The Diabolical World of Phone Scams
Evelyn was scared and reluctant, but she followed Mark’s instructions. First, she allowed him remote access to her computer and online banking. Then she received what appeared to be a deposit into her chequing account. Mark told her the money was from the RCMP, and she should withdraw it in cash and send it to an associate of his. What she didn’t know was that this was a sleight of hand: Mark had moved the money from her own credit card and savings into her chequing account without her knowing.
Wary, Evelyn considered contacting the RCMP herself, but Mark cautioned her against it. After all, he reminded her, he was already working with the police. He instructed her to drive to a bank, keeping her phone charged all the way. Hands shaking, Evelyn withdrew $29,700. It seemed strange, but the instructions were so specific, and the stakes so high, and she’d had so little time to think it all through. Mark told her to take the cash and wrap it in tinfoil, then send it by courier to an apartment in Mississauga, Ontario. She was to address the packages to a person named Omar Ali.
Of course, neither Richard nor Mark worked with any bank or police service. When they called Evelyn, they were almost certainly located thousands of kilometres from Canada, in an office somewhere on the outskirts of Delhi or Mumbai. Their workspace would have been familiar to cubicle dwellers the world over: a bland greige palette, an unrelenting fluorescent glare, the low din of phone chatter. Along with thousands of other workaday con artists, hired for their English proficiency, the pair were employees of a criminal network. It was responsible for what came to be known as the CRA scam, which police now believe is the largest fraud operation ever perpetrated against the Canadian public. It earned its name due to the best-known of the many ruses its perpetrators employed: tricking targets into believing they owed unpaid taxes, which they often dutifully paid.
Since the scam began a decade ago, police say the criminals behind it have contacted—by phone, email and other means—every single adult Canadian. Tens of thousands of people have fallen victim to the operation, collectively losing at least $34 million, and possibly much more.
We live today in a golden age for fraud artists. Scams have transformed from something vaguely in the ether, which seemed to primarily target the elderly and vulnerable, to a relentless daily phenomenon. It is nearly impossible to find someone who doesn’t receive a constant string of calls, emails and texts from fake employers, fraudulent courier services and strangely persistent duct cleaners. The financial toll has grown rapidly: in 2022, the Canadian Anti-Fraud Centre received fraud and cybercrime reports totalling $530 million in victim losses, compared to $379 million the year before and $165 million the year before that. Law enforcement believe those are just a fraction of total losses; fraud is a drastically under-reported crime.
The explosion of fraud in Canada can be chalked up to multiple factors: new technology, like artificial intelligence, helps con artists identify targets and even create chatbots and deepfake videos to trick victims. Thanks to the rise of cryptocurrency, it’s easier than ever to cloak criminal transactions. But most importantly, there’s been a growing trend toward professionalization, transforming what were once small, scrappy criminal enterprises into something more like corporate offices, scattered across the world, beyond the easy reach of Canadian law enforcement. In Mexico, drug cartels have expanded into real-estate fraud, peddling fake time-shares from call centres. In Jamaica, lottery and sweepstakes scams dominate. In Southeast Asia, it’s crypto scams, and in Nigeria it’s dating and romance fraud. Call it a redistribution of wealth from the gullible Global North to entrepreneurial underdogs in the Global South.
In the past few years, there has been no better example of this new economy than the CRA scam. It was perpetrated by thousands of people, mostly young men, on the other side of the planet who punched in for scheduled shifts, working on commission for far more than a straight job would pay. It also required the recruitment of dozens of small players on Canadian soil, especially new immigrants with connections to India. Some participated willingly, and others were duped into it.
And it all happened on a massive scale, right under Canadian authorities’ noses. Because even as scam artists have become savvier—scaled-up, technologically sophisticated, more ambitious and organized—Canada’s anti-fraud efforts have fallen far behind. Fraud investigations in Canada have long been under-resourced and overwhelmed. Now they’re even more hamstrung by a crushing number of small fish and the challenges of cross-border investigations. The result is that the rapidly proliferating criminal enterprises targeting Canadians operate with something close to impunity.
The CRA scam briefly changed that. Its sheer magnitude forced the government to launch one of the most significant anti-fraud investigations in Canadian history. Then, after stacking up a handful of victories, the effort was dismantled, leaving weary Canadians to once again fend for themselves.
The first endeavours by Canadian authorities to crack down on the CRA scam were scattershot, one-off attempts, chasing down individual cases disconnected from the bigger picture. It’s unclear if local police in Canada even understood that there was a bigger picture. In 2016, police in New Westminster, B.C., posted a public bulletin warning about scam calls purporting to be from the CRA. The following year, RCMP in Deer Lake, Newfoundland, warned residents about fake emails, also ostensibly from the CRA, asking for SIN numbers and banking information.
The Whac-a-Mole approach allowed the scammers to operate for years with little intervention. But word of mouth spread, along with reports to authorities. In September of 2018, CBC’s Marketplace broadcast an investigation tracking perpetrators to call centres in Mumbai. It found that 60,000 people had already complained to the Canadian Anti-Fraud Centre, and more than $10 million had been stolen—yet no coordinated response had been launched. When the CBC asked what the federal government was doing to protect Canadians, then–public safety minister Ralph Goodale finally snapped into action. The following month, the RCMP tapped Staff Sergeant Ken Derakhshan, a 26-year police veteran based in Milton, Ontario, to lead a new task force called Project Octavia, initially with a staff of six.
Derakhshan is upbeat and circumspect, friendly but formal. He’s spent more than a decade of his career investigating financial crimes, including mortgage fraud and marketing scams. But when he was brought onto Project Octavia, the full scale of the job in front of him wasn’t yet clear. All he knew was that stitching together the pieces of a fraud orchestrated remotely and executed locally wouldn’t be easy. “The big question was, how do you physically identify somebody and their location in Canada?” he says. “That was very daunting.”
It was only thanks to the CBC’s reporting that he knew the scammers were using a robo-caller—an automated system that dials numbers randomly or sequentially until it reaches every possible combination of digits. He also knew that they didn’t just employ one line of attack, but several. There was the one that targeted Evelyn, in which fraud artists told victims they were being recruited into an anti-fraud investigation and convinced them to send cash through the mail. There was the IT scam, in which a pop-up window appeared on a victim’s computer screen, temporarily freezing it. Victims were encouraged to contact a call centre, where a “support worker” took control of their computer and fixed the problem for a fee—sometimes hundreds or thousands of dollars, often via a cheque made out to a shell company.
But the best known was the scam that gave the enterprise its name, in which fraudsters purported to be calling from the CRA to collect tax debts. It was a carbon copy of the “IRS scam” that had targeted Americans. Victims paid by cash or money order, or, in a higher-tech twist, by cryptocurrency: some were told to visit a Bitcoin ATM to exchange Canadian currency for crypto, then send that to the scammers.
The RCMP was already worried about the use of cryptocurrency to facilitate fraud: it allows greater anonymity and less traceability than conventional transactions. Under Project Octavia, the force dramatically increased efforts to raise awareness of the practice. In 2019, police posted signs at Bitcoin machines across the country, reading: “STOP. Government agencies such as Canada Revenue Agency DO NOT accept Bitcoin.”
Since many Bitcoin machines were located in convenience stores, proprietors sometimes tried to pitch in, dissuading customers from depositing large amounts of money. But some victims were so committed to the narrative they’d been fed that they became combative, telling well-meaning staff to butt out. Derakhshan recalls an instance in which one store owner unplugged a Bitcoin machine to prevent someone from depositing more money. Another time, when an RCMP officer intercepted someone’s deposit and tried to return the money, the victim grew frantic, threatening to sue the officer and the force. “It’s a form of hypnosis,” says Derakhshan of the psychological hold that fraud artists can exert over victims.
Bob Sullivan is a cybercrime expert and host of the American Association of Retired Persons’ The Perfect Scam podcast. “At any given time, we’re vulnerable to a piece of information that knocks us off our game,” he says. “If you get an email that says there’s a warrant for your arrest, your blood pressure’s going up. You’re in a heightened emotional state, and that makes you more likely to be misled.”
The idea that everyone is a potential sucker was certainly the principle underpinning the CRA scam. The fraud was so pervasive that most of the Project Octavia investigators received calls themselves. Derakhshan did multiple times—once while in the middle of a meeting about the investigation. Sometimes he played along until the call ended; on other occasions he confronted the person on the other end, only to have them scream profanities and hang up.
The calls only gave Derakhshan a small taste of the psychic toll this manipulation has on a target. The impacts often transcended financial hardship—there were divorces, incidents of domestic violence and even suicides as victims grappled with blame and shame over their losses. It’s impossible to anticipate the full scale of repercussions when someone innocently answers their phone. One elderly woman was driven near mad by the constant calls, demands for money and threats of penalties. “They were like vultures on a dead animal,” says Derakhshan of the scammers. She died while the RCMP was still investigating her case. Another woman was defrauded of $8,500. Shortly thereafter, she realized she’d been scammed—but after persistent badgering, she still sent another $1,500. When Derakhshan asked her why she made the second payment, she said she’d just wanted it to be over.
One victim stands out to Derakhshan for the sheer scale of psychological torment. Scammers told a woman in New Brunswick that due to her tax debts, a warrant had been issued for her arrest. She sent them the money. She later received financial restitution from one of the implicated money mules—
someone in Canada facilitating the movement of stolen money back to India. But she wouldn’t allow the RMCP to mail a cheque to her. “We had a certified cheque for close to $7,500, which was her entire life savings,” says Derakhshan. He offered to send an officer to drop off the cheque in person, but her sense of public trust had been so thoroughly obliterated that she declined. Everything seemed like a scam. Eventually, they worked out a plan for her to pick up the cheque at an RCMP detachment. Derakhshan started to wonder if the scammers were working with psychologists. They knew exactly what to say, how to hook victims, reel them in and obliterate them.
Despite the abundance of high-tech tools now available, most scams remain relatively simple affairs. Criminals don’t need to ensnare victims through AI-generated videos and high-tech trickery—it’s enough to offer them something they want or need to be true, or are too afraid to doubt. And the CRA scam became lower-tech as it grew.
By mid-2019, the RCMP’s public-awareness campaign targeting Bitcoin machines was paying off. So the perpetrators pivoted to a more old-fashioned approach: telling victims to stick wads of cash in the mail and send them to apartments and PO boxes, mostly in southern Ontario. This opened up another investigative avenue. Police couldn’t yet track the syndicate’s top brass, but flesh-and-blood humans were intercepting the money at those addresses. These were the money mules. Some kept a portion of the victims’ money, and others received payment when the job was complete. They were recruited via email or text, sometimes by people they knew and sometimes by strangers offering an enticing financial incentive.
Once a mule received the cash, another mule, higher in the organization, would pick it up. At that point it was transferred back to the bosses in India, often via an informal practice known as hawala. The system is in some ways the opposite of cryptocurrency. It’s an ancient practice, popular today in the Middle East, South Asia and parts of Africa, as well as in diaspora communities around the world. It’s used by people without access to formal banks, or who simply want an easy, inexpensive way to move money between friends and family members. In a hawala transaction, there’s no legal record, and no money crosses borders. The system operates instead on an international honour system: imagine that someone in Toronto wants to send money to a cousin in New Delhi. He can simply visit a local hawala broker and give him the money; then his cousin in India can visit his own local broker, present a code and retrieve the money, minus a small fee. But, like crypto, it is off the books, a quality well-suited to cross-border crime, where following the money is typically the first step authorities take.
The opaque nature of these trans-border transactions wasn’t the only challenge. Derakhshan’s task force had limited contact with their counterparts in India. Police there also struggled to keep up with the tips the Octavia team passed on, particularly about the location of call centres. When they did make a raid, they would round up low-level employees—the guys who worked the phones. They would then parade a small group of men in rumpled T-shirts in front of local news cameras, and that was as far as it usually went. The kingpins, conveniently, were never on site and almost never credibly implicated. And every time a call centre shut down, two more seemed to sprout in its place.
It also appeared that there were structural problems with the Indian police: some of the information Derakhshan was sending made it to the criminals before a raid could be conducted. And it remained almost impossible to track the chain of command from overseas. In 2017, Indian police and U.S. authorities busted Sagar “Shaggy” Thakkar, an alleged kingpin of the IRS scam, which was run by the same criminal enterprise as the CRA scam. Otherwise, the organization’s leadership seemed untouchable.
Trying to untangle the criminal network in Canada was easier, but just barely. Within months of Octavia launching, Derakhshan got more officers assigned to the project. Even so, the work was slow and difficult. The criminal network was siloed: a money mule might not know the identity of their handler or of the other mule they were passing the cash to. When a victim reported an address where they’d sent money, one of Derakhshan’s officers would go knock on the door. Whoever answered might give them the name of the person who instructed them to receive the package. Often, it was a pseudonym, and the trail ran cold. Occasionally, a mule was drawn into the scam by an acquaintance they trusted and was able to provide enough information for Derakhshan to continue his investigation.
The Project Octavia team zeroed in on the South Asian diaspora—thanks in no small part to the CBC’s reporting. But as they knocked on doors, they noticed that many of the people who answered were Indian nationals on student visas. The recruitment of international students is increasingly common among organized crime groups who need to launder money or move it to a different country. Sometimes, the lure is easy money. Sometimes the accomplices are victims themselves, coerced into participating through explicit threats of violence against relatives back home. And other cases fall into greyer areas, according to Christian Leuprecht, a professor of political science at Queen’s University and co-editor of Dirty Money: Financial Crime in Canada. “Some people are completely incorruptible,” says Leuprecht. “Some people will do crazy things to make five bucks on the side, and some people are sort of in the middle if you find the right incentives.”
One of the mules in the CRA scam was Abilash Chenreddy. He was born in Hyderabad in 1993 and grew into a trim, serious-looking young man. He studied at Andrha University in the city of Visakhapatnam, where he was a mediocre but ambitious student. After earning a bachelor of technology degree, Chenreddy moved to Toronto on a student visa in 2017 and enrolled at Canadore College, whose student body largely consists of international students. To pay his way in Canada, he worked at gas stations and other menial jobs, and stayed on a post-graduation work visa after earning his diploma. Chenreddy set his sights on earning permanent residency and began building a social network in Mississauga alongside other expats. Some were friends from back home; others just fellow travellers with their eyes trained on the future, happy to meet for cricket matches or a few hands of cribbage on weekends.
Chenreddy struggled to find work, however. One day his roommate, a fellow Indian transplant, shared some online job postings that offered up to $300 per day to work from home. Chenreddy applied in early 2019 and soon received a WhatsApp call from someone who called himself Saumil. He said he lived in Gujarat, India, and he helped Indian customers buy and sell cryptocurrency. He wanted to expand into Canada and needed a Canadian address where people could send crypto gift cards for trading. Chenreddy didn’t know very much about crypto, but Saumil promised to teach him everything.
In August of 2019, Saumil told him that some gift cards would soon arrive, and another employee would pick them up. Chenreddy would be compensated for facilitating the transaction. Days later, the cards arrived. They were addressed to Omar Ali—the same person to whom Evelyn, the Alberta woman convinced she was helping track down credit card thieves, had sent cash to. Chenreddy assumed it was the name of another of Saumil’s employees. When the gift cards arrived, he was out of the apartment, so his girlfriend accepted them and then, as instructed, left them on the doorstep to be picked up. Hours later, they were gone.
It all seemed so trivial—what had he done, really?—and Chenreddy felt awkward prompting his supposed employer for payment. Two weeks later, he heard from Saumil again. Another package for Omar Ali arrived the following day and, once again, was picked up hours later. Saumil messaged Chenreddy to tell him there was an envelope in his mailbox with $250. A few days later, Saumil got in touch to coordinate a third package and offered $400. This time Chenreddy pushed back, asking when his cryptocurrency training would begin. Saumil never responded.
In October of 2019, police showed up at Chenreddy’s apartment. According to an affidavit he gave later, that was when Chenreddy realized he’d been involved in something potentially illegal. But he lied, telling the police he’d never seen any packages. After they left, he texted Saumil to tell him what had happened. There was no answer. Panicked, he deleted his WhatsApp chat history, hoping the whole episode would go away.
It didn’t. Weeks later, RCMP officers with Project Octavia showed up at his door. Chenreddy’s address had been flagged in several victim reports to the Canadian Anti-Fraud Centre. This time, he folded. He told officers he had received the packages but never opened them. He insisted he didn’t know what was inside. They broke the bad news: he’d facilitated moving thousands of dollars in stolen money and had participated in an international criminal conspiracy—even if it was more through willful ignorance than brazen criminality.
Chenreddy was never charged, though he didn’t escape consequences. By 2022, he’d found work as a software engineer for General Motors. That February he returned to India for two weeks to marry his fianceé. When he flew back to Canada, he was told there was an immigration warrant out for his arrest. His passport was seized; to get it back, he had to admit to being a member of a criminal enterprise and accept a declaration of inadmissibility to Canada. In a hearing with representatives from the Ministry of Public Safety in 2023, he was pressed by government lawyers on how it was possible that he didn’t see any red flags. After all, there had been no legitimate onboarding process, only WhatsApp communication with some faceless boss. He just reiterated that it seemed like a legitimate job at the time.
Derakhshan testified at the hearing, underscoring a key point. Chenreddy may have been a low-level operator with limited culpability but, without mules like him to move cash, the scam would have fallen apart. Last April, Chenreddy was found to have engaged in organized criminality and the destruction of evidence. A deportation order was issued, though his present whereabouts are unclear. Attempts to contact Chenreddy via his lawyer were unsuccessful.
In early 2020, Derakhshan’s team caught some major investigative breaks. They were untangling the web of mules operating in Canada, sorting through big and little fish. One day, another address, another destination for many tinfoil-wrapped packages of cash, appeared in his investigation. But this time, the home was registered to a couple in their 30s—and their real names were on the packages.
Gurinderpreet and Inderpreet Dhaliwal were Canadian citizens who had immigrated from India a decade earlier. They lived in a two-storey, beige-brick home on a quiet street in Brampton, Ontario. It was an enviable middle-class suburban life, with two kids and full-time jobs—Gurinderpreet did manual labour at a dairy, and Inderpreet worked as an administrative assistant. Derakhshan and his team conducted surveillance on their house, mostly tracking the packages allegedly filled with cash that regularly came and went. According to the RCMP, unlike the international students, the Dhaliwals may have been quietly amassing a small fortune—so much that they acquired a money-counting machine. Derakhshan says that, depending on how long this went on, the couple could have been responsible for hundreds of thousands of dollars flowing to criminal counterparts in India. When the RCMP finally raided the Dhaliwal residence in February of 2020, after weeks of surveillance, they seized $26,000 in cash and over $100,000 in jewellery. The RCMP announced charges of fraud and money laundering against the Dhaliwals, who were released on bail shortly after. (Their case has yet to be adjudicated.)
Throughout early 2020, more mules and money-mule managers were arrested. They were typically charged with fraud over $5,000, possession of proceeds of crime and laundering the proceeds of crime. And the Octavia team’s collaboration with Indian police resulted in 39 call centres being shut down. It was a sudden wave of progress in a hard-fought investigation. But amid this flurry of activity, Derakhshan got a message from on high: Project Octavia was being disbanded. Arrests had been made, awareness had been spread. The operation was gobbling up a lot of time and other resources; Derakhshan estimates that his total budget was $2 million over two years of investigation. He wanted to keep going, but it wasn’t his call. “The decision was made way, way above my pay grade,” he says.
In winding down the project, Derakhshan was tasked with filing an enormous amount of paperwork—evidence setting up probable cause for additional arrests and deportation hearings. A few more arrests were made in 2020. It was touted as a “mission accomplished” moment, but Derakhshan worried that the criminal organizations remained largely intact, ready to continue recruiting hapless students and greedy hustlers.
Garry Clement is the former national director for the RCMP’s Proceeds of Crime program. He says that since Project Octavia was disbanded, Canada has become a go-to country for money laundering. “The chance of being prosecuted is probably around two per cent,” he says. He blames this on a lack of resources, capacity and political will, plus procedural requirements—including the Jordan decision, a Supreme Court ruling that mandates criminal charges must be adjudicated within 18 months. “It’s a virtual impossibility to get a complex case before the court in 18 months involving financial crime,” he says.
Clement says that Project Octavia “removed the icing off the cake” with some splashy arrests. But it didn’t fundamentally disrupt the system of impunity that ensures scam calls keep coming, with greater frequency and creativity. Christian Leuprecht, of Queen’s University, doubts more resources will be allocated to these investigations unless it becomes an electoral issue for Canadians. “It’s very hard to explain to members of Parliament. Their eyes just glaze over.”
And so the calls keep coming, even as more extreme scenarios loom: deepfake nudes used to embarrass or extort; generative AI that fabricates text messages, emails and images; chatbots programmed to talk to prospective victims, doing a call centre’s worth of work all by themselves. In 2023, scammers phoned a 75-year-old Regina woman using an AI-generated voice clone of her grandson, ostensibly in need of cash due to an emergency. She handed over $7,000. The same year, a man in Toronto lost $12,000 after seeing an ad on YouTube in which a deepfake version of Justin Trudeau appeared to promote a fraudulent investment scheme.
After years surveying the scammer landscape, Derakhshan feels like his work was a drop in the ocean. Now that Octavia is over, he’s certain that the calls won’t stop, that there will be more victims and more misery. He sees now that criminal organizations will endlessly adapt, engaging with law enforcement in a never-ending dance. “They’ll change the fraud drumbeat,” he says. “But they’ll continue marching to it.”
