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Disconnected

Jim Edwards quickly built a long-distance-dialing empire. But he couldn't keep the distress calls on hold. Then the line went dead.

The truth outed the following week, when the revenue figures went flat. Reports from the front indicated that the program was in a state of chaos: Sales reps, who were paid commission on the raw number of authorization forms submitted, were turning in large volumes of bogus orders that couldn't be processed. Working the streets of New York and other inner-city neighborhoods, reps would hawk the cards on corners like crack dealers. "You'd be shocked how much business we got that way," says Northeast sales manager Michael Lydon.

It might have helped if the business had been legitimate. Some of the forms were filled out by people who offered phony names and numbers, then used up the ten-minute cards at the nearest phone booth. Others were simply forged en masse by the rep and turned in. The orders came back to Houston, where workers dutifully switched whatever number appeared on the form to BCI. As a result, thousands of customers were slammed in short order.

Nor was that the only slamming going on at 600 Jefferson: As BCI grew progressively more desperate for cash, attention to quality control had lapsed. People who had never crossed paths with the company abruptly found themselves connected, and they didn't like the steep rates reflected on their bills.

The situation deteriorated into an absurdist play. BCI slammed Dallas Morning News columnist Jennifer Nagorka, who wrote a scathing column about the incident. When she asked to see the order form authorizing the switch, a customer service representative sent her a copy. "It's a remarkable slip of paper," Nagorka wrote. "The letter has someone else's name, someone else's address, someone else's signature and my home phone number."

BCI even slammed the White House.
Evidence suggests that not all the slams were accidental. BCI had developed a software program that transmitted the names of people recruited through in-house telemarketing to the long-distance wholesaler. But according to several sources, the program had another function: to "repick" customers who had been with BCI but had left the fold. "I had a real problem with the repicks," says an administrative worker who sometimes handled complaints from the irate recustomers and relayed her concerns to her boss. "Among upper management, all of them knew about it."

If the customer expressed sufficient bile, he was placed in a "never pick again" list. "The White House went there," the source says. The description of the repick function was verified by two former BCI computer programmers.

"That's bullshit," says Edwards. "I can't believe somebody in [the computer group] couldn't understand what we were doing with that."

Former network administrator Billy Stewart thinks he understands well. After he was fired from BCI last April, Stewart changed his long-distance service to another carrier. Then he opened his phone bill one month and discovered he was again a valued BCI customer. "[The program] slammed me back," says Stewart, who knew of its capabilities. When he demanded an explanation, the response brought back memories. "What was showing on their screen was that I had talked to a telemarketer, but in fact I hadn't," he says. "I hadn't talked to anybody."

If Edwards felt the walls closing in, he showed no signs. Though he'd had to defer some salaries and had stopped reimbursing sales managers for expenses incurred in the field, and though payments to creditors had dwindled to a trickle, he told all who came knocking that the money would be forthcoming in a matter of weeks. "Jim is a master at making you believe in the direction he's going," says Don Boswell, whose ad agency is still looking for "around $100,000" BCI owes. "Jim's the original optimist."

He was so optimistic that in October he verbally committed $25,000 to the Houston READ Commission, so optimistic that he refused to cancel plans for BCI's big comeback Christmas gala, a 500-plate filet mignon dinner at the Houston Club. "Jim believed the company was gonna rise from the ashes," says one of the party planners.

On October 29 the Federal Communications Commission proposed to fine BCI $1.12 million for forging customer signatures on authorization forms and for other slams, citing "a disturbing pattern of willful disregard" for the law. On an October 31 financial statement, BCI listed debts of more than $20 million.

Ten days later Edwards met with controller Mel Cooper and two accountants and worked out a plan. If the company laid off about a third of the sales staff, the revenues from existing customers might well yield a positive cash flow by the end of the year. "Even though the [sales] programs weren't producing, we felt we were coming back," Edwards says. "We felt we were gonna have an outstanding '99."

Just minutes after they finalized the plan, they got word that Southwestern Bell and another local carrier had cut off their billing. The companies charged BCI with "cramming" (adding unwanted services to customer bills). In particular, they disapproved of BCI's $5.25 service charge for customers who had made no long-distance calls.

No revenue, no hope.
At that point, Edwards says, RFC Capital invoked a clause in their agreement, took control of BCI's cash flow and decided to foreclose on its only worthwhile asset, the customer base. "They could see what was happening and said, 'Look, guys, it looks like this thing is heading south here,' " he says.

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