
                   CONCERNING INTEGRITY, MONOPOLY, AND TELESENSORY
                       by Kenneth Jernigan and Barbara Pierce

     "In Pittsburgh," as more than one person told us, "it doesn't matter how good
your technology is or how low your prices. It doesn't matter about the quality of
your service or the support you give your technology. If you aren't selling products
made by TeleSensory, you can't do business with the state rehabilitation agency"--
which is known as BVS, or the Bureau of Blindness and Visual Services. This is what
we were told by a frustrated vendor of high-tech equipment for the blind and what we
heard echoed by many others. What this vendor of technology did not say (but
everybody knows) is that the TeleSensory sales representative in Pittsburgh, Mary Ann
Sember, is married to Tom Sember, a counselor in the state agency's Pittsburgh
office.
     In New Jersey the TeleSensory sales representative has a daughter who works for
the state agency. The family relationship is different, but the pattern is the same.
State business goes to TeleSensory regardless of cost, performance, or quality of
service.
     The arrangement is cozy for those who are part of the inner circle, but if the
same situation occurred in military procurement, it would be front-page scandal with
everybody crying foul. Here, however, only blind clients are being hurt--along with
small business operations (mostly owned by blind people). Since those who are being
denied the right to compete are not big-time operators with major bucks and political
clout, such complaints as have surfaced have largely been ignored.
     At least on the surface, the situation in New York is a little different. Family
ties don't appear to be involved, but TeleSensory still seems to manage. Vendors
report that in many  parts of New York TeleSensory has the state agency technology
market pretty much locked up. These vendors say that they are rarely successful in
getting orders despite better prices and superior service.
     How has all this come about? At a time when rehabilitation money is in short
supply everywhere in the country for the purchase of technology that blind people
need to become or remain competitive, why do so many state agency counselors insist
on buying equipment from a company with a nationwide reputation for slow and
unresponsive support service and prices higher than those of the competition? Why is
this done even when blind clients request alternative technology that they think will
serve their needs better? Some say that the answer lies in a combination of history,
sloth, and inertia--the fact that TeleSensory (formerly TSI) has been in the field
longer than most of its competitors and is bigger than the rest of them. Others
(whether correctly or not) cut through the niceties and call it collusion and
skulduggery.
     When high-tech for the blind first began to make a real impact (some twenty
years ago), the world of technology for the blind was tidily divided among the
various producers. (See the January, 1992, issue of the Braille Monitor.) TeleSensory
Systems, Inc., (known then, and still generally referred to today after its merger
with VTEK, as TSI) brought out the Optacon, which gave a tactile image of the letters
on a printed page, and also the first of the talking calculators. In addition, TSI
produced the VersaBraille, which was a portable device that permitted word processing
and used movable pins to display computer-stored text in what was called refreshable
Braille.
     When state and private agencies or the federal government wanted this type of
technology, they generally turned to TSI. It wasn't necessarily that TSI gave better
service or better prices than others but that very often nobody else was in that
particular corner of the market at the time.
     The talking calculator is a good example. It was priced at almost $500, but it
worked--and it was all there was. A few years later when the Sharp calculator hit the
market with a smaller size, more versatility, and a tenth the price, the TSI
calculator was history. This is not to criticize the TSI calculator or even its price
but only to say that even while some of the blind were buying and using it, TSI was
the recipient of a good deal of resentment and ill-will because of what was perceived
to be the exorbitant charge--especially since it was generally felt that a great deal
of TSI's research and development costs for a number of its products had been paid
for by government and other grants. In short, a number of the products were good (if
expensive), and by and large the support staff had a reasonably satisfactory
reputation for providing service and doing something about problems when they
occurred--but TSI was heartily disliked, not only by many other vendors but (more
important) by a steadily growing number of the blind.
     One more factor which must be added to the equation is Jim Bliss, TSI's
controversial chief executive and driving force. From the beginning Bliss has proved
himself to be a man of ability and unflagging energy, but he has also proved himself
to be a veritable genius at bad public relations. Wherever he has gone, he has
created hostility and made enemies. Whether justified or not, stories persistently
circulated (and, for that matter, still do) of sleazy conduct, questionable
practices, cutthroat tactics, and the determination to squeeze every penny from a
deal. 
     There is something more:  Even with Bliss's reputation for cutting corners and
squeezing pennies, sources tell us that TeleSensory is in financial trouble.  The
report from TeleSensory's auditors dated May 11, 1990, contains interesting material
and says in part:

Note B - Acquisition
     On January 27, 1989, the Company acquired all the stock of Visualtek, Inc.
(VTEK) in exchange for 480,528 shares of its common stock.  VTEK is engaged in the
development, manufacture and sale of electronic equipment for visually impaired
individuals throughout the world.  The results of operations of VTEK since January
28, 1989 are included in the accompanying consolidated financial statements.
     In connection with the acquisition, the Company entered into noncompete and
consulting agreements with VTEK's founder and majority stockholder in the amount of
$4,250,000.  These agreements were prepaid by the Company, are each for five years
and are amortized ratably over this period.  The Company has also agreed to pay
$30,000 of annual nonaccountable expenses in each of the five years relating to the
consulting services.

     Note E of the report of the auditors says in part:

     In January 1989, the Company entered into a working capital line of credit with
a bank which enables the Company to borrow up to $2,500,000 at an interest rate of
prime (10.5% at December 31, 1989) plus 1.5%.  The Company paid a commitment fee to
the bank equal to 3% of the maximum borrowings.  The line of credit expires in May
1990; however, the Company is currently negotiating an extension of the line.
     In December 1989, the Company executed a promissory note with the same bank due
June 1990.  The note bears interest at the bank's prime rate plus 1.5%.
     These bank borrowings are guaranteed by the Company and its subsidiaries and are
subject to certain restrictive covenants, including the maintenance of minimum
working capital ratios and tangible net worth, profitable operations, and a maximum
debt to net worth ratio.  The Company was in violation of the profitability covenant
at December, 1989; however, the Company has obtained a waiver from the bank.
     In December 1989, the Company borrowed $1,000,000 subordinated to bank
borrowings and collateralized by the Company's assets, from a material supplier at an
interest rate of 12%.  Principal repayments of $200,000 at March 31 and April 30,
1990 have been made.  The $600,000 balance is due May 31, 1990.

     This is what the auditors say for calendar year 1989, and reports are widespread
that 1990 was a very bad year for TeleSensory.  Some even say that the company's very
existence is in danger.
     However, when we discussed the matter with Jim Bliss, he said that while 1990
had admittedly been bad, 1991 had been good.  He said that the report of the auditors
to the stockholders would not be ready for several weeks and that he was, therefore,
not at liberty to give specific data.  But he emphasized that the company was in good
condition and that prospects looked good for 1992.  Without more specific data we are
not in a position to evaluate Bliss' statements or the rumors that contradict them. 
We are only in a position to say that TeleSensory continues its stormy and
controversial course.
     As technology evolved in the blindness field through the 1980s, competing
products began to emerge--and in the effort to reduce prices, technical support began
to suffer. Even brief conversation with anyone who uses technology for the blind will
turn up ghastly stories of malfunctioning systems and confused experts. TSI is by no
means the only object of these anecdotes, but blind users certainly do complain
steadily on computer bulletin boards of TSI unresponsiveness and equipment down-time.

     Yet, the large-volume purchasers (like state rehabilitation agencies and the
federal government) have continued to buy TSI products. Some say that it is simply
momentum and habit, an apparent feeling on the part of the agencies that they know
what they are getting and with whom they are dealing. Moreover, TeleSensory has
always billed itself as producing a complete line of products designed to work
together, and TSI sales representatives have used this argument as a selling point.
     As we have said, the 1980s saw changes in the technology world. Suddenly TSI had
competition, and these competitors were developing exciting new products at lower
prices. While TSI continued its traditional pattern of hiring sales representatives
throughout the country who were primarily concerned with selling TSI products, a
number of the newer producers began to establish professional relationships with
regional vendors--many of whom, as blind people, were themselves using the technology
they sold. These sales people were prepared to hustle for business and provide their
own equipment expertise as a start-up service in order to make sales and create happy
customers. They were often willing to give assistance with related technology which
was not part of their line of merchandise. In addition, they recognized that they
would have to undersell TeleSensory if they were to establish their own niches in the
market. Talking to these vendors, one is reminded of the old Avis rent-a-car "We try
harder" commercials. These new vendors are working very hard indeed, and while they
are getting business from the private sector and from institutions outside the state
rehabilitation agency structure, some very strange things seem to be going on in  a
number of state agencies.
     The usual practice in state government is to seek bids from vendors when
substantial amounts of money are to be spent. From what we can gather, this practice
is not followed by the New Jersey Commission for the Blind, and until fairly recently
most of the district offices of the Pennsylvania state agency did not bother with
bids either even though Pennsylvania law requires state purchasing agents to seek
them. Sometime early in 1991, however, a memo was apparently circulated to the
Pennsylvania BVS offices stipulating that in future three bids must be sought before
placing any sizable equipment order. We are told that the Philadelphia office had
been following this practice as far back as anyone can remember but that most other
regional offices had not.
     One might be pardoned for assuming that enforcing this bid policy would resolve
the acknowledged problem of staff purchases of overpriced or inappropriate equipment
for clients, but apparently such has not been the case. For example, one Pittsburgh
vendor currently sells the Arkenstone reading system for $3,500. The OsCaR,
TeleSensory's almost identical system, sells for $3,895. A ten-percent difference in
price would seem to make the Arkenstone attractive to conscientious professionals in
Pittsburgh trying to make their funds stretch as far as possible. But if one is
determined to give the business to the less competitive company, all one has to do is
write the bid specifications in such a way that (regardless of the facts) only the
more expensive product fills the stipulated requirements. 
     This is precisely what we are told most BVS counselors in Pittsburgh seem to be
doing. Bob Jakub, the local Arkenstone dealer, says that he has to date been awarded
two contracts for the Arkenstone reading system even though during the last several
years he has sought to provide a number of others to BVS clients. Jakub says that in
September of 1991 a client requested an Arkenstone as soon as permission was given
for purchasing a reading system for him, but the counselor insisted on providing the
OsCaR. According to Jakub the client (an attorney, who was not in the habit of lying
down meekly and letting people walk over him) continued to demand the Arkenstone,
which he eventually got. In recent weeks Jakub says he has bid on and received
another contract for an Arkenstone. But for the most part we are told the Pittsburgh
counselors buy TeleSensory equipment. And the only TeleSensory representative in the
area is Mary Ann Sember, the wife of one of the office counselors.
     No one has suggested that money is changing hands, but old habits are hard to
break--and pressures to conform to established practice do not have to be overt in
order to be effective. Sources close to the Pittsburgh office report that one
counselor was named as acting District Manager some time ago. He decided to put an
end to the practice of giving all the office's technology business to TSI, and as a
result, this source suggests, the acting manager is once more a counselor. 
     Meanwhile the list of unhappy clients who have been given TeleSensory products
grows. We are told that one woman was given the Vista computer screen enlargement
system, the TeleSensory product. We are further told that she experienced great
difficulty getting it to work for her and that in the midst of this prolonged
struggle she moved to another state. Her new counselor professed himself astonished
to find that she had been given Vista. He volunteered that in his agency no one had
ordered that product for years. In fact, our interviews indicate that many TSI
product users become dissatisfied in the months and years following the initial
purchase. In the beginning TeleSensory sales representatives seem to work hard to
sell and install TSI systems. When the equipment develops problems or the client
needs additional help to get started, or the system does not perform as promised, we
are told that the TSI personnel are suddenly hard or impossible to find and pin down.
As one disgruntled customer said, "As long as they need you, they are right there to
help, but as soon as you need them, you might as well forget it."
     In Pittsburgh there is a disturbing history of clients' getting TSI equipment
regardless of their own preferences or professional recommendation. We are told that
one BVS client was evaluated by the Pittsburgh Guild for the Blind, that the Optelek
closed circuit television system was recommended, and that training on the system was
provided. We are further told that despite the fact that the state agency paid for
the evaluation and recommendation, the state counselor ordered TeleSensory's Vantage
System. Only after strong objections were raised by the Optelek vendor was the excuse
offered that a mistake had been made and the Optelek system purchased instead.
Another vendor confided to one of our reporters that he had lost three orders in
which his equipment had been recommended but TeleSensory technology substituted. 
     In the weeks preceding the 1991 convention of the National Federation of the
Blind of Pennsylvania, the rumblings concerning the improprieties in the Pittsburgh
office of the Bureau of Blindness and Visual Services grew so loud that the
organization passed a resolution on the matter. Subsequent to the convention Ted
Young, President of the National Federation of the Blind of Pennsylvania, wrote a
letter to the state's Auditor General outlining the problems and enclosing the
resolution. Here are both the letter and the resolution: 

                                                           Philadelphia, Pennsylvania
                                                                    November 18, 1991

Ms. Barbara Hafer
Auditor General
Harrisburg, Pennsylvania

Dear Ms. Hafer:
     The National Federation of the Blind of Pennsylvania is a state affiliate of the
National Federation of the Blind, which has over fifty thousand members and an
affiliate in every state of the nation. As  blind people organized to promote the
social and economic well-being of all the blind, we are naturally interested in and
concerned about improprieties in any district of the Pennsylvania Bureau of Blindness
and Visual Services (BVS).
     Although we understand that some of the following concerns may have been brought
to the attention of others in state government prior to this time, we believe that
you--given your promises of cleaning up state government made in your recent
campaign--will take all necessary actions to resolve these issues.
     It has come to our attention that the Pittsburgh district office and some other
district offices of BVS have not followed the required state practice of sending out
bids before purchasing electronic adaptive equipment for clients. This is
particularly troublesome in the case of Pittsburgh, given the following facts and
allegations which, if true, suggest illegal practices.
     1. Tom Sember, a counselor at the Pittsburgh district office of BVS, is married
to Mary Ann Sember, a sales representative for TeleSensory, which is a major
distributor of adaptive electronic technology for blind persons, including speech
hardware and software, Braille printers, scanners with adaptive software, and
equipment allowing computer screen output to be enlarged for persons with low vision.
     2. There are a number of other producers of similar equipment. Much of this
other equipment is less expensive and performs the same functions with the same
quality as that produced by TeleSensory.
     3. Despite higher prices TeleSensory has been the main source of equipment
purchased by the Pittsburgh district office.
     4. Other equipment vendors have cited cases in which a given brand of less
expensive equipment was recommended and TeleSensory equipment was delivered. This was
true even when the client had been evaluated on the recommended equipment.
     5. It is alleged that, when clients request other brands of equipment, they are
dissuaded with the intimation that, if they do not accept TeleSensory equipment, they
may not get any at all.
     6. It is alleged that, when adaptive electronic equipment is recommended for Tom
Sember's clients, the case is transferred to another counselor and that TeleSensory
equipment is automatically provided.
     7. It is alleged that, even when a rehabilitation supervisor of the Pittsburgh
district office was advised that he could get the same equipment at a lower price, he
ignored this source.
     8. One vendor has alleged that, when he complained about some of the above
practices, the Pittsburgh district office stopped buying other products he sells
which do not compete with TeleSensory.
     Having learned of these factors shortly before our state convention, we passed
the attached resolution. As you can see, it requests that you investigate this
matter. It is our understanding that portions of this matter may have been raised a
year ago and that at the time it was referred to the Pittsburgh district office,
where it was promptly rationalized. Given the possible illegal nature of the above
practices, the cost to the taxpayers, and the failure of rehabilitation to consider
the best way of meeting the client's needs and preferences, we hope that your office
will investigate directly.
     Even as we write this letter, we are in the process of gathering more facts. We
will be happy to meet with you at your earliest convenience to provide names of
persons who would be willing to give you further information concerning this
situation. Thank you.

                                                                           Sincerely,
                                                                 Ted Young, President
                                     National Federation of the Blind of Pennsylvania

                                  Resolution 91-03

     WHEREAS, it has come to our attention from some blind persons and some equipment
vendors in the Pittsburgh area that there is a definite bias on the part of the
Pittsburgh district office of the Pennsylvania Bureau of Blindness and Visual Service
toward the purchase of equipment produced and sold by TeleSensory; and
     WHEREAS, we understand that this bias may extend to changing authorizations for
other equipment to similar products made by TeleSensory; and
     WHEREAS, we know that the wife of one of the rehabilitation counselors works as
a sales representative for TeleSensory; and
     WHEREAS, the Vocational Rehabilitation program is the largest purchaser of
technical equipment for blind persons, and this relationship to TeleSensory may
constitute a conflict of interest; Now, Therefore,
     BE IT RESOLVED by the National Federation of the Blind of Pennsylvania in
convention assembled this tenth day of November, 1991, that the National Federation
of the Blind of Pennsylvania request the Auditor General to investigate this
situation and rule on whether this relationship constitutes a conflict of interest
and whether it violates any other laws.
                                ____________________
     There you have the letter to the Auditor General and the resolution, and clearly
these documents were received at the Auditor General's office with great interest.
Here is the letter written to Ted Young by one of Attorney General Hafer's
assistants: 

                                                                    December 15, 1991

Ted Young, President
National Federation of the Blind of Pennsylvania
Philadelphia, Pennsylvania

Dear Mr. Young:
     Auditor General Barbara Hafer has asked me to respond to your letter of November
18, 1991, with respect to alleged irregularities at the Pittsburgh District Office of
the Pennsylvania Bureau of Blindness and Visual Services. We have reviewed the
information provided by you and have determined that some follow-up is appropriate.
     In connection with your complaint, the information provided by you will be
forwarded to the appropriate audit bureau for the purposes of review during the next
scheduled audit of the entity in question. Additionally, we will begin to make a
preliminary inquiry into the allegations as soon as possible, given existing
personnel and workloads.
     We will be in touch with you with respect to our progress and findings.
     I want to thank you, on behalf of Auditor General Hafer, for coming forward with
the information that you have provided. It is only by reviewing the conduct of the
affairs of state government that those affairs can be conducted as efficiently and
properly as possible.

                                                                    Very truly yours,
                                                               Charles P. Mackin, Jr.
                                                               Deputy Auditor General
cc:  Bureau of Departmental Audits
     Office of Special Investigations
                                ____________________
     That was the letter Ted Young received just before Christmas of 1991. Members of
the National Federation of the Blind of Pennsylvania are working with legislators to
encourage the Auditor General to press forward with her investigation as
expeditiously as possible. 
     The situation in other states is not as clearly defined as it is in
Pennsylvania. Vendors consistently report that the New Jersey Commission for the
Blind does not place orders for any equipment that competes directly with TeleSensory
technology. Al Blumenthal has been the TeleSensory dealer in New Jersey for years.
His daughter Donna is an employee of the state commission for the blind, and we are
told that the Commission purchases an overwhelming proportion of TeleSensory
equipment. Is there any connection? It would be nearly impossible to prove, but the
very fact of the family tie makes it difficult to believe that there is no
favoritism. One would think that the Commission might see the wisdom of doing
business with other vendors if for no other reason than to avoid the appearance of
impropriety. The fact that it would save money in the process would suggest to the
citizen in the street another advantage in doing so. But the New Jersey Commission
continues to dance with virtually one partner only, TeleSensory.
     Blind consumers in New York say flatly that TeleSensory has the market sewed up
tight. This does not appear to be an accurate perception, at least in some parts of
the state. C-Tech (a company that sells a number of technology products for the blind
and visually impaired), for example, reports that in the area around its headquarters
outside of New York City it gets state agency business. This seems reasonable since,
according to company officials, its prices are five percent below TSI's across the
board. The company picks up and delivers equipment and also provides loaner products
when they are available. It does not have entire computer systems to lend while
equipment is being repaired, but it says it tries to supply components when problems
develop with equipment that it has sold. 
     The company has recently expanded into the western part of the state. Company
officials report that they are getting business in the new area from every sector but
the state agency. It is clear that agency personnel are hesitant to leave the
familiar, even when the price is right. 
     And what about TeleSensory? It is the largest company in this corner of the
technology market. Through merger, take-over, and its own product development, it
manufactures and sells the widest array of technology for blind and low-vision
consumers in the country. By size and market penetration TeleSensory has a dominant
position in the blindness field, and this disturbs many, not all of whom are TSI
competitors.
     For the record James Bliss denies that TeleSensory has locked up any segment of
the market. When asked whether he knew about Mary Ann Sember's relationship to the
Pennsylvania state agency's Pittsburgh office and Al Blumenthal's connection to the
New Jersey Commission for the Blind, he at first said that he did not know about the
family ties. When the relationships were explained, he then admitted that he was
familiar with the situation but explained that "They both have some clearance from
those agencies, that there is not a conflict of interest." He went on to say, "It is
my understanding that it is well known, and everyone understands the situation. At
least," he continued, "that is what I was told."
     It seems evident that everyone does understand the situation, but perhaps not in
the way that Jim Bliss and the state officials in question do. One can only hope that
the Pennsylvania Auditor General will consider carefully the problems that have been
brought to her attention and force open the bidding process in Pittsburgh. That would
be a start and might serve as a warning in the other state agency offices in which
competition for technology business seems to have been an unpopular concept. 
     Though all this would help, it leaves unaddressed an area of TeleSensory
behavior which elicits almost universal comment in discussions of vendor conduct in
the field of technology for the blind. The feeling is widespread and deeply held that
TeleSensory officials do not respect blind people and that this disrespect permeates
all aspects of TeleSensory's dealings. Blind officials in several organizations
report that TeleSensory representatives in discussions and negotiations prefer to
deal with sighted conferees even when the blind individual with the power to make
decisions is in the room. There is no objective way to measure this perception, but
the general and strongly held conviction remains that TeleSensory officials do not
respect blind people. 
     Another more easily demonstrated criticism is that outside of its technical
support and marketing departments TeleSensory hires almost no blind employees. More
particularly, there are very few blind sales representatives. Jim Bliss named two and
said that there were others but that he could not come up with names without a list
in front of him. Since TeleSensory is a major company in this field, one might have
hoped for a larger commitment to employing technology consumers than the record
demonstrates. Virtually every other company in the field has a better hiring record.
Indeed, one of the two sales representatives cited works (by choice) only part-time
and limits her activity to selling Braille-connected technology.
     When asked directly about allegations that blind applicants for sales jobs have
been told they need not apply, Bliss stated that it is TeleSensory policy to comply
with the spirit as well as the letter of the law surrounding employment. Bliss said
that TSI has just undergone a Department of Labor affirmative action audit, and, as
he put it, "came out in good shape." He also said that TeleSensory just won the
Employer of the Year Award from the California Governor's Committee for Employment of
the Handicapped--all of which may mean much or little or nothing. Be that as it may,
the rumors persist; the perception continues; and the TeleSensory sales force is
dominated by sighted representatives. 
     And what is the consumer left to think? TeleSensory designs, produces, and
markets workable and expensive software and hardware that are made to perform best
with other TeleSensory products. Its sales force, we have been repeatedly told, is
hard-driving and, if a sale is in the balance, not above promising things that no
current technology can yet deliver. Moreover, as one agency director told us, "This
sales force would sell you a Mercedes for $65,000 if you were in the market for a car
that would get you to work. A Mercedes will get you to work, of course, but it is
intended to do a lot more." TeleSensory representatives seem to be good at convincing
would-be consumers that the TSI product is what they need and that they shouldn't let
anyone make them settle for anything less. This causes problems for state agency
counselors who are conscientiously trying to save money while getting quality
products. It leads to wholesale waste when the counselors themselves, for whatever
reason, are committed to buying TeleSensory no matter what. 
     As we move into the final decade of the twentieth century, one thing is clear in
the field of technology for the blind. Major changes are underway. TeleSensory is not
the only game in town, and the blind users of technology will no longer settle for
having their informed views ignored. When unsavory business practices exist, we will
do our best to put an end to them. 
     It is not appropriate to funnel state business to one producer, whose prices are
high and whose service is slow to nonexistent. When that producer's sales
representatives have direct family ties to the agencies of government that make the
purchases, then the consumers, the competing vendors, and the general public will
inevitably draw their own conclusions about what is happening.
     We who are blind face enough discrimination, narrow-mindedness, and inertia
among the general public without having to put up with it closer to home. We intend
to end second-class treatment in the larger community, and we are likely to tolerate
it even less in our own field of work with the blind--including the production and
distribution of technology. It is no longer sufficient for governmental and private
agencies (or, for that matter, vendors of technology) to rely on old solutions just
because they are familiar. Increasingly the blind of this country know what they are
entitled to and what they want and are prepared to fight to get it. Empowerment is
the current watchword, and we who are blind have not only been at it for a long time
but fully understand what it means and how it works.
