Ex-T-Mobile Exec Says Company Inflated Sales Numbers for Investors
T-Mobile, its former Senior Vice President-Sales James Kirby and its ex-Vice President-Sales Jason Grutzius engaged in a scheme of artificially inflating sales to small- and medium-business customers, alleged former Director-Sales Heidi Cramer in a sex discrimination lawsuit Tuesday that claims she was terminated when the plan went awry. T-Mobile assigned her “sole blame” for the wrongful actions of her male co-workers in the sales department, said the complaint (docket 2:22-cv-03800) in U.S. District Court for Southern Ohio in Columbus.
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Customers in the commercial telecom industry “commonly seek to acquire large numbers of telecommunications devices over a period of time,” said the complaint. “The standard industry practice under such circumstances is for the telecommunications company to sell and activate devices to customers to suit immediate customer need,” it said. Subscriber count “is a leading benchmark for success,” it said.
T-Mobile manipulated its sales figures in a “zero dollars plan” scheme by deviating from the standard industry practice of selling devices to suit immediate customer need, “and would instead sell customers all needed and forecasted devices immediately,” said the complaint. For devices sold that were not immediately needed, T-Mobile “would suspend the future devices, counting the devices as active but subscribed to plans at a cost of zero dollars per month until the customer needed the devices to be active,” it said.
The practice permitted T-Mobile “to cast itself in a favorable light when representing its current subscriber figures within the industry and to investors without requiring the customer to pay for devices that it did not immediately need,” said the complaint. The manipulation benefited Grutzius and Kirby directly, allowing them to meet their quarterly quotas and earn generous bonuses, it said. It also benefited T-Mobile, “providing an inflated first quarter subscriber figure” for 2021, it said. Kirby and Grutzius both left T-Mobile earlier this year, per their LinkedIn profiles.
The “rather obvious risk” of the scheme “is that a large number of subscriber cancellations may become necessary in the event that future customer need fails to meet an optimistic initial forecast,” said the complaint. “This is precisely what happened” in the second and third quarters of 2021, it said. T-Mobile chose not to terminate Grutzius or Kirby “for the predictable consequences of their actions,” but only Cramer, “the only female director in the department,” it said.
The complaint, which names T-Mobile as the only defendant, but not Grutzius or Kirby, alleges violations of the Ohio Civil Rights Act and seeks compensatory damages. T-Mobile didn’t respond to queries Wednesday seeking comment.