Facing the Music
Al Petty in the Overton mobile home that doubled as a recording studio and TeleCom2000 headquarters where millions of dollars in cashier's checks arrived by mail last year. Petty sits at the "Guitorchestra," a complicated musical instrument he once hoped would catch on as a replacement for studio musicians. It didn't.
TYLER--In one corner of a disheveled hotel room off Interstate 20 sits the computer that Al Petty uses as he frantically tries to work himself out of a monumental mess, one that could send him away to prison for 1,200 years for money laundering and fraud.
In another corner is the musical instrument that he says got him there. It's a numbingly complex, Rube Goldbergian contraption comprising a keyboard, 24 strings, 21 pedals, a slew of levers and a chrome emblem that reads, "Guitorchestra."
He played the Guitorchestra on television on the once-popular PTL Club and for local crowds in Tyler. He also recorded religious albums accompanied solely by his Guitorchestra. Petty says he spent a personal fortune and seven years of his life developing the instrument, which flopped, partly because it sounds similar to a much simpler synthesizer, and partly because it's so damned complicated that only Petty knows how to play it. He made just two, sold none.
Petty, who achieved some fame as a steel-guitar player when he was young, will tell you that the Guitorchestra is a brilliant and revolutionary invention that can realistically reproduce the sounds of hundreds of instruments. No, the flaw that doomed the Guitorchestra is not with it or Al Petty. It's with the world.
"It's far ahead of anything else. I mean, nothing is even close to it," he says. "It's too complex."
Broke and resigned to leaving his Guitorchestra tinkering behind, in 1993 Petty turned his mental powers to the world of finance. He launched numerous moneymaking schemes that caught the attention of the Tyler-area Better Business Bureau but usually didn't cause much commotion. After six years of trying different ideas, and still broke, he came up with what he believes is a revolutionary moneymaking plan that's as hard to understand as the Guitorchestra is to play.
Petty, who sees himself as a master of technology, marketing and just about anything he puts his mind to, made himself president of "TeleCom2000," which he described as a telephone marketing network that offered investment opportunities to members. He promised fast investment returns so huge that he immediately struck a nerve with the greedy, the hopeful and the hopelessly naïve, the kind who seem anxious to lose money on a long-shot horse with a catchy name. Word of TeleCom2000 spread fast, and money poured in.
After trying so hard for all those years to mesh with the rest of the world, Petty seemed to have finally found just the right formula.
Unfortunately for him, the world--or rather that small part of it known by the initials FBI--viewed his formula differently. The feds called TeleCom2000 a pyramid scheme, hence the 12 centuries of prison time staring Petty in the face.
Petty was broke and still living in a mobile home parked on a dirt lot in Overton when TeleCom2000 hit the jackpot in 2001. Soon, he had commissioned a $350,000 house to be customized with religious scenes. Plans called for an elaborate call-monitoring center in the house, one that would service thousands of TeleCom2000 investors.
Petty was doling out hundreds of thousands of dollars to investors. His mobile home was filled with, he believed, adoring, mostly single women hired at top dollar to process the cashier's checks that were arriving at his doorstep by the handfuls.
But things weren't what they seemed.
The telephone service that TeleCom2000 claimed to sell was real enough. But the company that sold the phones and offered long-distance services to investors was entirely separate from Petty and TeleCom2000. The company, WorldTeq, took phone service orders from Petty by fax and billed members of TeleCom2000's network itself.
The rest of TeleCom2000, the enticing part that promised a $26,097 return for an initial $5,699 investment in just five months, did not exist except in Petty's mind and on his elaborate payout and profit charts. TeleCom2000 was set up so that a growing base of investors was financing those who came before. The minute the droves of investors stopped, TeleCom2000's Niagara-like cash flow would stop, too.
Petty had created a voracious beast fed from the top down. It was dressed up to look like a telephone network with real phones for sale, but at heart was nothing more than a Ponzi scheme.
Soon, Petty's passionately devoted investors who had prayed with him, the office workers who fawned over him and even his own brother would betray him. He would lose everything, including his luxurious new $132,000 Mercedes with a push-button starter.
Inside Room 317 of the Lindale Hampton Inn, Petty wears jeans and a cowboy-style silver belt buckle, a bad curly toupee, tinted glasses and a garish purple sort of tie-dyed T-shirt covered by a big angel on the front. He appears tired as he works feverishly on a document he wants to give the federal judge who presided over his trial.
With his deep voice, sad, bloodshot eyes and mostly warm manner characterized by seemingly genuine references to God, he says he never, "ever, ever, ever, ever, intended to hurt anyone, nor did I ever hurt anyone. Never. Never."
He would never concede that he is a crook or anything close to it, although federal officials say TeleCom2000 was the most far-reaching and productive moneymaking scheme in the history of the federal courts in the Eastern District of Texas. The government is still searching for between $5 million and $6 million it says is possibly in an offshore bank account.
Petty says he is again broke, distraught over his conviction and convinced he's done nothing wrong. He filed a motion for a mistrial, which was denied, and offered up letters of personal explanations to the judge. Still, Petty is poring over thousands of documents that he says will vindicate him if he can just get someone in the justice system to see that his advanced technique of creating wealth for the average person is perfectly legal. It is quite complex and difficult for most to understand, but, as he's fond of saying, you don't need to understand electricity to turn on a light.
Petty leaves his document-strewn hotel room, as he is allowed to do during the daytime until he is sentenced. He takes the elevator to the lobby and walks to the hotel parking lot where a beat-up red Cadillac with Alberta plates sits. He gets in alone and drives to the Cracker Barrel on the other side of the freeway, where he will undoubtedly charm the waitresses while he orders a bowl of oatmeal.
"I never, ever took a dime of anyone's money to get anything for me. I didn't have to. I had $3 million left over after I paid $7.5 million in January, February and March," he says with the utmost sincerity and despair. "It's a whole new concept. There is nothing to compare with it."
When Al Petty is selling Al Petty, he is a picture of self-confidence. He likes to refer to himself in the third person and by both names, especially in his literature when he's describing one of his ideas that, according to Al Petty, are universally far ahead of their time. Al Petty believes he is far more intelligent than most, a genius when you get right down to it.
It seems like everything the high school dropout and self-described deeply Christian man and manipulator (but strictly in a good way) has done was big, revolutionary and difficult for the average person to understand.
He spent most of his life devoted to music and sometimes to God and, if his fantastic version of events is to be believed, was a child prodigy when it came to music and the steel guitar. According to a 13-page "autobiography" that Petty offered potential TeleCom2000 investors, at age 9 he could quote so much scripture that he "was the winner every time" in Bible drills at his church. Also at 9, he took up the guitar and "began teaching guitarists that had been playing for 10 and 15 years chord patterns and structures of chords that they had not recognized." He "started playing professionally at the age of 12," he says, and quickly developed a music course that was eventually adopted by Nashville musicians.
"Once again, Al was ahead of his time by 20 or 30 years," he wrote.
Later, he moved to San Diego and wrote The History and Science of Tuning, which was "to be some 25 to 30 or 40 years ahead of its time. Over 20 years were to pass before some of the leading musicians in the world recognized the invaluable and unprecedented principles in that book. That information became a classic." A secret one, apparently; no record of the book exists at the Library of Congress or anywhere else. (Petty says it's on tape.)
As Petty was writing his book, while he supposedly played music for film and television, he says he met Leo Fender of Fender guitar fame. Petty claims he would leave an indelible mark on the famous guitar maker. He was 23.
"After producing unparalleled efficiency in production systems in every department in which he worked, at the age of 27, Al Petty was placed in charge of the amplifier division for Fender Instrument Company," Petty wrote.
The company was in big financial trouble, Petty says, and in desperation, Fender "asked Al to figure out a production system to salvage his amplifier division." Petty cleaned up the mess and turned the division around, but at age 30 he moved on and the company suffered because of it, he says.
"After he left Fender, the management was never able to figure his system out," Petty wrote of himself. "It was too complex."
George Fullerton, who founded the company with Leo Fender and ran its business side, was in charge of production until the company was sold in 1965. He remembers Al Petty well and says that while it is true Petty became supervisor of amplifier assembly, Petty is exaggerating "about a hundred times over" his influence.
"I was in charge of all production in the factory; I was vice president of the company. Al had nothing to do with anything except being supervisor over building amplifiers, the assembly of them," he says.
Petty says his music and other career paths blossomed soon after he left Fender. He was on the charts so much that any aspiring commercial musician would be envious, and he "became the highest-paid country entertainer in the nightclubs on the West Coast." He also says he is in the Steel Guitar Hall of Fame, a Texas organization headquartered at a Mesquite music store. Petty is not a member of the recognized Hall of Fame in St. Louis.
"Every recording he made as an artist was in the top five on the West Coast. He had two fan clubs at the time, plus the publishing companies and the record company, as well as the television, the radio show and entertaining," Petty wrote. "Of course, as a 'star' he was always under threat of his life."
In 1986, he was supposedly living the good life. He owned a $650,000 California estate with 14.5 acres of lemon groves. Neither the property nor Petty's claims of fame on the hit charts could be confirmed.
Petty kept the faith in God that he rediscovered in 1980 but decided to give stardom up for a 1978 Winnebago and the dream of the musical instrument he believed would be revolutionary: the Guitorchestra.
"I was determined to develop this thing," he says.
Viewing the archaic-looking device, with its buttons and levers, most people would probably wonder what the point was. After all, by the time he was done "inventing" it, synthesizers had been available in electronics stores--let alone pawnshops--for years. Nevertheless, Petty is unwavering.
"The sounds are totally authentic. With a keyboard you are limited to this half and this half. Here, when I play this I can bend the strings like an orchestra...I developed the sounds, and they are far superior to anything on the market. What you can do with your feet and your hands and all that at the same time you just can't do that with a keyboard," he says over the twangy sound of Petty playing "Amazing Grace" on the instrument on a 10-year-old video.
Petty says he played on the PTL Club regularly and provided videotape that indeed appears to show him on the television show demonstrating the Guitorchestra from his Winnebago. A spokeswoman for Jim Bakker, the head of the now-defunct original Praise the Lord Club, says it is impossible to say how many times Petty may have appeared on PTL because records from the show are gone.
On the tape, Petty's voice is sort of like Willie Nelson's, but like the instrument and Petty himself, the package just misses the mark.
"It's the story of my life. I'm not aware of anyone other than Al Petty using it," he says of his Guitorchestra. "It's that good."
So it bombed, and that's when Petty, the child prodigy musician and superstar, began his ill-fated quest for cash. He doesn't blame the Guitorchestra directly but claims his debt caused his shift from music to finance.
"People think that at 61 years of age, I just crawled out from under a rock and decided to make some money," says Petty, now 69. "Nothing could be further from the truth. I never tried to make money for money's sake in my life until I was 61, and the reason I did it is because of seven years of this thing, and I went hundreds of thousands of dollars in debt."
In just a couple of years of applying himself to the world of finance, Petty had become a familiar figure to the Tyler-area Better Business Bureau. One day in 1995 or so, he pulled up to the bureau in an old lavender Cadillac. He emerged carrying a VCR and television. He was there to make a sales pitch. When Petty dropped by the bureau, it was usually to try to defend or pitch one of his new, pre-TeleCom2000 ideas.
Bureau employees might have guessed what the Bible-quoting genius was doing there. He was constantly selling "revolutionary" ways of making people rich that were just variations of the same old pyramid marketing schemes, says Kay Robinson, who has been with the bureau since 1985 and now serves as its president.
In the same conference room where Petty made his pitch seven years before, Robinson and two other longtime employees sit amid a stack of files generated by Petty's various capers and borrowed by the FBI. They talk and laugh about him almost nostalgically, the way three high school teachers might reminisce about a colorful troublemaker now all grown up.
"We always knew when Al was starting another deal," Robinson says, "because we'd start getting phone calls."
With fresh complaints arriving about Petty's latest endeavor, skeptical bureau employees watched as Petty made his pitch.
"He came here and set up a TV and VCR, and he started selling this deal," Robinson says. "What he did was convince us more instead of less. I mean, it's right there, and you're saying it, and you're doing it, and it's a pyramid scheme."
Into the video player went Petty's "Auto Drivers Research Association," an Austin-based and now apparently defunct "fraternal membership" organization that promised a free car worth up to $140,000 every year and monthly paychecks for "test drivers."
All you had to do to "test drive" a brand-new car of your own for a year was pay $1,200 in annual dues and then get 50 of your friends to agree to do the same. For reporting important data--whether the seats were comfortable, if the horn sounds all right--investors would start receiving checks right away, company literature assured. That kind of operation, often called a pyramid scheme because it requires an ever-growing base of investors to sustain the investors who came first, mostly involves getting friends to buy at a premium what you are promised for free.
Petty was selling his scheme as a new "multilevel" marketing plan unlike anything seen before. Amway, Mary Kay Cosmetics, Tupperware and other companies use multilevel marketing principles that call for business representatives to unload soap, makeup and plastic containers on their friends. The difference is that at the lowest level there are actual products sold at prices comparable to their worth.
The research association, like Petty's other schemes, failed without attracting much attention from authorities, either because it had few investors or because no one who lost money felt inclined to contact authorities. But that wasn't the last time Robinson or the others at the bureau would hear of Petty.
He soon began employing a computerized telephone dialer to make his various sales pitches. The dialer would later be instrumental in the meteoric rise of TeleCom2000.
In about 1996, the Better Business Bureau received a call from a frantic employee at Trinity Mother Frances hospital in Tyler. All of the hospital's phones, including emergency phones, doctors' office phones and those in patients' rooms, were ringing. Nothing could stop them, and they couldn't disconnect from a lengthy Petty commercial.
"They called Southwestern Bell and the police," says Ann Harris, director of standards and practices for the BBB. "They didn't know what to do."
The bureau found that Petty was using his "revolutionary" computer dialer to reach out and touch anybody who would answer. They also had an unlisted telephone number for him at his mobile home in Overton, Harris says.
"I got a hold of him and told him what he was doing, he was locking up all the hospital lines...I said, 'Al, you got that dialer on? Yeah? Turn that damn thing off; you got the whole hospital locked up.'"
Petty, who not infrequently compares himself to Alexander Graham Bell, switched off the automatic caller and apologized.
It would not be long before Petty's unorthodox business sense, combined with elements of the research association and his computerized phone dialer, would crystallize as TeleCom2000. To Robinson, Harris, the FBI and a jury of Petty's peers, TeleCom2000, which was launched in 2000, was clearly another pyramid scheme.
To Petty, it was legitimate and pure genius--but quite complex. When Petty was riding high on TeleCom2000 successes and a tidal wave of cash, he told his brother Dan Petty that he didn't have time for the Better Business Bureau or its complaints anymore.
"I am sitting out here in the middle of the woods. I'm not registered with Dun & Bradstreet, and I don't even care," Petty tells his brother in a December 2001 conversation secretly recorded and used in the FBI investigation. "The Better Business Bureau thinks I'm an idiot from outer space. I will not even take time to answer their complaints. Their complaints are so, so, so elementary."
Petty believed that investing in TeleCom2000 was so confusing that he would not allow anyone to send him money without being fully educated, and he insisted on being the educator. He required all potential investors to listen to a 14-minute taped message that described what TeleCom2000 was about.
The message would invite investors to join in one of Petty's national conference calls. During those recruiting calls, existing TeleCom2000 investors would gush about how much money they had made. Petty would explain the business and answer questions.
Petty is proud that no one was pressured to send money and that no one invested in the dark. He was happy to provide as much information as any investor desired.
On its face, TeleCom2000 was sold as a telephone network that offered its members cheap cell phone service and company profits. Joining the network cost $1,316 for a phone contract. After six months you were promised to receive checks to repay you the $1,316. A fee to the person who referred you to TeleCom2000 was supposedly also paid out of your money, but you were still guaranteed an added $2,463.
Even greater moneymaking opportunities were offered to those who invested more. A $10,000 investment was guaranteed by Petty personally to return about $50,000 in six months.
No investors were required to sell or market TeleCom2000. Petty did it all from the comfort of his mobile home. With the power of "digital technology," Petty felt he could target potential investors specifically identified by existing TeleCom2000 clients and find thousands of others randomly through phone messages and "fax blasting."
Petty reasons that because regular telephone networks must spend so much on acquiring and retaining long-distance telephone customers, they have to pass on expensive marketing and sales costs to customers. Plus, he says, customers are fickle and switch telephone service frequently, which means the telephone companies must spend more money to get them back or find new customers. As part of his pitch, Petty calculated that telephone companies spend about $3,600 for each new or returning customer including all of the marketing, sales and operational costs.
TeleCom2000 had no sales staff, no marketing staff, no big expensive building or other brick-and-mortar infrastructure to buy or maintain. TeleCom2000 could save everybody all the money that traditional telecommunications companies were forced to spend. TeleCom2000 would be saving so much money in expenses that they could "give" long-distance and cellular telephone service to its customer/investors for free. In fact, TeleCom2000 could give the money it saved back to customer/investors.
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.
Before winter of 2001, three of six Angels were working with the FBI. As far as Petty was concerned, things were a little behind but rolling along fine until the end of last March when he decided to move the operation to Canada--for better office support, he says.
On March 30, 2002, the day after the FBI entered the mobile home and shut down TeleCom2000, Petty told one of his Angels that the company had been sold and moved out of the country. The reasons were too "complex to enumerate" he wrote in a letter that promised Angels "gratitude pay" in return for their loyalty and silence.
According to the transcript of the secretly recorded conversation, Petty said that TeleCom2000 will continue to pay, "unless somebody destroys the company. I don't know how they can do that now that it doesn't belong to me, but they might do it. If they do, well, it's not just you, but thousands of people will suffer. That's what I will do anything to prevent. I don't care what I have to do."
The U.S. District Court for the Eastern District in Tyler issued Petty a temporary restraining order on April 2. TeleCom2000 and the fun part of Petty's wild ride were over.
Petty's preliminary hearing last June was a bit of a circus. Dozens of his estimated 3,000 supporters and investors traveled from many parts of the United States to the federal courthouse in Tyler to pray and commiserate with the accused. Some thought it was a trial, not just a preliminary hearing, according to Chuck Anderson, a Tyler resident who has written an unpublished book about Petty and TeleCom2000.
When the FBI froze TeleCom2000's operation, investors had been paid and quite recently. Many of them were angry at the government and could see nothing illegal about TeleCom2000, or at least that's what they said.
Petty's money was frozen, and he needed money to mount a defense. Incredibly, while Petty was fully engaged in criminal proceedings, on the TeleCom2000 Web site appeared a call for a "TeleThon 2000 Action Victory Fund" drive, which aimed to raise money by the same method that got Petty into trouble in the first place.
"How much is it worth to you to get your TeleCom2000 business back?" the site read. "Take advantage of the generous offers of TeleCom2000 business owners! Many of you owners have 'put it in writing' that they will purchase '2 for 1' businesses for you if you can come up with as much as $5,000 to $25,000 to contribute to our TeleThon Action Victory Fund!
"This means that--if and when we win this thing and get TeleCom2000 up and running again for a $5,000 donation to the TeleThon 2000 Action Victory Fund, the Action Committee will purchase a Pro10 for you--if and when TeleCom2000 wins and gets back in business! This earns you $60,000! A contribution of $25,000 will get you a Pro50 when TTN gets up and running! That would earn you $297,000!" (Pro10 and Pro50 refer to investment levels in Petty's scheme.)
The page said Petty needed $700,000 to "knock 'em dead" in the courtroom. The page also said they actually hoped to get jurors to join TeleCom2000 when the trial was over.
"Our goal for all 12 jurors is to sell 'em, sign 'em and put the jurors 'on the road to financial independence America,' and get a unanimous verdict of 12 votes not guilty!"
U.S. attorneys shut the site down. During the eight-day trial that ended October 30, the jurors were convinced that TeleCom2000 was indeed a pyramid scheme. Traci Kenner and Gregg Marchessault, assistant U.S. attorneys who prosecuted the case, said they plainly showed that Petty had taken in about $17 million during the two-year life of TeleCom2000 and that he owed more than $30 million.
"It escalated. Especially during 2002, which happens with these schemes. You'll see an escalation after they kind of limp along for a while," Kenner says. "He paid out around $8 million."
The pair also convinced the jurors that Petty had done enough posturing during the life of TeleCom2000 to make it plain that he knew the investment plan was a scam, Kenner says.
"He moved his operation to Canada," Kenner says. "He offered a gratitude pay plan to his employees, and one of the conditions of that plan was that they not go to the authorities, including the FBI. And on a tape recording that was entered into evidence where he had a discussion with one of his employees, he made the comment that he would continue to program [payments] even if he went to prison."
Dan Petty, Petty's only brother and his only legally recognized business associate, testified that he suspected TeleCom2000 was a pyramid scheme.
Al Petty was convicted of 24 counts of wire fraud, 20 counts of mail fraud, 31 counts of money laundering and 23 counts of engaging in monetary transactions with property derived from an illegal activity.
Based on advice he received from his attorney, Petty did not testify, which he now regrets. He is certain that he could have convinced the jurors of the truth. He also did not accept a plea bargain, which could have resulted in a lighter sentence but would have forced him to plead guilty.
"I can either lie and...spend the rest of my life, my eternal life, in hell for lying, or I can tell the truth and take a chance of going to prison for the rest of my life," he told his brother during a sometimes heated telephone conversation about a month after the trial. (This time, Al recorded the conversation.) "That's a no-brainer. I choose to tell the truth. Don't ever present me with a plea."
During the months leading up to the trial, the number of Petty supporters shrank. Money for his defense dried up. Some investors sued Petty.
The biggest problem Petty has with the government's claims and the outcome of the case, he says, is that the government, not Petty, created the victims of TeleCom2000. Until the government seized the funds, Petty says, every investor had been paid as promised, and they would have continued to be paid. He's right about that; he was paying everybody off. He even has a book of planned payments that were stopped when the government seized funds, he says.
But Petty's own charts speak to the certainty of his eventual undoing. The income he shows on his chart starts at about $16.5 million in March 2002 and is predicted to nearly double each month until the trial, when TeleCom2000 would have taken in $146 million. By Petty's own projections and TeleCom2000's guaranteed returns of between 500 and 1,100 percent, his revenue of $146 million would have required a return to investors of between $730 million and $1.6 billion the subsequent year. Still, Petty does not agree that TeleCom2000 was guaranteed to collapse. He compares it to legalized gambling or Social Security, which is the "father of all Ponzi schemes," Petty says. His witnesses at trial got it right, he claims.
"They pointed their fingers at the FBI," he said to his brother in that taped telephone conversation. "They pointed their fingers at them in court and said, 'Al Petty did everything he ever told me he would do...If he gets started again, I'll be with him again, but you guys took my money and you took my business and I want it back. I'm your victim, not his victim.'"
No matter who Petty believes is to blame, there is no question that TeleCom2000 left some investors in bad shape. By Petty's own account, some TeleCom2000 investors maxed out credit cards, cashed in IRAs, stocks and bonds and blew life savings. It's unclear if the government will be successful in getting anybody's money back.
Other investors, such as Kevin Garris of Pittsburgh, still stick up for Petty. Garris invested about $1,000 and received about $500 before the government shut down TeleCom2000. He says the network was getting its money from new network members and there is nothing wrong with that.
"Different people join under you, and the money comes from long-distance and cell phone expenses. That sort of stuff. It was working. It was working exactly the way he advertised it...A lot of people had no complaints about this," he says. "I can see that Al was set up royally. Somebody had it in for him...It's just nuts that the judge didn't drop the case. He must have been paid off."
Include William Hoohuli of Hawaii among those feeling ripped off by Petty. Hoohuli, a retired cement plant owner, says he spent about six months reviewing Petty's unsolicited faxes before investing about $6,000 in March 2002, the month the government ended Petty's operation. Petty's literature said that TeleCom2000 could afford to pay so much because the company bought millions of minutes of long-distance time. It was a pitch that made sense, and Hoohuli became convinced he could make money.
"If you read the structure, I think even you would jump in," he says. "I was hoping to get paid in April or May, and the check did not come...I'm mad at him because I lost money."
And then there is Anderson, the 58-year-old Tyler resident who wrote the book about Petty. Anderson, who sells annuities, worked himself into heart surgery while smoking up to four packs of cigarettes a day writing his 50,000-word tale of Petty's case. He had no personal involvement in the case but got interested after hearing about it from a friend. Anderson describes Petty as a sociopath who hid behind intentionally obfuscating language and charts.
"Where does all the money come from?" Anderson says. "Nobody understands that. It's Petty doublespeak. It has nothing to do with anything."
Petty seems certain he will get a new trial and vindication, though he could be sentenced any day. After having to sell a guitar for money to pay his hotel bill, he says, he was permitted to move back to his mobile home as he awaits sentencing.
His brother tried to patch things up and went to see Petty at the Hampton Inn before Petty went back home. Petty didn't let his brother come up to his room, but talked to him at length in the lobby. Petty told his brother that he believes his case is historic and that a book or a movie will come out that will show he is a victim of the government. His brother compliments him for his dedication, like when he built the Guitorchestra, and declares him a genius. Al Petty agrees.
"If you judge people by results, I'm a genius, but as far as brains are concerned, I doubt I've got any. You know I've always refused to take an I.Q. test, but I know this: I certainly get results," he says. "I get things done...Sometimes it ain't easy, but I get it done."
"I wish I had my car."
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