Prime TV Story Takes New Twists
Prime TV Story Takes New Twists
BY MATTHEW MORIARTY AND JOHN CHAPPELL: Staff Writers
A businessman associated with Prime TV defends his company’s present practices in Moore County, though acknowledging that he once served time in federal prison for a fraud conviction.
Prime TV, which operates out of the Gatelinx building on U.S. 1 in Southern Pines, abruptly laid off 270 employees over the weekend after DirecTV severed its ties with the Southern Pines company.
Prime TV later placed 115 of the laid-off employees in other businesses it owns.
DirecTV accused Prime TV of selling a competitor’s product at the same time.
Prime TV denied that allegation and is now seeking arbitration in a California court to recover more than $30 million it claims that DirecTV owes the company.
In recent years, thousands of customers have filed complaints with the state attorney general’s office and the Better Business Bureau against Prime TV for not paying rebates they say they were promised.
Earlier this week, Prime TV Manager David Hagen, who lives in Southern Pines, acknowledged that he and his wife, Annette, both served time in federal prison for fraud.
The Hagens have been identified by several former employees as being the owners of Prime TV, Gatelinx and several other local businesses, one of which is Dish TV Now — which sells Dish Network, a competitor of DirecTV. Dish TV Now plans to ex-pand to a Cary call center that may employ 1,000 people.
A spokesperson for the companies has repeatedly denied that the Hagens own them, but has refused to identify the owners.
“That couldn’t be further from the truth,” said Richard (Trey) Yelverton III, the attorney for Prime TV.
Both Hagens served time in federal prisons for bankruptcy fraud and mail fraud. David Hagen, who at various times has used several different names — like David DuFusco and David Allen — was at one time released on a $400,000 bond, revocable should he use any name other than his real one.
In 1990, Hagen began a five-year sentence in Sheridan Federal Prison Camp outside Portland, Ore. Annette Hagen served nearly three years at the Geiger Correction Center in Spokane, Wash.
According to articles in The Washington Post at the time, the charges stemmed from time-share promotions that made false promises of expensive prizes. Millions of letters were said to have been sent out promising prizes to recipients who visited time-share resorts.
But instead of a new BMW often promised in the letters, visitors only got things like a hamburger grill just big enough for a single patty.
At the same time, the Hagens lived lavishly with fancy cars while owing more than $1.3 million, according to court records quoted in The Washington Post.
In a statement released to WRAL-TV Wednesday, David Hagen said: “As a young man, I made the mistake of becoming involved in a business relationship with people whose marketing practices were challenged by various government agencies. Although I never intended to break the law, I entered into a plea agreement to charges related to alleged mail fraud and a bankruptcy filing and served a prison term.”
Since leaving prison, the Hagens have been successful local business people. According to employees, they opened Prime TV on Murray Hill Road in Southern Pines in 1997. By offering DirecTV service at a low price and promising rebates, the company expanded rapidly.
Last year, it moved into the Gatelinx building in the former Winn Dixie store on U.S. 1 and Poplar Street. Before last week’s layoffs, the business employed more than 400 people. Some employees have told The Pilot that number was closer to 600.
Over the weekend, Prime TV issued a press release blaming DirecTV for those layoffs.
But DirecTV said that Prime TV breached its contract by clandestinely selling DirecTV’s top competitor, Dish Network.
“It’s our understanding that they did engage in selling Dish Network,” said Bob Marsocci, senior director of public relations for DirecTV.
DirecTV terminated its contract with Prime TV on March 25. The contract required that Prime TV be an exclusive distributor of DirecTV satellite television systems. Prime TV has denied it sold Dish Network systems.
But Dish TV Now operates out of the Gatelinx building. A spokesperson said those companies were unrelated, but former employees say employees transferred interchangeably between the companies.
Sales people were recently transferred from Prime TV to Dish TV Now. According to a former customer service employee who didn’t want to be identified. In fact, she said her entire department was moved from the building to make room for more Dish TV Now salesmen.
“To say they are not involved (with Dish Network),” the former employee said, “that’s crud.”
DirecTV also said that Prime TV was not doing business properly. DirecTV has had hundreds, if not thousands, of complaints about Prime TV, Marsocci said. The complaints centered on a rebate program. The N.C. attorney general’s office has had thousands of complaints, said Noelle Talley, public information officer with the Department of Justice. Twenty-two of those complaints remain unresolved.
The Better Business Bureau received 2,248 complaints about Prime TV in the past three years. Eight of those remain unresolved. In addition, the bureau claims that Prime TV is also doing business as Gatelinx Corp.
DirecTV feels it was justified in terminating the relationship.
“They failed to meet our minimum standards,” Marsocci said.
Prime TV doesn’t deny that some people have had problems getting their rebates. But Yelverton said that the vast majority of Prime TV’s customers were happy with the service.
“We’ve sold 750,000 people DirecTV,” he said. “To have a few hundred complaints is not a huge number. We get 10,000 phone calls a day.“
The rebates in question come only after contracts go to DirectTV and are accepted. Prime TV had contracted with a Florida company, Parago, to handle the rebates, but that company had not done a satisfactory job, Hagen has said.
Parago is one of the country’s largest rebate providers. Hagen said Prime TV had to take over the rebate business itself. In the meantime, employees had to field calls from angry customers.
“The main problem was ‘Where’s my money?’ from people wanting their rebate,” said Billie Cain, a former employee. “I quit, because I didn’t like to be yelled at. I didn’t want to lie.
“We would get calls from people who had been waiting six months.”
An interoffice memorandum obtained by The Pilot shows that the rebate process always involved delay and sometimes deception.
After six to eight weeks of waiting for a check, a customer’s status could move from “normal” to “rush.” Call takers were told to say, “A rush generally takes two to four weeks.”
After 30 days on “rush” — with no rebate — customers would often call back. Only if they threatened “some form of escalation” — a report to a Better Business Bureau, a state attorney general or if a supervisor from DirecTV called about an account — would their status move to the next step: “critical.”
That status required management intervention. Call takers were strictly advised only to tell customers they were “putting in a request” for critical status.
Employees were required to take 90 calls a day, former employees say. To do so, they often found ways to cut calls short.
“They told us to tell customers the truth,” Cain said, “but people didn’t do that. They would lie. They would just say things like ‘You’ll get your check in two weeks.’ That would get them off the line, so you could take another call.”
According to documents obtained by The Pilot, Prime TV employees told one customer in Las Vegas, Nev., at least five times that her rebate check was on the way. That customer ordered her system in July. Prime TV approved her rebate on Oct. 1, yet she hadn’t received a check through March 11.
On March 4, the customer called again to complain. The customer service representative asked for more time, and then wrote in notes taken from the Gatelinx database that the customer “keeps calling and is mainly upset (because) her husband just passed away.”
Clara Worrell, of Good Samar-itan, Fla., said she hasn’t received her $89 rebate despite being approved since October. She’s had people at Prime TV hang up on her, she said, and feels as though she’s been lied to.
One customer service representative did try to help her, Worrell said. She whispered to her that the only way to get something done is to call DirecTV. Worrell did so and found that she wasn’t alone in her complaint.
She said: “The guy said to me, ‘Oh, you’re not the only one.’”
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