Gateway Carrier Owner Pleads Guilty to Laundering Robocall Proceeds

What happened

On September 16, 2022, the Department of Justice (DOJ) announced that Jon J. Kahen, 48, of Great Neck, New York, pleaded guilty in the Eastern District of New York to money laundering. Kahen was the owner and chief executive officer of Global Voicecom Inc. (GVI), a U.S. VoIP provider, from 1999 to 2020. The case was prosecuted by the DOJ Civil Division's Consumer Protection Branch and the U.S. Attorney's Office for the Southern District of California.

The facts

According to the DOJ:

• GVI provided calling platforms, domestic direct inward dial (DID) numbers, toll-free numbers and call termination services that introduced foreign traffic into the U.S. telephone system. That made it a "gateway carrier."
• Beginning at least as early as 2016, an India-based VoIP provider used GVI's services to route fraudulent robocalls, including calls impersonating the Internal Revenue Service (IRS), the Social Security Administration (SSA) and the SSA Office of Inspector General (SSA OIG).
• The provider also used DID and toll-free numbers re-leased or re-sold by GVI in robocall scams.
• By 2018, Kahen knew the provider was using GVI's services for unlawful activity. By May 2019, he knew its payments were criminal proceeds. He conducted monetary transactions with those funds anyway.

Under the plea agreement, Kahen agreed to pay $216,700 in restitution to four robocall victims and to forfeit $176,000.

Background

In January 2020, the United States filed a civil action alleging that Kahen and his companies carried millions of fraudulent robocalls despite repeated warnings. In March 2020, they were permanently enjoined from operating as intermediate VoIP carriers.

The SSA OIG, the U.S. Postal Inspection Service (USPIS), the U.S. Secret Service (USSS) and Homeland Security Investigations (HSI) investigated.

Why it matters

This case moved gateway carrier enforcement from civil injunctions to criminal liability. The theory was money laundering. Once a carrier knows that a customer's payments come from fraud, accepting and using those payments can be a crime in itself.

The key facts were knowledge and timing. Prosecutors pointed to when Kahen knew what the traffic was, and what he did after he knew.

Practical steps

• Document what you know about each foreign traffic source and when you learned it.
• Act promptly when you learn a customer is carrying fraudulent traffic.
• Control number resale. Know who uses the DIDs and toll-free numbers you lease.
• Get counsel involved as soon as you receive credible fraud notices.