Pay to Play

The son of a world—renowned chef says he wanted to reform the phone industry. The feds say he wanted to get rich quick.

Four months later, in April 1998, the would-be entrepreneurs received a check for $11,800, the harvest from thousands of calls yielding 24 cents apiece. They reacted by shutting down Jack's to establish a more sophisticated operation in South San Francisco — but not out of greed, David insisted in court.

A few days before the clearinghouse check arrived from the American Public Communications Council, he testified, the group's then-president contacted them. He cautioned that their high volume of toll-free calls could attract the suspicion of long-distance companies, David stated.

The warning spooked Nisbet, who feared the carriers would thwart them from amassing call data records on dial-around payouts, David recalled in court. The APCC sent the two men an itemized list of each long-distance carrier's portion of the $11,800 bill. AT&T, the telecom leviathan that controls half the long-distance market, paid a paltry $30. The figure suggested to them that the country's largest carriers were cheating pay-phone operators.

Eager to prove their theory, the partners agreed to broaden what they referred to as their telecom "survey." But Nisbet wanted to conceal their identities from the phone companies to evade further scrutiny, David testified, igniting an argument between them. "I believed in what we were doing, but I did not believe in [falsifying] the names," he said.

In the end, however, he chose to trust his longtime friend, who 15 years earlier had worked with Daniel at Narsai David's now-defunct restaurant in Kensington. The old high school buddies pushed ahead with their survey. Or what the feds would deem a scam.

David and Nisbet moved fast to resume their self-styled telecom crusade. They rented office space in South San Francisco and, under the names Dave Jacobs and Bill Jansen, leased 23 pay-phone lines from Pacific Bell. Nisbet hooked up the lines to a $15,000 autodialer. They flipped the switch on their new equipment in May 1998, less than a month after yanking the plug on Jack's faxes.

The autodialer placed more than 2 million calls during the next 18 months. Running a software program with a database of toll-free numbers, Nisbet programmed the device to dial 12 to 24 hours a day, with each line active for the same period of time. The machine hung up as soon as someone answered, and no number received a second call after a successful connection.

The duo decided to avoid the APCC after hearing from its president about their high call volumes while operating Jack's. (The agency later sent them an additional $28,000 in dial-around compensation for that enterprise.) Instead, posing on paper as Jacobs and Jansen, they arranged for two other industry clearinghouses to collect the money. They directed both firms to send their quarterly checks to a private mail store in Scottsdale, Ariz., where Nisbet rented a mailbox under the same aliases.

But problems arose once payments and call data records began landing in their mailbox in October 1998. Their fake names, concocted to dupe the long-distance carriers, prevented them from retrieving the parcels. The mail store's owner told Nisbet, who had opened the account over the phone, that he needed proof of Jacobs' or Jansen's identity to release the mail.

One lie spawned another. David and Nisbet designed a bogus driver's license for "William Jansen," making him a resident of Vancouver, British Columbia, and forged a notarized statement verifying his identity. At the time, David testified, he had vague misgivings about the ploy. Four years later, it would bring charges of mail fraud and using a fictitious name for a fraudulent scheme against David and Nisbet.

"It was an extremely awkward bind ... ," David said at his trial. "Did we go about [solving] it the right way? No. Did I see any other way of getting the mail at that moment? No."

The partners faxed the documents to the store owner and directed him to forward their mail to various San Francisco locations — the airport, a nearby motel. Over the next year, they soaked up $480,000 in dial-around compensation, receiving 10 checks payable to Jacobs and Jansen. Sorting out the venture's financial affairs fell to David.

Depositing the first three payments posed little trouble, thanks indirectly to Daniel's famous father. At the time, Narsai David provided radio voice-overs for Mechanics Bank, and he and Daniel held accounts at the same Berkeley branch. Recognizing Daniel, bank tellers allowed him to make the deposits, totaling some $36,000, despite the absence of his name on the checks.

His luck soured in January 1999, when a bank manager balked at accepting a check made out to Jacobs and Jansen in the amount of $126,000. The setback led David to approach his friend Stephen Cornet, a San Francisco attorney who has known Daniel's father since the late 1960s, when Narsai managed a restaurant in Berkeley. Cornet had handled minor legal matters for Daniel related to his wine business, and they liked to meet for lunch or dinner every few weeks.

At David's trial, each man recounted their discussion about the origin of the $126,000. Cornet recalled David saying the money derived from a wine deal; David asserted that he credited his new and "legal" telecom business. Ostensibly to insulate the unwitting lawyer from potential liability, David offered no details about the enterprise, nor did he mention that Jacobs and Jansen existed only as figments.

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