Skip navigation
× You have 2 more free articles available this month. Subscribe today.

Alabama Officials Guilty in Phone Scam

A former Alabama state auditor, County commissioner and another man pleaded guilty in July 1999 to federal charges stemming from a prison pay phone scam operated in Alabama and Louisiana by Global Tel*Link, a Mobile-based company. Former state auditor Terry Ellis pleaded guilty to tax evasion. Former Mobile County Commissioner Dan Wiley and salesman Donald G. Bahouth pleaded guilty to tax evasion and money laundering.

In exchange for the pleas, the government dropped conspiracy and mail fraud charges, according to The Associated Press. In addition, the three agreed to testify against the two remaining defendants named in the indictment. They are political consultant and lobbyist Willie F. "Buddy" Hamner and businessman William T.J. "Billy" Boyett.

The federal indictment accuses the five men of defrauding the federal government, the state of Alabama, Mobile county

taxpayers and families of jail detainees and prisoners over a four-year period.

Global Tel*Link, previously known as Global Telcoin and United Telcoin, bilked customers who accepted automated collect calls from prisoners by padding minutes and adding hidden charges. Then in order to lower the size of the commissions paid by the company to state and local governments, fake phone sales figures were used in accounting reports.

Ellis, who was the Alabama State Auditor from 1990 to January 1995, owned the company, then known as National Telcoin, with Hamner in 1989. The company supplied pay phone service to Alabama prisons. Bahouth was a Global salesman, and Wiley maintained the billing.

Ellis told the court that he attempted to conceal his interest in the company after he was elected state auditor by making it appear that Hamner was the sole owner. And later, when Hamner developed a conflict of interest while lobbying for the Public Service Commission, Boyett became their cover. Global sold the Alabama state prison contracts in 1993 to People's Telephone Co. in Miami. Ellis told the court that he and Hamner negotiated the sale and received over 80 percent of the sales price, and Boyett, the figurehead owner, received less than 20 percent.

The indictment states that the Global added extra time to the bill for each collect call originating from prisons and jails, usually one or two minutes, and also added an extra charge of about 25 cents to each call. The estimated amount bilked from prisoners' friends and families is not known.

According to the indictment, the state of Alabama was cheated out of more than $700,000 in lost commissions because Wiley, Hamner and Ellis submitted fake accounting reports (that, ahem, somehow escaped detection by Ellis' State Auditor's office) with lower revenue totals on which to base the state's commissions. Mobile County was cheated out of more than $250,000 in commissions using the same scheme. Again, the fraud went "undetected" by County Commissioner Wiley,

Bahouth's statement to the court describes the Louisiana pay phone scheme. He said he negotiated a contract with US Long Distance Inc. to provide pay phone service in Louisiana's prisons. Bahouth said he tacked an extra one-cent-per minute "commission" to the amount billed customers, and would then pay USLD the negotiated per-minute amount. Bahouth told the court that he and Wiley split $138,657 collected in that scheme.

Things began to unravel, though, after the defendants sold Global Tel *Link to Schlumberger Technologies. The new owners quickly uncovered the billing irregularities in the company's accounts. Schlumberger obtained an $8.5 million civil judgment in 1998 against Wiley, Bahouth and others for misrepresenting Global's financial condition at the time it was sold.

Source: Associated Press

As a digital subscriber to Prison Legal News, you can access full text and downloads for this and other premium content.

Subscribe today

Already a subscriber? Login