Excerpt from court filing dated October 3, 2000
The Operative Facts
The Defendant’s “Telecom Solutions” Business

Eric J. Dalius and Jeffrey S. Hensinger founded a Pennsylvania Corporation known as Telecom Solutions in September of 1994.  Hensinger was President and Secretary and Dalius was V.P. and Treasurer of this corporation.  Its original offices were located at 609 Hamilton Mall, Allentown, PA.  By January 1, 1995 the business had grown and was moved (at the end of the original lease) to larger quarters at 850 N. 5th Street in Allentown.
            The corporation was formed as a consequence of the parties’ successful test-marketing of a 30 minute long distance debit calling card utilizing a then available 500 minute penny-a-minute promotion being offered by LCI, a long distance telephone company.  The Defendants offered each potential company representative two 500 bonus minute cards (1000 bonus minutes) with each 30 minute long distance debit card they purchased (based upon availability).  Because of the very favorable response (100 orders a day after the first week) Telecom Solutions was formed.
            At the time, Dalius was a certified representative of ACN (American Communications Network), which was a registered agent of LCI, authorized to market their services.  Accordingly, Dalius’ belief that he could coopt the LCI offering (ie. Utilize it for the benefit of LCI and new Telecom customers) was eminently reasonable.  However, when Dalius and Hensigner went directly to LCI to make the purchases (after fully explaining their intentions to take advantage of the LCI promotion – something the Government now calls their “scheme” and the Probation Officer refers to this as a “multi-level pyramid marketing plan” and later simply as a “scheme”)1  LCI said that since Telecom had become incorporated it was no longer eligible for the 500 minutes at a penny a minute promotion because the “fine print” limited the offer direct to consumers only.  By this time several weeks of the offering had already passed and Telecom was stuck with only what LCI was then willing to give them – a higher rate for similar cards.  At this point, the business plan of Telecom was in distinct jeopardy but, Dalius and Hensinger reasoned that with what LCI promised would be more favorable rates in the near future, Telecom could still become profitable as a reseller within 30 to 60 days given their ability to purchase long distance minutes in bulk.
            Telecom also reasonably believed that its bargaining power (leverage) with LCI could be increased if they engaged LCI’s main competitor AT&T as an additional source of long distance minutes.  This was done immediately (late September and early October).
            However, shortly thereafter Telecom’s large volume of sales made the inevitable receipt of bad checks (insufficient funds) from customers a daily event.  This in turn resulted in Telecom’s bank (Ambassador) freezing their accounts pending a bad check audit.  (It is important to note that Telecom never issued a bad check but, was the recipient of many – not an uncommon occurrence in any mass –marketing business.)
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1Neither is, of course the case.  A pyramid is an artifice which has no product or service to sell and is predicated upon the earliest participants making money at the expense of later participants.  In comparison, Telecom sold a product, there was no pyramid and, was predicated upon a sound business plan in which no one was intended to experience a loss of any kind.

Another unfortunate consequence of Telecom’s sudden success was the fact that potential customers and reps who were encouraged to contact the Better Business Bureau to see if any complaints had been lodged against Telecom (there were none) expanded to multiple inquiries to the Attorney General’s Office (no complaints but, mere inquiries).  Due to the sheer number of inquiries, Telecom was forced to meet with the Better Business Bureau, The Chamber of Commerce (which they did) and even hire an attorney to interface with the state’s Office of Attorney General, which reviewed with no unfavorable comment Telecom’s entire records.
            These distractions interfered with Telecom’s ability to increase its customer base to the level required to reach the anticipated reseller status (with the concomitant lower rates needed to meet customer expectations).
            Consequently, Telecom’s ability to provide the lowest possible calling card per –minute rate diminished greatly.  Further, when in response to Ambassador Bank’s account freeze, Mr. Dalius was forced to keep cash proceeds at his home, he was the victim of a burglary of those proceeds.  The $100,000 burglary he later experienced was promptly reported to the police and is a matter of record.
            Understandably, Telecom was required to adjust its business plan to meet these new exigencies and did so by moving from a calling card platform to a One Plus Platform which allowed for Telecom’s ability to negotiate lower per-minute rates for their customers.  The One Plus Plan which was secured by LDDS (Long Distance Dialing Service, Inc.), created a membership plan which could offer, in addition to lower long distance rates than the original LCI & AT&T calling cards, discounts on advertising, voice mail services, pagers, etc. (It should be noted that, as with all calling card plans, TSI’s agreements expressly permitted changes in the program to reflect economic conditions and therefore, the switch to a One Plus Plan was explicitly authorized.)
            By the third week of February 1995, Telecom had received 487 memberships and were on their first steps to financial recovery when the FBI raided their offices and closed down Telecom business.
            Telecom’s inability to pay its vendor carriers or fulfill any of its customer’s calling card need thereafter was strictly a function of the government’s intervention.  It was not the part of any predetermined scheme.
            Notwithstanding the fact the losses claimed were the product of a non-criminal business failure, Defendant Dalius, from the outset, acknowledged his responsibilities for the failure and entered his pleas on that basis.

Eric Dalius Bio at Npros.com

Telecom Solutions