Stephen Tashman settles himself on a hardwood chair inside a West Palm Beach federal courtroom, his attention riveted on the morning's proceedings. It's the second day of trial, and although Tashman's intent on the steady stream of arguments and testimonies, he appears relaxed, his deportment hardly that of a man engaged in a showdown with the Federal Trade Commission that could cost him millions of dollars. His well-lined face reveals nothing. Often he leans back and cradles his head in one hand. Sometimes he dons spectacles as if to get a clearer look at his accusers.
Chuck Bigger
A bad connection: Investor Daryl Joiner trusted TDC with thousands of his dollars
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This week they are two attorneys from the Federal Trade Commission (FTC) and a procession of mostly embittered witnesses testifying against him and Telecard Dispensing Corporation (TDC), a now defunct company that once sold prepaid phone cards and their dispensing machines to investors nationwide. The FTC believes that, under Tashman's guidance, TDC deceived its customers in a myriad of ways that included exaggerating earnings potential and failing to provide promised business venues and exclusive territories.
And that's just for starters. The FTC also claims that TDC failed to inform its customers of the litigation histories of its executives, even though the law requires full and accurate disclosure from franchisers. Maybe the reason TDC neglected to provide these crucial tidbits is because four of the company's officers carry existing state and federal judgments against them for fraud or misrepresentation in previous business ventures.
Because of these and other suspected violations, the feds have hauled Tashman into court along with four other TDC executives: Harris Cohen, Stephen Mishkin, Michael Dundee, and Ernest Lockamy. The sixth defendant? TDC, the Florida corporation that once reeled in thousands of investors and millions of dollars through its offices in downtown Hollywood.
Some of the codefendants sport signs of nervousness on this April day. Lockamy strokes the bridge of his nose and rubs his mouth in a repetitive ritual. Cohen poises his bulky frame at the edge of his seat and presses his lips together. All of the defense's crew erupt into fervent whispers and headshaking each time an accusation is levied. Except for Tashman. He sits still, his face a stone. On the stand a young mother from Palmetto, Georgia, recounts how she lost her children's college fund to TDC. The woman's voice mutates from petal-soft Southern to high-pitched outrage as she recalls the earnings and guidance she was assured she would receive from TDC and how the lack of both led eventually to a loss of $14,000, a sum she says had taken her six years to save.
Tashman shows no sign of worry. He hasn't testified, nor has he responded to repetitive inquiries by New Timesfor his comments on the trial and the FTC's allegations. His silent bravado might come from experience. This isn't the first time his business ethics have drawn a writer's ink or a federal probe.
After a brief recess and the inevitable dawdling in the hallway outside the courtroom, everyone shuffles back to the trial. Former TDC customers continue to tell their similar tales of trust and loss. None of these investors looks at Tashman while he or she speaks. They have no idea who he is and admit as much on the stand.
Inside and outside the court, a stable of former employees points to Tashman as TDC's ringmaster, yet virtually none of the company's customers ever heard or saw Stephen Tashman. They never knew that the precious and substantial money they'd invested in TDC's business opportunities would eventually reach the hands of a man whom federal agencies and ex-employees describe as well-versed in the art of the scam.
Under Tashman's leadership Telecard Dispensing Corporation sold long-distance phone cards and dispensing machines from 1995 through 1999 to investors across the nation.
Supposedly TDC placed its customers' machines in venues like gas stations or mini-marts where customers purchased long-distance time by sliding dollars into a slim slot then selecting a $5, $10, or $20 card. An 800 access number and a scratch-off PIN were provided on the back of each card. Callers dialed the 800 number, entered their PIN, and made their domestic or international calls. TDC lauded the cards as especially suitable for those on the move: business travelers, students, truckers, and military personnel.
Investors claim that they were intrigued by TDC's radio advertisements that bragged about a rapidly growing industry, minimal investments, and big returns. When investors called the number provided in the ads, TDC salespeople then crowed about how the "talking" machines literally sold themselves because an electronic voice periodically boasted to passersby about the savings TDC phone cards offered.
TDC's ventures were hawked as low-maintenance. Through their dispensing machines, investors could avoid directly selling to buyers and simply monitor and replace the machine's card stock as needed. Yet, according to court testimony from former investors and charges made by the FTC, what TDC vaunted wasn't even remotely what consumers received.
"The whole thing started going downhill as soon as we got the machines," says Daryl Joiner, a former TDC investor and witness in the FTC's trial against Tashman and the company. Joiner contacted TDC in March 1997 after hearing about the company on the radio during a Rush Limbaugh show. The idea of owning an easy-to-manage business appealed to Joiner.
