News Flash - Telemarketers are

News Flash - Telemarketers are Sleazy! - The St. Paul Pioneer Press is hot on the trail of corruption in the GOP-led administration. Again.

The story begins: "Some of Minnesota's top Republicans, including Gov. Tim Pawlenty and Auditor Patricia Awada, have had business ties to a Minneapolis-based telephone company accused of cheating consumers in seven states."

The story itself notes the connection between the Republican leadership and New Access Communications. New Access was charged by regulators in three states with the process of "slamming" - inducing people via telemarketing to switch phone companies for ostensibly lower rates, but hiding higher rates and fees in the bills - and ended up paying over $200,000 in consumer protection settlements in three states.

The story lists a number of complaints against New Access (owned by NewTel, which was founded by GOP figure Elam Baer, and on whose board Pawlenty sat).

One immediate question: Do board members, concerned with the hiring and firing of executives, have anything to do with the day-to-day operation of a sleazy telemarketing operation? Eventually, sure - if the fines and settlements cross the threshold of "inevitable costs of doing business in a regulated market" to the point where the executives (approved by the board) are having trouble at the bottom line. We don't know the specifics - and either does the Pioneer Press' article, beyond a number of quotes from academic experts from several business schools.

The story notes:

Last year, New Access Communications paid $222,000 to settle charges it violated consumer protection laws in three of those states — Washington, Oregon and Indiana — by overcharging some customers and tricking others into changing their telephone services.

Each case involved complaints filed while Pawlenty was one of three directors and an investor in New Access' parent company, NewTel Holdings. Directors are legally responsible for overseeing the management of a company and its subsidiaries, experts say.

And there's another question: the complaints were filed when Pawlenty was a director - but the story mentions neither when Pawlenty was a director, nor if he was director when the cases were settled, or any of the actions Pawlenty took (or didn't take) that bore on the settlements.

Here's the interesting part:

New Access is also the subject of an ongoing investigation by the Minnesota attorney general's office, according to company officials, who said it agreed last year to stop telemarketing here until the case is resolved. A spokeswoman for the agency said she could not discuss any investigations that may be under way.

To me, as in the American Bankers story, the real story is in the story itself.

Just as the heat from the American Bankers story, the "Pawlenty Will Release Sex Offenders" story (which eventually tanked), and the Gang Strike Force stories - all of which seemed to some observers to have been stage-managed by Attorney General Mike Hatch - died down, along comes another story with ties to the Attorney General's office. It comes to us via the same team that broke the American Bankers story, working for the same newspaper that dropped the story as soon as it swerved back to point to Mike Hatch.

More as the story develops.

Posted by Mitch at July 14, 2003 08:35 AM