Facing the Music

Petty's convictions and his convoluted explanations combined with catchy terms like "Titanium" and "Platinum" level investing had a legitimate ring to mom-and-pop investors. No overhead costs and a loyal customer and investment base would have to be profitable, wouldn't it? In truth, Petty's logic is, for lack of a better description, baloney. While it's true that AT&T and Verizon have marketing and sales staffs and offices to pay for, they also have actual telephone lines and a real telephone network. TeleCom2000 didn't.

TeleCom2000 had only Al Petty, Al Petty's literature and Al Petty's recorded messages and conference calls and WorldTeq's fax number for Petty to place orders for phone service. WorldTeq paid TeleCom2000 about $50 for each referral, or about $233,000 for the life of the $16.5 million TeleCom2000 operation.

If you ask Petty where the money was coming from--and he was asked over and over--he will always say in a most sincere way that the money for TeleCom2000 came from the power of the network of people and from the savings.

It is impossible to get him to agree that savings themselves don't generate money. That is the exact quantum leap in logic that is sending Petty to prison. You don't earn $500,000 in cash for not building a $500,000 house. If you give TeleCom2000 $1,300 and TeleCom2000 gives you $3,600 back, that extra money has to come from somewhere. In Petty's case, the only real cash came from investors.

In December 2001, TeleCom2000 was taking in millions, and despite his insistence that everything was legal, Petty was nervous about the government, according to a transcript of the secretly recorded conversation at his mobile home. He told one of his Angels--his word for his office help--and his brother that the government wants to keep people in a "mold" and would try to stop him if anyone gets too far ahead.

"When you start creating millionaires out of people that were former highway patrol cops, you know, they don't like it," Petty said.

Nearly a year earlier, in January 2001, TeleCom2000 had staged a gathering of investors at the Holiday Inn in Tyler. Petty was the star of the Christian event and performed some of his music. Dressed in a brown sport jacket and turtleneck and wearing his tinted glasses like a 1970s disco king, Petty walked and talked in front of the mostly older group of about 75 investors gathered in a ballroom.

Petty told the group that he lives by "agape," which is "love that seeks to help the other person attain the highest good...It's very, very important because that has to do with what this plan is all about."

Several investors, including a former Tyler car dealer, touted the merits of TeleCom2000. The car dealer, who claimed to have made more than $250,000 from TeleCom2000, cautioned the crowd not to "pester" the busy Petty with too many questions. He told the group just to worry about cashing the many TeleCom2000 checks that would be arriving.

For someone sitting on top of the world, Petty at times looked a bit uneasy in the video, as if he'd started a brush fire and was trying to stamp it out with his feet. He cautioned the audience that certain people, particularly government types, would not understand what TeleCom2000 was about. He said it angered him that anyone would try to characterize his complicated principles or his company as a "pyramid scheme."

"Can you imagine some of the yokels, these attorneys and attorneys general trying to understand?" Petty said.

Petty was paying off investors as promised, however. Between January and March 2001, Petty paid TeleCom2000 investors $7.5 million. Petty set up a computerized system to generate checks that automatically would be sent to investors according to intricate schedules he provided.

Petty was also paying himself, and when you talk to Petty, he firmly believes, or says he does, that TeleCom2000 was making real profits that translated to legitimate compensation. He commissioned construction on his new house and ordered more than $100,000 worth of goods for it. He bought the Mercedes for himself and a new sport utility vehicle for one of his Angels. He also bought the Angels a horse so they could take a break once in a while, Petty says.

At TeleCom2000 headquarters, a.k.a. Petty's mobile home, the pace was hectic as the checks came in a deluge and a growing number of investors had to be paid.

The Angels, who were earning as much as $4,000 a week--and who sometimes were asked to give Petty back rubs and see him in leopard-pattern bikini briefs--could not keep up. Twice Petty had to contract for temporary office help.

Petty didn't know it, but a flip comment he made at a Tyler bank about opening a religious account to keep the money away from the government had sparked a suspicious activity report. An FBI investigation followed.