By Rocks Off
By Chris Lane
By Angelica Leicht
By Corey Deiterman
By Angelica Leicht
By Corey Deiterman
By Corey Deiterman
They called it the Fire Sale. For weeks, the members of the skeleton crew that survived the mass layoff in November had been trudging to work, sitting at their desks, doing nothing except hoping that maybe a miracle would occur and the company might somehow rise from the dead. Finally, in an act of compassion on January 15, the human resources director issued a memo firing herself and everyone else.
Initially, employees signed forms -- they could take home an office computer or two, or three, which would be credited at $150 or $200 a pop against the weeks of back pay they would never see.
But the orderly transfer quickly devolved into a looting spree worthy of a war-torn third-world nation. Several employees and an investor helped themselves to servers and other high-priced computer equipment. Others ran off with antiques, artwork, rugs, furniture. Empty pickup trucks pulled up to the curb at 600 Jefferson and left a few minutes later, loaded. One enterprising worker removed a 300-gallon tropical fish tank from a wall; another scored an Indy-car replica go-cart the company had custom-built for a promotion. In the mad rush, trash cans were overturned and reams of paper scattered across the carpet.
In just a few days, the once-plush headquarters of Brittan Communications International were reduced to rubble. "It looked like a little tornado had gone through there," says former systems manager Toby Hynes. "Everything was ravaged."
BCI's ignoble end came as a shock to many who had intersected with the long-distance telephone company since its founding late in 1994: charities that received more than $1 million in donations from the company; vendors left holding more than $4 million in unpaid bills; regulators who were preparing to lower the boom on BCI for illegal business practices; and employees who felt their company was more like a family than a place to work. "It was really one of the most beautiful experiences of my life," says former public-affairs director Steve Long, who was laid off in September.
Not that the signs of impending disaster hadn't been flashing for months prior to the final collapse: bounced payroll checks, canceled credit cards, state and federal sanctions, periodic layoffs. But the company always seemed to rebound from the brink, and as late as December, before he holed himself up in his executive suite, CEO Jim Edwards maintained that renewed prosperity lurked just around the corner. "We were all told that the sinking ship would be righted," says John Walsh, a sales manager who ended up with three computers and a $17,000 hole in his pocket for expenses and back wages.
When the ship went down, it left more than $20 million in debts and a host of people searching for answers. The big question: Given that the company claimed more than $140 million in revenues over four years, what happened to all the money?
Edwards says BCI was victimized by misfortunes that couldn't have been predicted. Regulators unfairly charged the company with slamming customers (switching their long-distance carrier without permission), he says, and the penalties sent the company into a downward financial spiral from which there was no escape. "It created a debt we never intended to have," Edwards says. "It put us in a severe cash-flow bind from there on out."
Not everyone sees it that way. Former employees and shareholders describe a company with almost no fiscal controls, frittering away millions on private jets, inflated salaries and huge executive bonuses, failed side ventures, luxury office furniture and other excesses.
Even when the company was essentially insolvent, the spending continued. "In the beginning, it was champagne on a champagne budget," says Susie Taylor, one of the first people to hire on with BCI. "At the end, it was champagne on a beer budget."
The loosest wallet of all belonged to Edwards, whose hunger for the trappings of success seemed insatiable long after success turned to failure. Today, his company in ruins and his own financial footing extremely shaky, he's still driving the $140,000 Mercedes 600S originally leased by BCI. "Jim Edwards is a man of great appetites," says Steve Long. "He's the biggest spendthrift I've ever met in my life."
Huddling in a corner of Little Pappas restaurant on Shepherd in the fall of 1994, Jim Edwards cooked up his plan. The concept was simple: Buy bulk time from long-distance carriers and resell it to the public. BCI would just need to convince customers to switch their service from another company and then hold onto them, no mean feat in the cutthroat long-distance telephone world.
Edwards had the experience to know the idea had big profit potential. A native Houstonian who has never strayed far from home (he had an unremarkable college career at the University of Houston), Edwards dabbled in real estate and commodities trading before finding his niche in telecommunications. Beginning in September 1993, he worked an eight-month stint for another long-distance reseller, Heartline Communications, during which he says the company grew fourfold. After that he joined with three others and formed Telecommunications Company of the Americas (TELCAM) in Galveston.
The company was doing well after its first six months in business, he says, but his partners expelled him over "differences about taking money out [of the company], which I was opposed to."