(FORTUNE Magazine) – Last summer Sally Mikolajczyk received one of those ubiquitous sweepstakes offers in the mail. A retired social worker with the City of New York, the 86-year-old says she had "nothing better to do" and sent it in. A few weeks later she got a phone call. The caller identified himself as Mr. Dawson, an agent with U.S. Customs. He said Mikolajczyk had won the Canadian sweepstakes, but to collect her winnings she had to send $2,200 to cover the taxes. Mikolajczyk wired the money, but her prize never arrived. Instead, there were more phone calls--from "John Ashcroft," "Jack Stevens," and "Jonathan Peters." The good news, they told her each time, was that the size of her prize had increased--it eventually reached $3.5 million. But before they could send her prize, they said, they needed additional funds to cover taxes and other expenses. Mikolajczyk obliged again and again, eventually sending more than $90,000 before she realized she'd been duped. "I can't explain why I trusted them," says Mikolajczyk, who asked that her name be changed for this story. "I really should have known better. But they made it sound so good, you just knew the money was around the corner. They really sounded trustworthy."

In 2003 telemarketing fraudsters in Canada bilked unsuspecting victims in 140 countries out of more than $100 million. The vast majority of those defrauded--more than 75%--were American, says Barry Elliott, a detective with the Ontario Provincial Police who runs a telephone fraud help line called Phonebusters. "On any given day," says Elliott, "there are 1,000 to 1,500 boiler rooms operating in Toronto, Montreal, and Vancouver." Armed with cellphones and a tantalizing collection of tall tales, they prey upon the lonely, the desperate, and the naive. Once known for its clean streets, clear skies, and wide-open spaces, Canada has become the global leader in telemarketing fraud.

Yet those two seemingly contradictory portraits may actually be connected. "People often associate accents with the region where that accent is spoken," says Jack Chambers, a linguistics professor at the University of Toronto. So denizens of the industrial town of Birmingham, England, have an accent described as "sooty," while the famous Noo Yawk accent is associated with crime, grime, and traffic. For many Americans, Canada represents a kinder, gentler reflection of themselves--a place known for its peacekeepers, strict gun laws, and universal health care. The streets are so clean that a film production in Toronto famously had to hire security to prevent anyone from clearing away the garbage on the set. And when American teenagers travel abroad, many affix a Canadian flag to their backpacks--the maple leaf often gets a warmer reception than the Stars and Stripes.

As a result, when Americans hear the Canadian accent, they may be predisposed to trust the speaker. "There's an unmarked, generic aspect to the Canadian accent," says Chambers. "It doesn't have vowels that wobble a lot, and all the consonants are in place. It's very well behaved, in the phonetic sense, much like the accent spoken in the American Midwest. Those are parts of the world where people breathe clean air and think clean thoughts. And so that's why they associate the accent with honesty and trust." Perhaps that explains why a 2002 Pew Research poll found ABC News anchor Peter Jennings, who hails from Toronto, one of the most believable public figures in America. Or how CBS News correspondent John Roberts transformed himself from a long-haired video jockey on Canada's music television station, MuchMusic, into Dan Rather's somber heir apparent.

The ascendancy of Canada as a telephone-fraud superpower is a relatively recent phenomenon. Until the mid-1990s, Canadian fraud artists worked mainly within Canada. But a coordinated initiative by law enforcement, banks, and credit card companies effectively reduced the problem, forcing fraudsters to look elsewhere for victims. "We're partially to blame for killing the market up here," says Phonebusters' Elliott. "We drove them to the States."

Canadian con artists operate in an extremely hospitable environment. The prison sentences in Canada for fraud are light compared with those in the U.S.--offenders usually get a small fine and probation, as opposed to a jail sentence of seven to 12 years--and U.S. Attorneys who attempt to prosecute Canadian residents face a daunting thicket of jurisdictional issues, extradition requirements, and other bureaucratic entanglements. "Fraudulent telemarketers set up in Canada and target Americans because in the past they have avoided detection, investigation, prosecution, and punishment," says Michael J. Sullivan, the U.S. attorney for Massachusetts. "These criminal telemarketers know it is far more difficult to investigate and prosecute such cases when two sovereigns and numerous law enforcement agencies are involved."

Fraudsters also change the method and nature of their cons frequently, making detection more difficult. In addition to the lottery scam that hooked Mikolajczyk, there are a host of others, each calibrated to appeal to a slightly different demographic. The mortgage scam offers individuals with bad credit the chance to qualify for a home mortgage--provided, of course, that they pay the advance application fee. The loan scam offers credit to people who normally wouldn't qualify. The scams are advertised in newspapers or online, offering a toll-free number for applicants to call. Victims send in all their identification, receive automatic approval, and then are asked to send a $300 to $700 "insurance fee" to secure the loan or mortgage. Needless to say, they never receive their payout.

In a variation on this theme, New Yorker Sandra Taranto sent $199 to cover the annual fee for a credit card that never arrived. "The man sounded so trustworthy on the phone," says Taranto, in a broad Staten Island accent imbued with a worldliness that suggests she should have known better. "He gave me his name, badge number, even a phone number to call back."

Elliott says these small-time cons, while less tragic, are perhaps even more ingenious. Fraudsters can collect small sums from tens of thousands of victims without raising the ire of law enforcement, which is unlikely to pursue cases involving such amounts.

There are signs, however, that Canada's run as a telephone-fraud Goliath may have reached its nadir. U.S. Attorney Sullivan recently extradited and successfully prosecuted one fraud operator, and two more have been indicted. More significantly, perhaps, Canada's sterling reputation has been battered by a series of scandals. Ever since the animated comedy South Park jokingly blamed Canada for all of America's woes, the U.S. seems to have taken the message to heart. In the past year U.S. politicians have held Canadians responsible for terrorism, mad cow disease, last summer's blackout, even the growing popularity of gay marriage.

So the Canadian accent may suddenly be becoming less trustworthy. Will that mean the demise of telemarketing fraud? Not likely. "You could wipe it out in Canada tomorrow," says Elliott. "It wouldn't make a difference. These guys would just move down to the Caribbean."

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