The Grand Slammer

Crooks abound in the world of long distance. But it takes a really good crook to steal from the other crooks.

By the late '90s, Accutel was hardly the only outlaw company allegedly pillaging millions in the wild west of deregulated long distance, according to William Von Hefner, editor of TheDigest.com, a telecommunications industry news website. "Companies like Accutel are all over the place," Von Hefner explains. "Most of them you've never heard of. Long distance is a perfect place for fraud to occur. Companies can charge for services that don't really exist, steal something without the person ever noticing it. It's almost a perfect crime."

Among the better-known crammers and slammers was a California outfit called Cherry Communications. In 1994, the Federal Communications Commission launched a probe of the company after receiving numerous complaints about slamming. Cherry signed a federal consent decree in April of that year that, while not requiring the company to admit guilt, forced Cherry to pay a $500,000 fine. That was chump change compared to the purported profits. Since the company was private, exact revenue and profit figures were unavailable. However, one indicator of Cherry's financial wherewithal is the debt it owed WorldCom: $165 million. Most long-distance resellers charged customers ten cents per minute for carrier time they bought at five cents, meaning that Cherry could have sold the WorldCom time for $330 million. After California revoked Cherry's license following continued complaints of slamming, the company filed for Chapter 11 bankruptcy in October 1997.

In an example of how slammers and crammers played secondary roles in recent Wall Street scandals, the $165 million Cherry arrear to WorldCom was among the telecom giant's bad debts. WorldCom CFO Scott Sullivan allegedly hid these debts to cook the books when WorldCom was vying to take over MCI, according to a lawsuit filed in California by high-tech entrepreneur Roger Abbott.

Colby Katz
Donna Kim, former president of Accutel Communications, has become the federal government's key witness in a case against her previous employer, Arne Soreide.
Colby Katz
Donna Kim, former president of Accutel Communications, has become the federal government's key witness in a case against her previous employer, Arne Soreide.

By 1998, slamming became a significant consumer issue. According to Senate testimony by Susan Grant, vice president of public policy for the National Consumer League, in February of that year, it was the league's fifth most frequently reported problem. The number of complaints was increasing steadily. "In the first six months of 1997, we received 221 reports," she explained. "By the end of December, the total was 810."

Yet many long-distance resellers weren't satisfied with profits from slamming and cramming. Some stiffed the carrier that provided service. That's what Accutel allegedly did. According to the indictment, the company cheated four major carriers, including WorldCom, out of about $4.5 million total between April 1997 and September 1999.

Small long-distance companies like Accutel often cut corners, explains Von Hefner. "They're run by people who are either convicted felons or lawyers," he says. "They have criminal minds. Are criminals smart? Yeah. The average person who's involved in schemes like these has to be smart to keep up. But you can't equate intelligence with ethics."


Telecom titans such as WorldCom weren't Arne Soreide's only victims. He was apparently good at avoiding bill collectors. Soreide would shell out cash when necessary, Donna Kim alleges, but he'd first try to find a way out of paying. When Cable & Wireless threatened to cut off Accutel's service for lack of payment, for instance, Soreide simply jumped to WorldCom, according to the federal indictment. When WorldCom threatened, Soreide moved over to Sprint. It was a game in which Soreide was champion.

Soreide played that game with Accutel's offices at 1060 S. Federal Hwy. in Delray Beach. Until October 1998, he rented the space for Accutel for $5,775 per month under a three-year lease that had started in April 1997.

On a Friday afternoon in October 1998, building owner Dennis Udwin attended a meeting at the office building and noticed a moving truck in the parking lot, according to his deposition in a pending lawsuit over the matter. Udwin was shocked. "They hadn't notified us or anything," he explained.

Then the landlord walked into Accutel's office and met with Soreide. "What are you doing?" he said he asked. "What's going on here?"

"I have another company moving in here," Udwin recalled Soreide telling him. "I'm moving somewhere else."

But Udwin suspected trouble. "I sincerely hope that you plan on honoring your lease," he told Soreide.

Yet Soreide apparently had no such plans. He was moving the company to his own place. Soreide had created three separate corporations -- 100 Sample Realty, 150 Sample Realty, and Oconto Real Estate Holdings -- that he was using to divert Accutel money to and then buy property in Broward and Palm Beach counties, according to the federal indictment. One of those properties was an office building at 100 E. Sample Rd. in Pompano Beach, the next and final home of the Norwegian's telecom headquarters.

From October 1998 to August 1999, according to the indictment, Soreide routed significant amounts of money out of Accutel and into his real estate companies. He also cut checks to his wife for thousands of dollars. During this period, the Soreides purchased a $2.5 million home in Boca Raton's exclusive Royal Palm Yacht & Country Club, allegedly using Accutel assets.

Donna Kim helped with the books at the time, and she remembers one incident that illustrated Soreide's extravagance. "What do I do with this thing called DCOTA?" she asked Soreide, referring to a $14,000 receipt from the Design Center of the Americas in Dania Beach. "What did you buy from them?"

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treatment9
treatment9

SS # 538-61-4580 is of guy article is about

 
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