Never mind that is also had few assets, hardly any revenues, and the chairman of its board soon would plead guilty to federal money laundering charges. In the Atlanta Empowerment Zone (AEZ), big plans count. Of course, it also helps if you enlist a prominent attorney with direct connections to the mayor's office.
But now, the big plans have come to naught. No jobs have been created, no call center opened, and the only people paid are the lawyers. And they stand to make even more money if BAOA takes the city to court -- which seems likely -- for failing to come through with a loan that the company's leader thinks was promised.
The story of Black Americans of Achievement goes back to 1983, when it was founded in California as Tahoe Lake Concessions Inc. It was another 10 years, though, before the company conducted any business. In 1993, the company changed its name to BAOA and began selling a board game by the same name. The company counted Jesse Jackson as a member of its advisory board.
In 1997, though, BAOA decided its future lay not in games but in telemarketing. The company would open call centers in Atlanta, New York City and Los Angeles. Even better, BAOA would open those centers in each of the three cities' "empowerment zones" -- large, decaying urban swaths that stood to receive $250 million shots in the arm from the federal government. A portion of that money -- $12.8 million in Atlanta's case -- would be disbursed to businesses that would locate in the zones and hire local residents.
BAOA started the Empowerment Zone loan process in 1997, submitting its application to the city and meeting in October of the same year with top Atlanta officials such as Mayor Bill Campbell, who was given his own Black Americans board game by BAOA CEO Peter Van Brunt.
The loan process proved slow, but BAOA felt confident enough that -- before receiving any money -- it reported Atlanta's cash commitment as a done deal in its 2000 Securities and Exchange Commission annual filing. The company also claimed that the Upper Manhattan Empowerment Zone had committed to financing. (That deal didn't close either.) BAOA anticipated the Atlanta call center would open during the second quarter of 2000.
"Each center will open with at least $10 million in business, provided by one of BAOA's strategic telemarketing alliances," BAOA claimed cryptically in filings.
An April 1999 letter from the company's CEO, Peter Van Brunt, to Empowerment Zone interim director Ron Diamond reflects the company's confidence: Van Brunt wrote that BAOA already had spent $280,000 on the call center project, and that it had even secured $250,000 in financing to purchase a building at 555 Whitehall St. to house Call Atlanta, the name of its project. Investment bankers had committed $10 million to the venture, according to Van Brunt. Clients also had made purchase orders totaling a whopping $100 million, he wrote.
The company's revenue projections proved equally sunny -- $5.3 million in the first year and $14.9 million in the second.
But the company's financial records paint a different picture.
As of Dec. 31, 1999, the company had only $4,755 cash on hand, and only about half that amount the next year. Nearly $300,000 had been used to finance company operations -- BAOA had no full-time employees -- and it spent $21,467 to purchase an option on the future location of the call center. It spent more than $900,000 on "marketing and consulting fees" without bringing in any revenue. BAOA's net losses before taxes totaled more than $1.27 million for 1999, and more than $2.6 million in 2000. Since its inception, the company has lost nearly $10 million.
Indeed, the company itself seemed to be on the brink. In 1999, the company hired an outside accounting firm, which concluded: "... the company has suffered losses in prior years, working capital deficiencies and continues to experience liquidity problems that raise substantial doubt about its ability to continue as a going concern." Van Brunt downplays the seriousness of that statement. He says accountants write similar sentences about most small companies as caveats for potential investors.
The company, the audit continues, stayed afloat based on advances from individuals and the sale of securities.
But BAOA's troubles didn't stop with money. In 1999, federal authorities arrested William "Tank" Black, a former sports agent and chairman of BAOA's board of directors. Black sold BAOA stock, then trading for around 10 cents on the OTC market, which he received for free, to athletes, like New York Giants' wide receiver Ike Hilliard and Jacksonville Jaguars' running back Fred Taylor, for 50 cents to $1 each, according to a May 2000 report in Sports Illustrated.
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