To Read The Executive Summary of the Complaint

To Read the Entire Complaint

 NY Complainant, Bruce Kushnick, 212-777-5418

NJ: Tom Allibone, 609-397-2257

MA: Marcus Lewis, 978-534-2366, Peter Brennan, 800-292-1017 x3325,

To Read the Filed Complaint and Other Material: http://www.teletruth.org/audit.html

FOR IMMEDIATE RELEASE: August 22, 2002

New York ---- TeleTruth, a nationwide customer alliance of individuals and small businesses, is requesting an investigation into Verizon's alleged multi-billion dollar accounting discrepancies. The complaint was filed today in the three states New York, New Jersey and Massachusetts, with the respective Public Service Commissions and state Attorney General's offices.

"Forget about Enron, MCI or Global Crossings' accounting problems. Those companies are small time compared to Verizon", states Bruce Kushnick, Chairman of TeleTruth. "The FCC staffers called it 'Vaporware', but it equates to billions of dollars of missing equipment in every state that customers are still being charged for."

In 1994 and again in 1997, prior to Verizon's creation through the merger of Bell Atlantic and GTE, the FCC conducted audits of the Bell companies. With regard to Bell Atlantic, the FCC stated :

"The findings of this audit highlight the significance of our previous concern about the integrity of NYNEX/Bell Atlantic North's record-keeping. In 1994, our audit of Nynex revealed numerous errors and instances of insufficient information. In addition, both in 1994 and 1997, we found that NYNEX's record-keeping procedures were not being followed or were ineffective. We found that these procedures, which have been in place for many years, do not ensure that all investment recorded in the carrier's central office equipment accounts is associated with equipment in service."

In the year 1999, the FCC released the results of audits of the Bells' continuing property records that found that the Bell's accounting records contained $5 billion dollars in missing equipment and an additional $13.6 billion in "unverifiable" equipment for a total of $18.6 billion dollars. The government agency known as the General Services Administration (GSA), which commented on the audits stated, "It should be noted that these audits represented only 25% of the equipment and network components that should have been audited." The GSA also reported that "…other areas…may have an even higher level of missing equipment." This could place the actual figure of illicit write-offs to anywhere between $20-80 billion dollars.

Because of political pressure from Congressman Billy Tauzin (R-LA), John Dingell (D-MI) and other Bell supporters, the FCC then turned the situation to the individual states to address. Although the state of New York did a separate audit that corroborated over $633 million in missing equipment, TeleTruth estimates that there could be an estimated $2.5 billion dollars of missing or unverifiable equipment in that state alone.

To date, neither the FCC nor the state commissions have completed an audit or given customers refunds and lower prices.

Peter Brennan, a Massachusetts resident and complainant states:

"The impact of the missing equipment may not be fully understood until one realizes that all phone rates have been based on this network vaporware. By having an increase in expenses, Verizon and other Bell companies have been able to consistently lobby for rate increases over the years. Unlike Enron in which the shareholders shouldered the burden of loss, all customers who pay a phone bill pay the price."

The role of the Bell accountants is also a question that needs to be answered according to Massachusetts Complainant, Marcus Lewis, "The auditors for the Bells at the time, Price Waterhouse Coopers, should also be investigated separately for their failure to bring to light all of the missing equipment issues. They are to Verizon, what Anderson was to Enron," says the Leominster resident. "We have little doubt that what happened in New York also happened in the Bay State."

"TeleTruth is filing in New Jersey, New York, and Massachusetts to put politicians and regulators on notice. The politicians have a responsibility to ensure that customers are reimbursed for the enormous amounts of money that have gradually been taken from them, or there will be consequences at the polls from customers who say enough is enough," says Tom Allibone, also of TeleTruth. Although TeleTruth is initially filing against Verizon, their intention is to file against all of the original Regional Bell Operating Companies by the end of the year."

For more information, please call Bruce Kushnick, 212-777-5418, bruce@newnetworks.com, or contact the other complainants: NJ Complainant: Tom Allibone, tallibone@ltcconsulting.com 609-397-2257, MA Complainant: Peter Brennan, pbrennan@tpigroup.com, 800-292-1017x3325, MA Complainant: Marcus Lewis, marcusio@verizon.net 978-534-2366.