eight men. The telephone men were taken into custody as material witnesses.

Witnesses revealed a distinguished bag of customers. Tallulah Bankhead, appearing in a play at the Royal Alexandra theatre, agreed to take ten dollars’ worth of tickets. Others who bought were Norman Borins, then a crown attorney, Chief Constable McNamara of Etobicoke, and Sam Factor MP. (Years later when Sam Factor MP had become Judge Samuel Factor he was trying a man for fraud via the telephone promotion and commented, “I sometimes give up hope for protecting the public — they can be so gullible.”)

Magistrate F. C. Gullen found Walker and Finkelstein guilty of conspiring to defraud the public “notwithstanding the written agreement between the Veterans’ League and Walker, and the consideration of one hundred dollars.

“I find,” the magistrate declared, “that neither the agreement nor the consideration can make this venture legal and valid. From the very beginning there is a conspiracy to defraud, for the public were led to believe that they were sup-

porting the Canadian Veterans’ Bonus League whereas as a matter of fact they were paying the money for the benefit of the accused.

“Three thousand tickets were printed, of which 1,332 were sold — while the seating capacity of the hall was only seven hundred and fifty.”

Magistrate Gullen then made an observation which casts doubt on the legal position of organizations which lend their names to charity promotions in return for “a consideration.” He said, "The officers of the Canadian Veterans’ Bonus

League are fortunate they are not charged jointly with the accused for allowing the name of the association to be used in such a manner.”

Walker and Finkclstein both were sentenced to three months definite and three months indefinite in reformatory. They appealed their convictions to the Ontario Court of Appeal, which upheld the magistrate. Chief Justice Robertson commented, “The evidence was that these people set to work to canvass anybody likely to buy tickets on the representation that they were assisting the veterans . . .

they got an agreement with the veterans to cover up.”

Mr. Justice Masten said tersely: “Who was going to make the money? Walker and Finkclstein. The whole thing was a fraud.”

The telephone men, arrested as material witnesses, were released on the grounds that they were pawns of the promoters. It’s true that, left to their own devices, they probably couldn’t organize a major promotion. But the perverted skills of this group are essential to the telephone promoter’s success.

The elite among them are, or were, the mining, oil and” uranium stock pushers who prospered mightily in the decade between 1940 and 1950. During the boom in telephone sales of stocks, when telephone calls were going out from Toronto to any part of the continent where a sucker might be found, and when deals of fifty thousand dollars or more each were common talk, approximately one hundred professional telephone men flourished in Toronto alone.

Then came the crackdown. The Ontario Securities Commission tightened its regulations, and so did the brokers’ own association. In the year ending March 31, 1951, twenty-six dealers and telephone men were suspended. The racket swiftly declined in Ontario.

Many of the telephone men moved to Quebec. Soon that province tightened its laws. The phone men trekked westward. But province after province greeted them with stringent anti-fraud laws. Recently Ontario Securities Commissioner O. F. Lennox has heard tales of a remnant of the old guard of telephone men operating out of Cuba. It’s not as outlandish as it sounds — selling Canadian stock to Americans via overseas telephone from Cuba. In fact, apart from the lenient laws of Cuba, calling from the island gives an added stimulus to the story: "We’re down here inspecting our Cuban properties when we got a flash from our Canadian holdings—news of a sensational find we’re sure you’ll want to get in on the ground floor . . .”

Because the stock pusher was the aristocrat of the phone men. most of those now operating in lesser schemes claim to be displaced stock men. Some of them are. Certainly a reunion of the remainder of those hundred originals would show a wide variation in fortunes. A few fortunate or more ruthless ones graduated into stock promotions of their own and today their names are synonymous with million-dollar deals, yachts, winters in Florida and space in gossip columns.

The unluckicst few have become what their colleagues call “travelers,” homeless men who carry an extra shirt and a pair of socks in a brief case, sleep in movies and railway or bus waiting rooms, and work at the telephone game only long enough each day to be able to buy the cheap wine on which they exist.

The in-between majority of telephone men form a strange company — actors who use the telephone as their sole prop: men without families and without future who can nevertheless assume the cloak of respectability and stability when they con their victims over the wire.

It’s a tradition among telephone men that most of them are drinkers — in fact, that they drink all they can get at any given time. It’s not that the profession attracts drunks, they say, but that the tension of constantly importuning other people leads to drink and to other instabilities that make them lonely men. One promoter takes advantage of this weakness by serving his phone-room gang a double gin first thing in the morning and twice more during the day to keep up their efforts. Another promoter (a reformed alcoholic himself) won’t allow a drop on his premises, but doesn’t know that the cartons of black coffee consumed in large numbers are really filled with native port. Some genius among telephone men discovered that the two beverages are indistinguishable in appearance at a short distance.

The dyed-in-the-wool telephone man doesn’t, he admits, care much what the promoter’s intention in a given deal is— that is, whether he intends the deal to be totally honest, borderline or totally dishonest. "When a man buys my special-

ty.” one telephone man said recently, “he’s got to take all I’ve got.” In action, the telephone man sounds like a character out of Dickens, O. Henry or Damon Runyon. One of the most adept is a man whose name—like that of most telephone men—is whatever he decides it is for the duration of the job. For this particular deal he is Pete Bell.

Pete gets a Mr. Smith, vice-president of a moderately large company, on the telephone. Pete’s voice, which has been weary in conversation with his colleagues in the noisy phone room, suddenly is firm, confident, friendly.

"Hello, Mr. Smith. Good to talk to you again. It's Pete Bell. I’m helping out over at the Knights of Fellowship, allocating space in the souvenir program of the annual benefit show. 1 see they’ve got your outfit down for half a page .. .”

Mr. Smith isn’t sure that he knows Pete Bell or the Knights of Fellowship. But he isn’t sure that he doesn’t know them, either. Bell’s tone sounded as if he was at least a business acquaintance. And the Knights sound like one of those worthy outfits. Smith makes noncommittal sounds.

Bell laughs good-humoredly. "I don’t want to give you a sales talk,” he tells Smith, “but actually it's a terrific bargain. My own outfit has taken a page and 1 wish they’d let us take more, but they want to spread it around. Why, figure it out yourself. A hundred and sixty dollars for your message in programs that will be read by ten thousand loyal knights, their families and friends— people who are interested in finding out who are their friends, w'hat businesses are willing to help them help others who can’t help themselves.”

The art of Pete Bell has concealed from Mr. Smith the fact that every statement he has so far made is false. He has never spoken to Mr. Smith before, his name isn’t Bell, he’s not a volunteer worker, he’s not “allocating” space but

selling it at high pressure, he has no outfit that has bought a page in the program, ten thousand copies are pure imagination, and the total membership of the Knights of Fellowship, including those in arrears, is under four hundred.

But Mr. Smith has protective devices of his own. He’s almost sold, against his will. So he plays his trump card. “1 make it an inflexible rule, Mr. Bell, not to enter any agreement involving money over the telephone.”

Bell’s voice drops a tone. “Very wise,” he says. "I have the same rule, personal-

ly. But 1 think you forget, Mr. Smith— I happen to be in a wheel chair.”

He pauses long enough for that to sink in, then he says in his usual buoyant tone, "I wasn’t going to close the deal with you, anyway. My good wife, who is also helping out the Knights, will serve as my legs and call on you . . .”

Mr. Smith is lost. He is embarrassed, and feels like a brute for doubting a cripple who nevertheless makes the effort to help others, and whose wife joins him in the good w'ork. When the collector calls on Mr. Smith less than a hour later

(she’s a brisk middle-aged woman who gets ten percent of what she collects, and has never met Bell personally) there’s an envelope waiting for her, containing the copy for a half-page advertisement and a cheque for a hundred and sixty dollars.

In due course Mr. Smith’s advertisement will appear in a "souvenir program,” a few copies of which will be handed out at the concert, and a couple of dozen indifferent eyes may see his message.

There are some businessmen who don’t particularly want their product advertised

in a concert program, hut who are willing to contribute, and they can often be persuaded to pay for a “Compliments of a Friend” ad. The Better Business Bureau calls those the four most expensive words in advertising, because one insertion covers all contributors who have paid for such an ad — and each thinks the anonymous notice is exclusively his own.

If the telephone man can arouse no interest in the program, but can still hold the prospect to the telephone, he starts working on ticket sales, first a batch of a dozen tickets to distribute among deserving music lovers of the neighborhood, and pursuing the sale down to a pair of $1.25 tickets. If all else fails, the telephone man makes a final heartfelt plea for a two-dollar cash donation. That, at least, will give him half a dollar for his efforts.

In big cities the telephone man has a special problem. A show in the north end, say, doesn’t interest prospects who live miles away. The telephone man’s solution is simple: he transfers the show to a more convenient hall. True, when the tickets are delivered they bear the name of the place where the show will actually be held. Usually the customer puts this down to a misunderstanding and lets it go at that.

Perhaps the most famous feat by a telephone man, told and re-told among themselves, was the time a man who was calling himself Duffy, at the moment, talked a hank manager into loaning a prospect money to buy space in a program. Duffy talked the owner of a variety store into the proposition that business would boom if he took a hundred-and-thirty-dollar ad. The prospect agreed it looked good, but he had no money.

“Go borrow from the bank,” Duffy ordered him.

“Mister,” said the storekeeper, “I owe the bank three thousand dollars, and the manager isn’t even talking to me, because I can’t make payments on my debt.”

Duffy didn’t give up. He telephoned the bank manager, gave his sales talk, and pointed out that the variety-store owner couldn’t make payments unless he made sales—and advertising was the way to make sales. He actually talked the banker into adding a hundred and thirty dollars to the store’s overdraft to pay for the advertisement.

While most telephone men dislike taking the initiative, a few use a device for raising money when they’re desperate. It’s known as the Chinese restaurant game. In his most authoritative voice the telephone man informs the proprietor of a Chinese restaurant that he may expect an immediate visit from a healthdepartment inspector.

The telephone man hasn’t the nerve to carry out the confidence game himself, so he persuades a penniless drunk (not difficult to find in city beer rooms) to act as temporary “inspector’s assistant.” On instructions from the telephone man, the bum enters the restaurant, opens refrigerators, peers into stoves and sinks. Meanwhile the telephone man waits outside, ready to flee if the racket goes wrong.

Sometimes the bewildered restaurant owner will hand over a “bribe” of twentyfive to a hundred dollars (so say the telephone men who discuss the matter) and the unfortunate assistant is sent on his way with a ten-percent share.

But mostly telephone men are content to work for others, to derive a modest living and a secondhand satisfaction by becoming for a little while something they might have been — men of position, of charm, of integrity.