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Why did Dan Snyder want to sue Washington City Paper?

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Dan Snyder last week served himself to a round of bad press. In an interview with the New York Times Magazine, Snyder said that he hadn’t read “The Cranky Redskins Fan’s Guide to Daniel Snyder,” a November 2010 cover story in Washington City Paper. That story inventoried Snyder’s less successful moments as a businessman and owner of the Washington Redskins. And even though he apparently hadn’t read it, the piece bothered him enough that in April he filed a libel lawsuit in D.C. Superior Court against Washington City Paper.

(Disclosure: I am a former City Paper editor but left long before the story in question was published.)

On the heels of his did-not-read admission, though, Snyder dropped his suit. In a statement, Redskins spokesman Tony Wyllie said: “In the course of the defendants’ recently filed pleadings and statements in this matter, the Washington City Paper and its writer have admitted that certain assertions contained in the article that are the subject of the lawsuit, were, in fact, unintended by the defendants to be read literally as true. Therefore, we see nothing further to be gained at this time through continuing the lawsuit.”

Abandoning the suit is a sensible move -- given all the bizarre and baseless charges Snyder foisted on City Paper. Among them: He accused the paper of anti-Semitism for fronting the story with a photo illustration of him with devil horns and a goatee. He claimed that the story accused him of using Agent Orange on nearby trees. And he complained that it made fun of his wife. As a whole, the suit should earn a mention in the next compilation of Snyder’s more dubious decisions.

But Snyder had one legitimate beef with City Paper that’s worth exploring before the lawsuit fades from the news. It arises from this passage in the introduction of the “Cranky” story: “So before we welcome the New Dan Snyder, let’s look back at the one we know. That’s the Dan Snyder who left his mark, or stain, on more than just a football team. That’s the Dan Snyder who got caught forging names as a telemarketer with Snyder Communications.”

Snyder worked as a telemarketer? And forged names?

The passage was a poorly rendered and sensationalistic abridgement of a 10-year-old case. In 2001, the Florida attorney general settled with Snyder Communications Inc. and a telecom provider for $3.1 million over allegations that the companies had switched customers’ long-distance services without their permission -- a practice known as “slamming.” In a statement on the action, Attorney General Bob Butterworth said, “In the case of Snyder Communications, our investigation revealed thousands of instances in which the marketing agent’s representatives forged customers’ signatures to switch them” to another long-distance provider. In classic accountability-stifling fashion, though, the AG settlement included no corporate admission of wrongdoing, much less a personal admission by Snyder that he had doctored long-distance papers.

The truth of what happened at Snyder Communications sits within 133 boxes of documents in the custody of the Florida AG’s office and a large file generated by the Florida Public Service Commission. Together with interviews of former Snyder Communications employees, those documents offer clues as to why Snyder may have initiated the City Paper lawsuit, and then bagged it.

The records suggest that Snyder was far removed from the day-to-day operations of his long-distance marketers, such that any contention that the boss was directly involved in wrongdoing appears unfathomable. They also portray a series of management failures and questionable actions on the part of Snyder Communications, which Snyder may have decided he’d prefer not to publicly relive in a drawn-out court fight with City Paper. (Patty Glaser, Snyder’s attorney in the action against City Paper, declined to respond to questions about how Snyder Communications operated.)

The Snyder Communications paper trail starts in late 1997, when the company signed a three-year contract with GTE Communications Corporation (now part of Verizon). A press release stated that Snyder Communications would provide “specific turn-key, outsourced marketing services” to GTE, which is mumbo-jumbo for recruiting long-distance customers. The marketing would target the “20 million multi-cultural and other households” in the Snyder Communications marketing database.

It was a good time for an aggressive young telecom company. Though the breakup of the AT&T monopoly had occurred more than a decade earlier, the field was wide open for a team of go-getters to sell cheap long-distance plans to cost-conscious consumers.

In pursuit thereof, Snyder’s team of marketers in January 1998 fanned out in urban areas across the country, with a vigorous presence in southern Florida. Before they could present themselves to customers, though, they had to put on their Dockers-style slacks and a shirt with a GTE-branded name tag. GTE contract managers insisted on uniform compliance.

Once properly attired, the “foot” sales teams hit up supermarkets, fairs and festivals, and community events where they could pitch their long-distance deals to prospective customers. A telemarketing team sat inside and dialed away. The whole squad got right to work generating sales. Though these were low-wage jobs, with commissions workers could make $2,000 or $3,000 per month, a big bump over the “warehouse” wages many of them were earning before coming aboard at Snyder Communications.

Some of the sales were legit, and some, apparently, were fraudulent. Because of suspicion of fraud or incomplete information, GTE rejected 2,789 orders delivered by Snyder Communications in the first month of the contract. In the second month, there were 15,403 rejects; and in the third month, 24,208 rejects.

With the trend line going in the wrong direction, GTE launched an audit of Snyder Communications and attempted to craft countermeasures for the faulty orders. For as long as the Snyder Communications people stayed on the beat, however, complaints kept flooding in. State records document the troubles.

Consider this complaint from October 1998: “[F]ather of Tamara called & wanted to know how we got his daughter’s name & all the information on her. He said she wasn’t even 18 years old yet.” The form was annotated: “ESCALATION NEEDED.”

Or a July 1998 complaint from Penny Ryan of Sarasota: “[Sales representative] said GTE was going to start billing her for LD, she said she didn’t want GTE for LD…. [Sales representative] was very persistent & told her, quote, ‘That’s the way it’s going to be, bitch,’ unquote. She has had problems w/local service & is going to file complaint w/FCC.”

Ryan, at least, was still alive to lodge her grievance. A number of the fraudulent cases involved signing dead people up for long-distance. One complaint chronicled a conversation with a dissatisfied man: “Wife is dead has been dead... account is in wife’s name. ‘She couldn’t have come up from the grave to authorize this.’ he is very hurt by this.”

R. Earl Poucher, an analyst for the state’s public counsel, testified that with the help of Snyder Communications, GTE produced at least 4,000 slamming violations and at least 3,000 forgeries in Florida -- a set of calculations heatedly denied by GTE officials.

Snyder Communications attempted to stem the wrongdoing. Following the GTE audit, managers took apart the order-processing system and pummeled one another with e-mails on faulty paperwork. They focused on quality control. Says a former employee: “We did everything humanly possible to prevent slamming -- there were all sorts of checks,” including an extensive data-scrubbing mechanism. “We constantly worked at making that better…. Cheating and stuff was definitely not encouraged.”

Cheating and stuff apparently managed to encourage themselves. Ruben Rios, a Snyder Communications manager in south Florida, says company leaders faced something of an epidemic. There were times, he said in an interview, when people who practiced fraudulent sales techniques in New York “would be terminated, and then they would show up in another market.”

Even liberal pink slipping couldn’t get the situation under control. “We’d hire 50 and we’d terminate 20, we’d hire 50 and we’d terminate 20,” Rios said in his deposition with the Florida AG. “There was always, you know, get rid of the bad apples, bring more people.” Rios blames some of those apples for the problem with dead customers: He said he hired a supervisor who had “two or three friends and they worked at a funeral home, and they had lists, and all of a sudden started showing up a lot of Social Security numbers that belonged to deceased people.”

GTE terminated its foot-sales arrangement with Snyder Communications less than a year into the contract and it shut down the rest of the arrangement months later.

So what was Snyder’s role in all this? It’s inconceivable that he himself ever pounded the Florida pavement or worked the phones seeking customers, and it’s even more of a stretch to suggest that he did it fraudulently. To state that he forged signatures as a telemarketer is to suggest a level of micromanagement and foul play that Snyder didn’t exhibit even in his worst years as the owner of the Redskins.

Did he know about the problem? Said Rios in his AG deposition: “I’m sure he knew. He had to have known.” One e-mail in the Florida files suggests that word of the misdeeds worked its way near Snyder’s roost on the org chart. On March 31, 1998, a GTE executive wrote: “As you know we were calling the customers that Snyder sold consumer plans that were business lines and of the first 30 we contact all of them were slammed.” On the e-mail’s list of recipients was Mitch Gershman, a Snyder Communications executive and current chief marketing officer of the Washington Redskins.

But as top dog of Snyder Communications, Dan Snyder was ultimately responsible for the chaos within his company. Although many ground-level workers were doubtless guilty of stretching the rules, they had no control over the incentives and demands under which they worked. And multiple documents in the state records suggest that Snyder communications may have overpromised as far as what it could deliver to GTE in terms of new customers and revenues.

“I think Snyder [Communications]’s problem, including everybody else’s, maybe they weren’t honest with GTE on the type of orders that we can produce,” Rios said in his deposition.

That statement drives right at the Dan Snyder dichotomy: Is it greed that drives him? Or ambition? Perhaps what you think hinges on whether you’ve ever paid him a parking fee.

Whatever the answer, Snyder the communications mogul foreshadowed the ways of Snyder the Redskins owner. His long-distance marketing people were nothing if not aggressive and hard-working, a description that works for his Redskins ticket-sales crew. His managers at the telecom outfit hired and fired in quick succession, an approach familiar to a handful of men who’ve trolled the Redskins sidelines with headsets. And Snyder built his marketing firm into a high-value proposition, selling it for $2.1 billion to a French concern; his Redskins, who won their season opener Sunday, rank among the top NFL franchises in value.

On the other hand, there was no value, Snyder appears to have decided, in sitting through a deposition with lawyers pressing him on what he knew about his south Florida long-distance team. Said the statement from Snyder’s office: “We prefer to focus on the coming football season and the business at hand.”

Read more from Erik Wemple on the Erik Wemple blog.

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