By Francisco Alvarado
By Trevor Bach
By Chris Joseph
By Michael E. Miller
By Allie Conti
By Keegan Hamilton and Francisco Alvarado
By Jake Rossen
By Allie Conti
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.
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.
Eight years ago he endured a ruptured disc and numerous blood clots in his lungs and legs. His ailments left him in constant pain and with little energy. A former CPA, Joiner sought a business he could operate with minimal effort, something with which his son could help out between high-school classes and baseball practice. TDC's machines and cards seemed like the ticket. Although Joiner called strictly out of curiosity, the company's spiel sounded so good he eventually plunked down more than $15,000 he'd pooled together through credit cards and the family's savings. Over the course of two nightmarish years, Joiner and his family managed to recoup only $6000 from their initial investment -- a $9000 loss that doesn't include the phone cards Joiner purchased and never sold.
"It sounded so good," recalls Joiner. "High return, low risk. In hindsight, you wonder."
Former TDC staffers describe how customers like Joiner were funneled through a five-gear sales engine that included fronters, references, closers, loaders, and locators. During trial the FTC plays an audiocassette of an undercover agent speaking with a fronter. The tape and testimonies of former customers reveal TDC's initial pitch.
Potential investors were first patched to a fronter, who'd immediately qualify them by asking more than once if they could "comfortably handle" the investment. If callers indicated they could, fronters began to talk numbers. Investors were told that, with a $10,980 investment -- a minimum purchase of two machines -- and a mere three to five hours a week, they could expect a return of approximately $20,000 or more within the first year.
Do you like those figures? The fronter's pitch weighed heavy with "yes" questions, a telemarketing tool used to reinforce the best possible outcome of the sale in customers' minds. Investors like Joiner say that fronters also promised that the company would find locations for machines with foot traffic of at least 500 people a day. Fronters hailed the professed returns on initial investments as "very realistic." Territories were lauded as exclusive, and TDC pledged not to sell to any other customer within a 50,000-people radius -- in some areas, the size of a county.
Fronters also informed customers that they'd receive informational packets containing financial and disclosure documents. The packets should have outlined the earnings achieved by existing investors as well as the identities and legal histories of the company's officers. The FTC and former customers say the packets contained neither.
TDC's alleged scam began with its fronters. The FTC and ex-customers claim that TDC's fronters overhyped potential profits by offering callers a list of references, existing TDC investors who supposedly prospered from their purchases of machines and phone cards. "They all said essentially the same thing," says Joiner. "That the company helped them locate machines. Each said they had no difficulties. One guy [said that had] had 28 machines, that he'd been doing so well, he'd been buying more."
Former employees say that what TDC neglected to tell its customers was that the company paid its references anywhere between $15 to $30 per call, with some references pulling in as much as $2000 to $3000 a week for the glowing testimonies they gave regarding their investments. Ex-employees also say that one often-used reference person was actually a former fronter for TDC and that, while she did indeed own two machines, the dispensers were never set up.
Once customers decided to invest, closers stepped in to seal deals. They asked customers to send TDC their area's phone book, which closers would later pass on to locators who would place the machines in nearby venues. Customers were told to tuck the payments for their investments within their phone books and that an overnight delivery service would pick them up.
Before customers received their machines, a final sales shove arrived in the form of a loader. Loaders called customers poised to receive their machines with extraordinary deals they claimed came from last-minute cancellations by other customers. Breaks on prices were offered if new investors agreed to take on more than their initial two-machine purchase. Because loaders promised also to sell any future machine at the "new" and lower price, most customers took the bait.
"I was going to buy only two. But I looked at it from a worst case. If they did half of what they said it would do, it would be a good investment," says Joiner. After listening to the loaders' pitch about savings and volume, Joiner picked up an extra machine.
With his new business venture now in hand, Joiner expected a smooth setup starting with machine placements and subsequent phone-card sales and profits. Instead, he says, he entered a months-long battle comprising poor service and lame excuses. Joiner claims that locators told him they couldn't find a single venue in his hometown of Colorado Springs, a city with a population exceeding 300,000. After repeated calls from Joiner, a locator finally proposed a food store 12 miles away from Joiner's home.
When Joiner and his wife arrived, they were met with yet another unpleasant surprise.
"I thought all we had to do was, 'Hi, where do you want us to set up?' [But] he had no interest in having a telephone-card machine," says Joiner, who was unaware that locators often called store owners and hustled initial interviews for TDC customers without actually securing placement for their machines. Joiner and other investors often scrambled around town of their own accord simply to find locations that TDC had already promised to procure.
Joiner and his wife visited many stores and even a U.S. Air Force base that locators promised as placement venues. The Joiners received the same disheartening responses: All of the store owners with whom they negotiated had no interest in placing their machines. And although TDC assured exclusive territories, Joiner says he and his wife came across TDC machines and phone cards within blocks of their home.
"I was steamed. My wife and I had already spent at that point hours and hours driving around, doing what we didn't want to do, finding locations," says Joiner. "We kept on digging around and found two locations on our own, one in a donut shop, one in a dry cleaner's. In a month and a half, they sold a combined total of one card."
Months of back-and-forth between Joiner and TDC finally forced the company to find one location in the mountains approximately 50 miles from Joiner's home. The Joiners cinched two other locations on their own. Unfortunately those were within a block of one another. At that point Joiner felt compelled to take what he could get.
He says that none of the machines ever prospered or even came close to garnering the earnings initially conveyed by TDC. More problems developed. Joiner claims that several times during his dealings with TDC, the cards became inoperative. Joiner continually had to visit machines, post signs of disrepair, and replace bad cards. In the summer months, sales remained inconsistent. When winter descended upon the Rockies, the traffic of potential card buyers dwindled, and already erratic sales practically vanished. By the spring of 1999, the machine placed in a mountain grocery store by TDC was stolen. The other two now gather dust in Joiner's garage.
"It's been one of the most irritating and disgusting experiences of my life," he says.
After 15 months' worth of calls and letters that were not returned, Joiner contacted the FTC. That contact is the reason he appears in federal court on the third day of trial, even though he found the trip to West Palm Beach debilitating because of his poor health. Joiner felt compelled to go.
"I'd like the satisfaction of knowing these people are not going to do this kind of thing again," he says.
Inside the courtroom Joiner slowly makes his way to the witness stand. He's exhausted from the long flight, and his face is gaunt. Unable to make the journey alone, his wife accompanied him and now watches as he recounts his dealings with TDC in a quiet outrage. Before he leaves the stand, Joiner receives one final slap in the face. The FTC inquires whether he knew about the checkered legal histories of Tashman and some of his codefendants. The federal agency claims that, for Tashman, this past includes a previous injunction against him by the FTC, a conviction for securities fraud in Texas, a lawsuit filed by the SEC that resulted in a permanent injunction, and cease-and-desist orders in six states.
Before answering Joiner's face pales. His voice rises a pitch, and he grinds out his response through a clenched jaw. "I would not have put a nickel in this thing if I had known anything about that."
Another former investor echoes Joiner's sentiments.
"They stuck it right to me," says Richard Blake about his dealings with TDC. Blake already gave his testimony, but he sticks around this afternoon to check out Joiner's and a few others'. Blake says he first contacted the company in the fall of 1997 from his home in eastern Texas. He too heard an advertisement on the radio, and similar to other investors, Blake churned through TDC's sales maneuvers and confronted fronters lauding juicy returns and minimal work. He picked up two extra machines at the prompting of a loader, and he endured locators disinterested in placing his products.
"Customer service was a joke. It was customer disservice. They treated you like you were a pain in the butt and you were bothering them," says Blake, who also says he slogged through several low- to no-traffic venues provided by TDC locators. He finally gave up trying to squeeze a profit from his venture when he learned that TDC sold phone cards directly to a store that also housed one of his machines. The owner told Blake that TDC had offered him phone cards at the same rate as Blake's and that the store didn't need his machine anymore. "You were doomed no matter which way you turned," says Blake.
By the end of his year-and-a-half relationship with TDC, Blake had sunk about $24,000 into his ventures. He managed to recoup $15,000 through an uneven trickle of phone card sales and by selling one of his machines. The other three still sit in his garage.
"It'll be a cold day in hell before I respond to any business opportunities that I hear on the radio," says Blake, who unknowingly offers a wise caveat. In court documents the FTC claims that Blake, Joiner, and other TDC customers now join a legacy of investors duped by Steve Tashman.
"Several times before Defendant Tashman has been a party defendant in an advance fee scheme where consumers lost thousands of dollars as a result of misrepresentations; this is not the first time consumers have lost money in a scheme where Defendant Tashman was involved, and it is likely he will engage in similar future schemes," the FTC alleges.
In 1995 Tashman's business practices earned him a place in Fred Schulte's Fleeced!: Telemarketing Rip-Offs and How to AvoidThem. The book provides meaty accounts of cons and techniques utilized by less-than-scrupulous telemarketers. Two companies run by Tashman merited a full chapter.
The first involved Atlantex Associates, a North Miami Beach-based firm that sold oil and gas partnerships to investors. Similar to TDC with its pitches, Atlantex dangled declarations about low risks and big returns. According to Fleeced! Tashman and Atlantex netted more than $8 million in sales to consumers, whose returns didn't come close to what telemarketers proposed. In January 1987 the FTC sued Atlantex for misrepresentation and fraud. The agency alleged that Tashman ran the show at Atlantex, and the court fined Tashman and fellow officers more that $12 million and entered a judgment against Tashman that prohibited him from netting future income through deceptive or false representations.
Unfazed, Tashman trucked on, and in the early '90s, he started Junction Financial Corporation, a Hallandale-based business that sold partnerships in an ostrich breeding and farming business.
Federal agencies claim that Junction bilked more than 1000 customers around the nation out of a cool $3 million. None of these investors ever received a slim dime of return. Junction didn't bother registering the interests they sold in the bird farm with the Securities and Exchange Commission, and the company continued selling unlicensed partnerships even though the birds failed to breed. Fleeced!recounts that, when a federal auditor arrived at the end of 1993, he discovered that only a fraction of the $3.2 million invested by customers went toward the buying of birds. But the money didn't simply vanish. Fleeced! cites an SEC affidavit that hundreds of thousands of dollars flowed from Junction's accounts in the form of loans to Tashman and others.
Court documents reveal that in December 1993 the SEC charged the company with civil fraud. In its complaint the agency accuses Tashman of misusing investor funds, deceiving buyers, and failing to disclose past judgments. As he did with TDC, Tashman never listed himself as a principal in any of Junction's corporate document or filings. Still, the SEC's case was strong enough to result in yet another judgment that barred Tashman from employing any "device, scheme, or artifice" to defraud consumers. Despite the injunctions against him, the FTC alleges that Tashman surged on with his latest venture: TDC.
"You know he was really proud of it, of the fact that he's done all these securities scams and oil well scams and ostrich farm scams," says Vita Roquet, a former TDC employee who worked for Tashman for three years. "That was his thing," she remembers, then chants the mantra she says she heard numerous times from Tashman's lips: No one's ever been able to get me, and they never will.
Roquet shakes her head with disbelief as she remembers her time at TDC. As part of her duties as a payroll clerk, she frequently met with many of TDC's employees and officers and got a close look at the company's machinations.
Her and other coworkers' descriptions of Tashman befit a self-imposed lord wielding his power over an ill-gained kingdom. Bedecked in his daily attire of custom-made silk shirts and expensive Italian loafers, Tashman relished yanking employees from their duties in order to fetch him cigars or to take his mother to the grocery store. Roquet and other workers recall how Tashman's regular screaming fits filled TDC's offices; many of his employees feared his wrath. Tashman's cross hairs could settle on anyone, from his sales crew to his managers.
"Nothing ever made him happy. He would scream and yell all the time, and he would be angry with whoever, for whatever reason or no reason," recalls Roquet. "Of course, catch your umbrella, because when he starts screaming, he just spits all over everyone," she adds. Roquet refers to herself as a New York Italian who's unaccustomed to taking crap from anybody. But the job paid well, and she learned to avoid Tashman's rampages. "He would do it basically to make a scene. For attention. Like, 'I'm the boss, and I want everyone to know it, and I want everyone to remember it,'" she says.
Maybe Tashman wanted TDC employees to be aware of his rank, but he sure didn't want anyone else to be. Former workers say they were instructed never to mention his name to customers. If Tashman fielded a call, he often used the name Stephen Stone to mask his presence at TDC. "He'd tell you that he wasn't supposed to be there as an owner, because he had the injunctions against him and all the other charges," says Roquet.
She and other employees state that Tashman's legal past was familiar knowledge around the office, as was the high volume of customer complaints about machine locations and inoperable phone cards. The FTC and employee testimonies claim that Tashman controlled virtually all aspects of the company's pressure cooker environment: He hired and fired employees, wrote and revised sales scripts, governed sales meetings, and monitored phone calls and sales figures. Yet stress alone didn't drive Roquet to quit. Her decision to leave crystallized when she saw the crush of dollars that rolled like a river through Tashman's hands.
One of Roquet's responsibilities was counting cash payments sent by customers through overnight delivery services. She says she was then required to take the money downstairs to the First Union branch that operated within the same building as TDC. Under Tashman's instructions Roquet made sure that deposits were bundled in no more than $9000 increments. "Anything $10,000 and over, you'd have to register with the government. So he'd make sure that I'd split it up. I'd make a few trips during the day," she says.
Roquet also brought money back from the bank and delivered customers' payments on a weekly basis to Tashman, who she says divided large wads of cash among himself and other TDC executives. Sometimes Tashman simply took the money and locked it in his credenza. When enough money accumulated, Tashman notified his assistant. "She usually would grab me and say, come on, we have to go downstairs. And we'd go down in the elevator, and she would put the cash in safe-deposit boxes, probably $200,000 to $300,000 at a time," says Roquet. She says she witnessed at least five trips with similar amounts in the last six months that she worked at TDC. The FTC bolsters Roquet's account and claims in court documents that much of TDC's business was conducted by cash transactions, with large amounts of cash placed in safe-deposit boxes.
Although Roquet cut paychecks to Tashman for the meager amount of $500 per week, she also processed paychecks for Mariland Tashman -- Steve Tashman's ex-wife -- for $9000 a week. According to Roquet and other ex-employees, Mariland Tashman was rarely seen at TDC offices and had no role in the company's daily operations. New Times was unable to reach her for comment.
Shortly before Roquet left her job in the summer of 1998, she counted the biggest chunk of change she'd seen since she began working at TDC. Roquet says that at seven o'clock one morning, Tashman strolled in with a briefcase filled with rolls of large bills. Roquet claims she counted every last one. The final sum was $2,000,000.
She had seen enough. Roquet quit her job without having another one lined up and proceeded to contact the FBI.
"I called because of the goings-on, because of the complaints, the people getting ripped off, because of the cash flow that was going through there that wasn't being reported," she says. "Something was very, very wrong."
Roquet says she gave the FBI an earful, and they subsequently asked her if she would wear a wire while speaking with a TDC reference person. Roquet complied. She says that the reference was taped admitting that the machines about which she raved to potential TDC investors were still in her closet. The FBI would not comment on the case.
Roquet says that what bothers her most about her time at TDC is the number of customers misled, ripped off, and ultimately discarded. Roquet personally answered hundreds of desperate calls from investors. She vividly recalls one woman who used her husband's life insurance money to buy dispensing machines. "They told her how much money she'd make and how she'd be fine for the rest of her life. And the machines were still in her garage. They were never placed, and no one would talk to her," she recalls.
"How do you do that to someone? How do you close your eyes at night?" Roquet asks.
Malek Brouri, a former locator for TDC, offers an answer. "They do what they want. They don't care about anybody; they don't have a heart. The only thing they want is money -- who has more money and who has the biggest scam," says Brouri, who worked with Roquet at TDC from 1996 through the spring of 1997.
The "they" to whom Brouri refers are Tashman and his codefendants. During his tenure with the company, Brouri also observed TDC's procedures and says that much of the information provided to customers was misleading. "I did more than my job. [But] whatever they were promising them was too much," recounts Brouri, who confirms customers' accounts of hyped profits. He states that the exclusive territories promised to investors were lies. "They sell to anybody who wants to buy," he remembers.
Because Brouri worked with the company's closers, at times he even heard them harassing references if they were too accurate about their sales numbers. Brouri also witnessed closers cursing and hanging up on indecisive customers as well as loaders dumping their last minute "bargains" on the unsuspecting.
"It became stressful. The more machines they sold, the more customers they'd get," says Brouri and adds that once locations became scarce and customers discovered they weren't making the money they were promised, the office was inundated with phone calls from irate investors.
Brouri became disgusted and left TDC in April 1997.
Then he contacted the FBI. Brouri says the agency didn't respond to him until a full year later. When agents finally arrived, he informed them of what transpired at TDC. Eventually the FTC contacted him at the end of 1998 and asked him to testify against Tashman and TDC. Brouri gladly agreed. "I'm not afraid. I don't have a problem talking; that's my nature," he says.
Apparently Ana Skwierc thought the same. After working at TDC for almost two years, Skwierc and five other employees banded together and paid a visit to the Florida State Attorney's Office shortly after TDC closed its doors in January. "You don't have to be a rocket scientist to see what was going on," says Skwierc, who eventually was pointed by state attorneys to the FBI and the FTC.
Skwierc knew of a plethora of TDC customers who were furious because they didn't have locations and their calls weren't returned by company managers. "I didn't get any calls from people saying they were happy," says Skwierc. She recalls one investor who drove from New Mexico to Hollywood, Florida, to demand his $28,000 investment back from TDC and another customer from Chicago who Skwierc says lost his life savings. As far as Skwierc knows, neither man was reimbursed.
"I felt bad for the distributors; I knew they got so ripped off because of the way they pumped up sales right before they closed," says Skwierc, who sometimes ran sales reports for Tashman when one of his assistants was unavailable. She says she regularly saw TDC's sales income reach $300,000 to $400,000 per day. She and other employees say that, in December of last year, a month before the company ceased its operations, daily sales often hit $500,000, with Tashman scrutinizing every cent.
"[He] was everyone's boss," says Skwierc, who adds that Tashman opened and closed TDC and was present every day, even during hurricanes.
"He knew everything," she says.
The FTC calls Skwierc, Brouri, and Roquet to the stand on the same day, as well as former customer Joiner. Skwierc seems subdued, tired of recounting the same story she's told over and over to state and federal officials. Brouri evokes the Fifth Amendment in response to more than one question. He tells the court he's afraid of incriminating himself, because, Tashman's recently filed a lawsuit against him for allegedly stealing TDC's customers and dollars. When asked about the lawsuit's charges, Brouri shouts his response: "That's a lie!"
Roquet fields questions from the defense with verve. When attorneys quibble over her not remembering the exact type of briefcase that once contained $2 million and was brought to her by Tashman, she pulls herself up, places one hand on each broad knee, and stands her ground. "What exactly are you asking me?" she retorts. The defense lets the point go.
Skwierc and Brouri leave after their testimonies, but Roquet remains, along with Joiner and Blake, to observe the rest of the day's proceedings. The three cluster together in the back of the courtroom during an afternoon recess and swap stories. Roquet sits with her pocketbook in her lap and tells the men how much she paid references per call. Blake laments the $750 worth of defunct phone cards he still owns.
"We got stuck with those too!" says Joiner. He rests his arm around his wife's shoulders, his Medic Alert bracelet dangling from his right wrist. None of them ever met before today; now all three share an unexpected camaraderie founded on their experiences with TDC.
The FTC estimates that Americans dump approximately $40 billion per year into telemarketing scams, and the FBI estimates that approximately 14,000 illegal telephone-sales operations swindle U.S. consumers every day. Cons are worsening in some ways because of a largely unregulated variable: the Internet.
So what kind of retribution can the federal government seek from businessmen like Tashman? According to an FTC attorney, one or a combination of three punishments: injunctive relief, the posting of bonds, or consumer redress.
Injunctive relief should prohibit a defendant from deceiving additional customers or engaging in any future con. Although the FTC possesses a tracking system to monitor compliance in these kinds of judgments, defendants habitually slip through its cracks. Tashman did. In court documents the FTC recounts how Tashman ran TDC even though he was under two separate judgments incurred during his reign at Atlantex and Junction Financial Corporation.
The second type of relief comes in the form of a bond, a heavy bit of bail posted by the defendant who wants to engage in a specific kind of venture. Bonds can cost hundreds of thousands of dollars, depending on a defendant's past pattern of deceptive behaviors and unfair conduct. The FTC claims that many violators view these monies as out-of-pocket expenses, the price of conducting business any way they see fit. And Tashman's pockets might run deep. The FTC estimates that, during its three-year investigation of TDC, the company sold its machines to at least 3000 customers for a total of $32 million. The sum doesn't include investors who were loaded with extra machines, the additional sales of phone cards, or sales figures for TDC's last year of business.
A final form of judgment could be consumer redress, financial restitution to some of TDC's customers. It's unlikely. TDC was sold to Rock Sound Communications in January of this year, three months before Tashman's trial. Two weeks after the sale, Rock Sound filed for bankruptcy, although the previous month of December was prosperous, with sales peaking to half a million dollars per day. The U.S. Bankruptcy Court found the filing suspect. The court's documents claim that, in the 18-day period between TDC's sale and Rock Sound's bankruptcy filing, not a single business activity transpired that indicates any real transfer of assets took place between TDC and Rock Sound. TDC workers even recall Tashman informing them that he'd continue to run the company after the sale.
Court documents allege that Rock Sound purchased all of TDC's assets and none of its liabilities. Bankruptcy court filings claim that the transfer was nothing more than a ruse to defraud creditors and insulate TDC's assets from adverse judgments in its current battle with the FTC.
Based on Tashman's past maneuvers with Atlantex and Junction Financial, the court might be onto something. Both companies filed for bankruptcy shortly after federal agencies commenced litigation. By the time Junction made its way through bankruptcy court, only 2.4 percent of the secured claims filed against the company were paid to 812 claimants for a modest total of $53,212.46. Fleeced! states that Atlantex managed to avoid paying its investors and its $12 million court-ordered fine because regulators were unable to find the company's assets after it filed.
And the beat goes on. Former TDC staffers told New Times that even as Tashman's fate unfolds in federal court, he runs Prepaid Technologies at 6100 Hollywood Blvd. The company sells phone cards and point-of-sale machines that activate the cards with long-distance minutes. On several separate occasions, New Times observed Tashman's black convertible Mercedes parked steps away from Prepaid's offices and even heard employees speaking of him as they broke for lunch. The FTC says that it's aware of Tashman's presence at Prepaid, but the federal agency refused to comment any further because of its pending legal actions against him.
At the present time, the trial's postponed because of scheduling conflicts, and the defense has yet to present its case. Although Tashman and his attorneys refuse to answer questions about the trial, federal court filings show the defense is attempting to negate many of the FTC's allegations. The defendants deny that they enticed customers to buy their business ventures through misrepresentations about earnings potential. They also deny offering exclusive territories and claim they accurately disclosed the legal histories of TDC executives.
The defense does name Tashman as the general manger of TDC, and it does state that "consumer complaints have been satisfied." The defense responds to the FTC's allegations that TDC didn't help customers find locations for their machines as promised by stating that the company offered only a secretarial service charged solely with scheduling appointments for customers, who would then place their machines themselves. The defendants also claim that the permanent injunction sought by the FTC against them was "inappropriate" because the defendants are no longer selling business opportunities and are unlikely "to continue to injure consumers and harm the public interest."
The FTC says that the trial might resume again in June or even later. In the interim Tashman's luck might evaporate. Codefendants Cohen and Mishkin have switched allegiances and agreed to testify on behalf of the FTC. Since both men have worked with Tashman for years, their accounts of Tashman's modus operandi could prove convincing. And damning.
Regardless Tashman's survival instincts remain intact. Nothing escapes his attention. During a TDC investor's testimony, his scrutiny switches from the stand to the back of the courtroom. Someone he's never seen before has ducked in while his back was turned. That someone, a New Timesreporter, now scrawls in her notebook. Tashman stares. Hard. During a recess he loiters by the elevator until she approaches, then he jumps in just as the doors shut.
"Who are you?" he asks. He's not aggressive, but he's determined. During the brief three-floor ride down to the lobby, names and introductions are exchanged. Once the elevator opens, one of Tashman's bevy of attorneys materializes and instructs him not to speak to the press. But at this moment, Tashman can't help but spout a quick bit of self-promotion.
"TDC pioneered telemarketing. Before us there was nothing," he boasts. Keeping vigil nearby, the attorney adds to Tashman's shtick.
"This man's a pioneer!" he booms, and leads Tashman away to the parking lot, where the defense's contingent of dark suits and cell phones churns about. Tashman whips his phone out as well, dials a number, then lights a thin cigar he's popped into his mouth. He strolls about laughing and blowing smoke, seemingly undaunted by the press or the possible outcome of the trial.
Contact Emma Trelles at her e-mail address: firstname.lastname@example.org