Reverend Al Petty ( Allen Petty Jr. ) and the TeleCom2000 Network Ponzi Scam
Jesus Tells Me, Yes I Know
Operating from a small travel-trailer on 20 acres of land in a rural setting west of Dallas, the self-proclaimed "Reverend" Al Petty (aka Allen Petty Jr.), with a bank of eight or nine computers, has saturated the internet with his TeleCom2000 Network promisingunbelievable annual returns of 500% to 1300%,
According to Kay Robinson, Executive Director of the Better Business Bureau of Central East Texas (Tyler, TX), Petty has a history of involvement in raising "easy money" through various "MLM" (multi-level marketing) and pyramid or "Ponzi" schemes.
According to court records, Petty produced a video tape in January 2002 entitled "Teaching the Teachers", in which he begins by giving a Christian devotional and explaining that "Jesus has opened his eyes to the TeleCom2000 Network concepts as a way of expressing love for his fellow man by providing a path to financial independence"!
Two of his "ministry" bank accounts have also taken on a religious aura with the names – "Christian Disciples International" and "Face to Face Ministries"
Records also indicate that in addition to owning a Rolls Royce, $132,000.00 of followers’ monies was used in March 2002 to purchase a Mercedes Benz.
Using either the TeleCom2000.biz. website or his toll-free recorded message at 1-877-689-4711 you can hear, with a sponsors invitation, a 15 minute oration of the riches which await you. There are two fairly widespread sponsors’ names you can use – either "Ken Romanoff" or "Paul Box".
According to Charles D. "Chuck" Anderson of The Annuity Group in Tyler, TX you might want to save yourself all this trouble by accessing "txed.uscourts.gov" and click on to "Frequently Requested Cases", then referencing "6:02cv148 Certain Assets of Allen Petty Jr. aka Al Petty in re".
In Doc. 14 from 5th District U.S. Court by United States District Judge T. John Ward on April 17, 2002, Judge Ward opines that "Petty then goes on to describe his investment scheme with the aid of genealogy tables wherein the relationships between investors can be described in degrees of consanguinity."
Further, the Judge states that "Petty bluntly states that the telephone services that accompany the program are simply because the government wants to see a product involved with any (multilevel) business. Thus, Petty explains, the phone services are incorporated into the program to keep from "raising any red flags."
The Judge continues, "Furthermore, in the video introduced by the Government, Petty himself dispels any belief that TeleCom2000 is a telecommunications/marketing business as he now argues before the Court.
"In his own words, Petty describes Telecom2000 not as a legitimate business, but as a classic Ponzi scheme!"
07/16/02 - Allen Petty Jr., 68, also known as Al Petty, was indicted on 78 counts of wire fraud, mail fraud, and money laundering. According to the U.S. Attorney for the Eastern District of Texas, Petty is accused of operating Tlelcom2000 Network marketing "businesses" throughout the world by guaranteeing substantial returns on investments but the income generated was not sufficient to pay guaranteed returns and that investors funds were disbursed for personal use. Petty's assets and those of Telecom2000 Network have been frozen by two preliminary court injunctions issued earlier.
08/15/02 A superceding indictment of 28 additional counts was filed against the "Reverend" Al Petty (Telecom2000 Network) on August 7, 2002 (bringing the total count of mail fraud, wire fraud, money laundering, etc. to 102)!!
Presently, his trial is scheduled for September 24, 2002 in 5th District Court in Tyler, TX He and his so-called Telecom 2000 Business Owners Action Committee (BOAC) have devised another incredible "opportunity"!
As of last week, they have been promising the "PettyPhiles" 2 for 1 "businesses" in an effort to raise $700,000 for Petty's attorney, Texas criminal attorney Richard Haynes.
Here's how it works. Prior to the "evil" FBI shutting him down with TRO's and injunctions in early April, Petty was selling "businesses" in, roughly, $1,000 increments - i.e., $1,000 would purchase one "business" (or "PRO 1"), $5,000 would purchase 5 "businesses" (or "PRO 5"), and roughly $50,000 would purchase a "PRO 50" or 50 "businesses"!
PRO 50 was supposedly as much as Petty would allow owners to participate with because "he didn't want them to extend themselves financially"!!
And now, facing several hundred years of prison and millions of dollars in restitution, his BOACnow offer "PRO's" at 2 for 1!! Pre-TRO's, injunctions, and indictment, Petty and Telecom2000 were offering 500% to 1300% returns!!
Now, through his BOAC a "donation" to the legal fund of $5,000, for example will purchase ten "businesses" - or a "PRO 10"!! A $25,000 donation will purchase 50 "businesses", or a PRO 50!!
And, they say, WHEN Al Petty is exonerated and Telecom2000 is up and running again, the holders of each "business" will receive a 12 to 1 return. SEE WEBSITE telecom2000action.com and check out ALL icons at bottom of first page for some "fascinating reading"!
What is mind-boggling is that after only a few days, they claim to have raised $247,000 from folks who have already been scammed and appear confident they will raise the full $700,000 by August 18!!!!
See also Telecom2000owners Yahoo group for discussions on this venture.
10/30/02 - Eight days of federal court proceedings ended when a jury convicted Al Petty Jr. on 98 counts of fraud and money-laundering.
The jury deliberated about three hours before reading its verdict as the 69-year-old Petty bowed his head slightly in a courtroom packed with loyal TeleCom 2000 Network investors, most of whom still insist Petty's business was legitimate.
The jury also forfeited Petty's interest in more than $5.4 million of investor funds held in various TeleCom 2000 accounts and money orders, and thousands more in property, including a Mercedes Benz purchased by Petty using TeleCom 2000 funds.
Petty could be sentenced up to life in prison and a $250,000 fine. U.S. District Judge John Hannah did not set a sentencing date.
In the final day of testimony, expert witness for both sides clashed over whether Petty operated a "Ponzi scheme," promising investors returns of up to 1,300 percent but paying them only with the funds of later investors.
Government prosecutors argued the scheme was destined to fail, leaving its investors with nothing after many cashed in life savings, "maxed-out" credit cards and took out loans for tens of thousands of dollars to purchase "businesses" in TeleCom 2000.
"Many are senior citizens, who are especially vulnerable and can ill afford to suffer such losses," said Matthew D. Orwig, U.S. attorney for the Eastern District of Texas.
In closing arguments, Assistant U.S. Attorney Traci Kenner told the jury TeleCom 2000 paid out more than $16 million while earning slightly more than $200,000 from the sale of telephone services.
"There is no way Mr. Petty could have paid those investors, other than using the funds from other investors," Kenner said.
Expert defense witness and financial consultant Eugene Lehrer testified on behalf of Petty. Defense attorney John R. Smith said Lehrer's testimony would rebut that of the prosecution's expert witness, University of Texas business professor William Cunningham, who testified Friday.
Lehrer, who holds a doctorate in urban economics and an MBA in banking, said the prosecution's definition of a Ponzi scheme, which originated in the 1920s, does not take into account advances in technology available to new businesses.
"In 1980, the (personal computer) changed the way of doing business," Lehrer said. "You don't do business the same anymore, it's just different."
Lehrer insisted Petty's method of financing his company from the money of new investors is more like "refinancing" than the Ponzi scheme the prosecution alleged.
"Refinancing is a way to sell new debt to pay off old debt," he said. "It's an accepted business practice. When companies start out, they don't always hit a home run."
However, on cross-examination, Lehrer could not point to anything entered into evidence that stated investors knew they were helping to refinance Petty's company.
Lehrer also took issue with Cunningham's projections on the amount of income needed to provide the guaranteed returns of 500 to 1,300 percent to future investors. Cunningham testified Friday that to sustain the level of return Petty guaranteed, TeleCom 2000 would have to make four times the amount of money that Exxon is estimated to bring in annually.
Lehrer said that number assumed Petty would keep the same guaranteed rate of return over time. He estimated the rate of return would eventually drop to 70 percent.
But during cross-examination, Lehrer conceded he had heard nothing in court that would indicate Petty planned to drop the rate of return.
When asked about future products, Lehrer insisted testimony from a Petty computer technician indicated there would be new products added to TeleCom 2000 Network.
The prosecution pushed to find out what specifically Petty might plan to sell.
"He just mentioned the cutting edge," Lehrer said of the technician. "He didn't give it a name."
Prosecutors said Petty sold phone services only to avoid raising "red flags" with the government.
Tape recordings played in the trial revealed Petty talking about protecting his funds from the government, researching offshore accounts and setting up multiple bank accounts in Tyler under the names of ministries.
As the government froze Petty's accounts in April, he was attempting to move the business to Canada, hastily shipping multiple pallets of computer equipment overnight on Easter weekend, witnesses testified.
In closing arguments, Smith characterized the government's investigation as an abuse of power and said it could not prove Petty intended to defraud his clients, none of whom complained about TeleCom 2000 before the investigation began.
"The government says it wants the money, the land, the vehicles to return to the victims - the victims who did not exist until the government became involved and who will not exist tomorrow if Mr. Petty is found not guilty," Smith argued.
Hannah refused the government's motion to detain Petty until sentencing, instead, ordering him to report daily to a probation officer who will also monitor Petty's whereabouts electronically.
The guilty verdict came as a blow to Petty supporters who traveled from as far as Washington state and who bowed their heads as Petty led them in prayer while the jury began deliberations.
"Give me the strength, the courage and the discipline to do my part," Petty said. "I have no guilt feelings for anyone here - we have done our part."
During the prayer, Petty repeated his belief that the TeleCom 2000 Network was based on "divine laws."
"We all believe that," Petty said. "Give us the patience to not think, 'Lord, you have forsaken us.'"
Tyler Morning Telegraph
04/03 Con man Al Petty Jr. received a 292-month federal prison sentence for bilking millions from investors in a telecommunications Ponzi scheme. The punishment of more than 24 years means Petty, 69, will spend most, if not all, the rest of his life incarcerated.
After eight days of testimony in October, a jury convicted him on 98 counts of fraud for running Telecom 2000, a sham business that collected more than $16 million in investments. It determined Petty used late investor funds to pay earlier investors.
Petty's somber mood exiting the courtroom was a stark contrast to
his temperament earlier in the day.
Addressing some 23 objections to the pre-sentence report, Petty gave the packed courtroom a peek into the hustler's trickery becoming at one point angry with government officials for "sabotaging" his business.
Petty used a spreadsheet and the creative accounting for which he is known to explain why his sentence should be reduced by 12 years.
According to the existing pre-sentencing formula, if a "guideline loss" amount exceeds $7 million, 20 years can be added to his sentence. The government estimated losses around $8.3 million, but Petty contends that number should be just over $4 million.
Quickly spouting off numbers, he claimed investors were paid money promised them through October 2001. Only those involved from November 2001 through March 2002 lost money, he claimed. The average initial investment from November should be the number used in the pre-sentencing formula, he said.
Before imposing a sentence, Hannah allowed longtime friends of Petty to testify on his behalf. Many of them described him as a genius or Godly man.
U.S. Attorney for the Eastern District of Texas Matthew Orwig said thousands of investors lost about $8.3 million, but a receiver appointed to disperse victims' funds has only received 625 claims.
Victims will only receive nickels on the dollar in reimbursement for their investment but are encouraged to contact receiver Rob Evans and Associates at (818) 768-8802 or email@example.com.