June 26 (Bloomberg) -- Every day, hundreds of prisoners across Mexico scan phone books looking for their next victim.
Using mobile phones smuggled into their jail cells, they make thousands of calls a day in search of someone to swindle. Some demand ransom payments for kidnappings that never really happened. Others ask for a bank deposit to claim a prize that doesn’t exist. A successful deception earns an average bounty of 5,000 pesos ($385) in the world of organized crime.
About 10,000 people a month report such telephone extortion calls to a citizen group that works with law-enforcement authorities in Mexico City. Kidnappings were up 21 percent last year in Mexico, creating an uneasy climate that extortionists can exploit. Prisons have failed to quell the illegal behavior with call-blocking technology, and now lawmakers are considering pinning more responsibility on wireless companies like America Movil SAB.
“There’s a climate of social fear in which anything can be possible, so when someone calls to tell you your son has been kidnapped, it’s believable,” said Elena Azaola, who specializes in criminal behavior at Mexico’s Center for Advanced Studies and Research in Social Anthropology.
Violence related to organized crime has reduced economic growth by about one percentage point each year, according to government estimates. It’s difficult to pinpoint how much Mexicans shell out each year in extortion payments because many choose not to report the crime, according to research firm CIDE.
When Sergio, 20, picked up the phone of his Mexico City home on a Friday afternoon, he never guessed the man on the line claiming to represent his bank could be calling from inside a prison.
Sergio, who asked to go by his first name to protect himself, was told he had won a new Volkswagen Jetta and needed to deposit 5,000 pesos in the next hour to recover his prize.
“He sounded like a nice guy. He asked me if I had seen the ads for the contest inside the bank, and I started to believe that yes, maybe I had,” Sergio said in a phone interview. After depositing the money and realizing the scheme he had fallen for, “I felt vulnerable, ashamed. I wondered what other information they could possibly have on me,” he said.
In other common scenarios, extortionists will claim to kidnap a friend or family member, make death threats as if belonging to organized crime groups or drug cartels, or pretend to be a faraway family member asking for money. More than 800,000 telephone extortion victims have reported crimes to the Public Security and Justice Procurement Citizen Council of Mexico City since it created a hotline to protect and inform citizens in December 2007.
Prisoners work with accomplices on the outside, since they can’t collect their illegal gains on their own, said Luis Wertman, president of the council. Many inmates ask for prepaid calling cards as a reward to continue their work, he said.
More than half of the victims of extortion calls in Mexico earn 1,300 to 4,000 pesos a month, according to CIDE. Prisoners could pay as much as 10,000 pesos for a smuggled phone, in addition to separate weekly or monthly bribes to prison guards to look the other way, Azaola said.
“You can’t separate this from the enormous corruption that occurs in jails,” she said.
Federal prisons are operated by the National Security Commission, which falls under the Interior Ministry’s authority. No one answered repeated calls to the commission’s offices. State prisons are administered by local governments.
A prisoner “with a good work ethic can make 100 to 200 calls per day,” Alejandro Hope, a former government intelligence officer and now a security analyst at the Mexican Competitiveness Institute, said in a telephone interview. Even if just one call is successful, the prisoner can make more than three times the monthly minimum salary in just one day.
Hope, who lives in Mexico City, has received an extortion call himself, he said. Last year, he picked up the phone and heard a voice that sounded like a teenage girl saying, “Daddy, Daddy, they’re hurting me!” Hope’s daughter was sitting next to him, so he hung up.
Another Mexico City resident wasn’t so lucky. The 52-year-old woman, who asked to be identified only by her last name, Lopez, said she lost 34,000 pesos last month in a telephone extortion scam. Someone posing as her nephew convinced her that he’d been in a car wreck on his way to visit her and needed money.
“I felt angry, swindled,” Lopez said. “I shouldn’t have fallen for it, but my emotions overpowered my reason.”
Lopez, a diabetic who had spent two years saving the money for a bladder operation, said she was already vulnerable because her son had been kidnapped and killed in the northern city of Reynosa in 2012.
Reported extortion cases in Mexico reached a record last year, according to data from the Interior Ministry, multiplying by more than nine times since 1997.
In theory, signal-blocking devices should be able to stop prisons from becoming extortion call centers. The machines work by transmitting a signal on the same frequency as wireless phones, canceling out their transmissions.
The blocking signals are only meant to cover a 20-meter (66-foot) radius outside prisons. Instead, they often interfere with mobile-phone coverage in surrounding towns, resulting in about 1.4 million incomplete calls a day, according to a 2013 study by the citizen council and telecommunications industry group Anatel. In other cases, the blocking devices malfunction or are tampered with.
America Movil, controlled by billionaire Carlos Slim, along with Telefonica SA, Grupo Iusacell SA and NII Holdings Inc.’s Nextel, currently cooperate with Mexico’s National Security Commission to block signals within some of the country’s prisons.
Under a law proposed by President Enrique Pena Nieto, currently under consideration before the Senate, the phone companies would become responsible for ensuring the blockers work. That has drawn criticism from both citizen groups and the wireless industry that the government shouldn’t put the burden of law enforcement on others.
“It is a terrible oversight on behalf of the legislators,” said Wertman of the citizen council. “As the authority, you are renouncing a pledge you have for the safety of society.”
Mobile-phone companies already work with the government and will continue to do so, said Cristina Ruiz de Velasco, Nextel Mexico’s vice president of public affairs and communications.
“We want the law to stay as is, in the sense that the responsibility of operators is to collaborate with authorities, rather than to have the task of blocking transferred to us,” she said in an e-mailed statement.
The current law governing cooperation with justice is being followed to the letter and doesn’t require any change, a Telefonica official said. Agreements already exist with the National Security Commission, the official said.
Because signal blockers are controlled by the prisons today, they’re prone to the same corruption as other criminal activity that takes place inside the jail, Hope said.
‘‘If companies controlled them, it would be better,’’ he said.
Press officials for America Movil and Iusacell declined to comment. A spokesman for the Ministry of Transportation and Communications didn’t respond to phone and e-mailed requests for comment.
‘‘It is the authorities that have the access and can catch the corruption that allows these cellphones to enter, so that we don’t have to spend on blockers that are expensive and complicated,” said Anatel’s Gabriel Szekely, who represents operators like America Movil’s Telcel and Telefonica’s Movistar, at a Senate hearing in April. “Who’s turning these blockers on and off inside these prisons? We’re extremely vulnerable.”