(FORTUNE Magazine) – TO THE SHAREHOLDERS in the crowded auditorium, Stephen R. Cohen looked as if he were on top of the world. Dapper and deeply tanned, the chief executive with the blow-dried silver hair and gold bracelet seemed firmly in command. The annual meeting last September of Telecom Plus International was drawing smoothly to its conclusion at the firm's Boca Raton headquarters when a lone shareholder suddenly spoke up: ''Hey, wait a minute!'' Angry shareholders began confronting Cohen. ''Why the hell did Telecom buy you a $4-million apartment?'' ''Where do you get off giving yourself a 50% raise when the company is losing money?'' Finally a shaken Cohen was able to adjourn the meeting. One irate member of the audience muttered, ''Next time we're going to throw eggs.'' Telecom's disgruntled shareholders claim that its executives have been working to enrich themselves, not the company. The Florida telecommunications concern installs and services telephone systems manufactured by Siemens, NEC, Lucky-Goldstar, and others for an impressive list of corporate clients that includes GM, IBM, and 3M. In the four quarters prior to the annual meeting, the company had lost $20.6 million on sales of $255 million. While Telecom was running in the red, Cohen, 44, and his top lieutenants personally made an estimated $2.4 million on a stock deal and stood to make another $2.5 million exercising options in a company Telecom took over. The dissident shareholders maintain that these profits rightfully belong to the company. Cohen and his top managers have also enjoyed lavish raises and perks that shareholders claim are way out of line for a company in financial distress whose stock, which had traded as high as $15.50 in 1983, was recently at a four-year low of about $6. Cohen vigorously denies any wrongdoing. When FORTUNE asked him for an interview, he replied in writing that the accusations are being orchestrated by ''one dissident shareholder'' who ''has his own agenda and has been stimulating other stockholders by spreading misinformation.'' Investors contend that management has put its own interests before those of its shareholders to a degree that is unusual even in this age of lofty executive salaries, lavish perks, and lucrative stock options. Says Brian McManus, a former broker at Shearson Lehman Brothers whose clients owned roughly 18% of the stock: ''These guys seem totally out for themselves. They know that shareholders are furious.'' Moreover, until recently the company apparently lacked strong outside directors to supervise management. One outside director, Phillip Cohen (no relation to Stephen), who runs Morgan Schiff, an investment banking house, not only collected $50,000 a year for serving as one of four outside directors, but his firm also pocketed $2.7 million in fees over two years for helping Telecom with acquisitions. Telecom's investor relations were not always so stormy. Founded 16 years ago, Telecom Plus International grew to become the largest independent supplier of telephone systems in the country. Cohen, a native of Long Island, joined the company as its chairman in 1976. He had been a stockbroker at Philips Appel & Walden, but in 1975 he was barred by the Securities & Exchange Commission from working in the brokerage industry for five years because he was accused of stock fraud. Cohen neither admitted nor denied the charge. Telecommunications experts say that he did a brilliant job building Telecom into a major competitor in the installation business. IN THE PAST four years, however, fierce price cutting in telephone equipment and installation squeezed Telecom's margins and caused it to rack up $87 million in operating losses over the period. During that time Cohen kept stockholders happy by buying and selling telecommunications companies at a profit and promising better times ahead. But over the last year Wall Street grew disillusioned, and the stock fell by 33%. Another shareholders' meeting is tentatively scheduled for this March, and Cohen will probably face an even more hostile audience. The purpose of the gathering is for the shareholders to approve the sale of most of Telecom's operating assets for $165 million to Siemens AG, the big West German electronics conglomerate. Most investors want to see this deal go through and think that Cohen did well to get such a good price. However, when the sale takes place Telecom will become a shell company, with about $5 million in operating assets and $235 million in cash: $165 million from Siemens and $70 million from the sale of Maxcell Telecom Plus, a mobile-telephone company. Cohen wants to redeploy the $240 million into new business ventures -- a proposition sure to trigger fireworks because some shareholders want Cohen tossed out, Telecom liquidated, and the $240 million paid out to them. The company's breakup value is about $8 a share, or $2 more than the recent market price. ''I'd take cash over Cohen,'' says one broker who deals in the stock. So, apparently, would Rank America, a subsidiary of Britain's Rank Organisation, which owns 20% of Telecom. Rank wants to put the proposal for liquidation to the shareholders at the March meeting, but Telecom management is resisting including it in the proxy. Rank has requested that the SEC require Telecom to put the proposal in the proxy. TELECOM'S TROUBLES don't end there. David Sweet, a New York lawyer who is the executor of his mother Minerva's estate, which includes 650 shares of Telecom, has filed a lawsuit charging that Cohen and his top managers ''wasted and mismanaged'' the company's assets and that they diverted the company's wealth for Cohen's ''personal use and benefit.'' Sweet is demanding that they return to Telecom the money they allegedly squandered. Close behind Sweet is Robert Gintel, of Gintel Equity Management, a $250- million mutual fund concern in Greenwich, Connecticut, who has also filed suit accusing management of self-dealing. Gintel and his funds together own some 5% of Telecom stock, which he bought last spring at $8 a share. Says he: ''Every time I read a proxy statement or an annual report from this company I get so infuriated. It's gross.'' What really seems to steam these shareholders is that Cohen and four of his henchmen, plus Phillip Cohen, who has since left the board of directors, personally made an estimated $2.4 million in stock transactions involving Triboro Communications, a company Telecom acquired. In the summer of 1983, Triboro was a near-bankrupt New York company with annual revenues of about $4 million from installing and servicing phone systems, the same business Telecom was in. Telecom agreed to buy 81% of Triboro for about $1 million, or 12 cents a share; at the same time, Cohen and his group bought 6.25% of the company for themselves for $125,000, or 20 cents a share. Four months after the acquisition, Telecom had all its new contracts in the New York City area fulfilled by Triboro; and in late 1983, Telecom also assigned to Triboro the rights to a distribution contract with NEC for telephone equipment. Telecom explains these transactions by saying that it had been struck by its union, whereas Triboro's union was not on strike, and the company was able to operate in New York City as usual through Triboro. But in the process the virtually worthless Triboro stock became valuable because the company now had Telecom business on its books. In its August 1985 proxy statement, Telecom informed its shareholders that Tele-Plus, a 65%-owned subsidiary, purchased the rest of Triboro for $4 a share. Thus Cohen, his executives, and Phillip Cohen received a windfall of $2.4 million. Gintel's suit claims that those profits rightfully belong to Telecom. Both the Gintel and Sweet suits take issue with dealings in Maxcell Telecom Plus. Maxcell was a Washington, D.C., company that built mobile-phone systems and owned licenses to operate in Atlanta and West Palm Beach, two potentially lucrative markets. In 1983 Telecom bought 46% of Maxcell and lent it millions to develop its franchises. Then in 1985, Maxcell asked for additional funding and eventually received $13 million. According to Gintel's suit, Cohen used this request as leverage to extort for himself and his pals Maxcell stock options worth 23% of the company at the time. Supposedly he threatened Maxcell management that Telecom would not provide the money unless he and his Telecom top guns were given the options. The Maxcell managers agreed and granted them and Phillip Cohen the right to buy 480 shares of Maxcell at $6,930 each. In return Telecom opened its purse. Last year, Telecom bought the rest of Maxcell and then in December sold the entire company to McCaw Cellular Communications, a radio- telephone company in the state of Washington, for $70 million. Gintel reckons that if Cohen and his colleagues exercise their options, they will make a $2.5-million profit. This is money that rightfully belongs to Telecom, Gintel argues. WHEN FORTUNE asked Cohen about the Maxcell options, he said that they were for the ''additional responsibility'' he and his managers assumed when Telecom ! acquired its substantial interest in Maxcell. He added that the extortion charge is ''absolutely fallacious and absurd,'' and said that the men have now ''voluntarily returned'' these options to Telecom. Cohen had no comment at all on the Triboro stock deal because of pending litigation. Aggrieved about these transactions, dissident Telecom shareholders took the company's 1986 proxy statement as a slap in the face. Mailed to stockholders last August, the document noted that in January 1986 the company had spent $2.9 million to provide its C.E.O. with an apartment in New York City because he needed to be there frequently for business. The company later chipped in another $1.1 million to renovate and furnish the exclusive Trump Tower pad. Complains stockholder Richard Grant of Palm Beach, Florida: ''These guys spend money like drunken sailors.'' In October, Cohen bought the apartment from the company and then leased it back to Telecom for $15,000 a month. Then this January, Cohen canceled the lease and agreed to reimburse the company for the improvements. The proxy statement also revealed that in 1986, while the company was losing money, Cohen, who has substantial personal wealth, received a base salary of $487,000, a 50% increase over the previous year, and a guaranteed 12% annual increase through 1987. THE IRONY IS that no matter what Telecom's fate, Cohen is likely to come out ahead. If he wins the vote at the March meeting, he'll remain as C.E.O. with a $240-million war chest in his keeping. If shareholders throw him out and liquidate the company, he will make a very handsome profit. In January, Cohen bought 70,000 shares of Telecom at about $6 each to add to the 469,288 he already owns. If Telecom is broken up at $8 a share, a price many shareholders think likely, Cohen will lose his company. But he could eventually have some $4.3 million in cash to go out and, dealmaker that he is, start all over again.

CHART: INVESTOR'S SNAPSHOT TELECOM PLUS INT'L

SALES (LATEST FOUR QUARTERS) $255.1 MILLION CHANGE FROM YEAR EARLIER UP 20%

NET LOSS $20.6 MILLION CHANGE PROFIT YEAR EARLIER

RETURN ON COMMON STOCKHOLDERS' EQUITY -10% FIVE-YEAR AVERAGE 2%

RECENT SHARE PRICE $6 PRICE/EARNINGS MULTIPLE N.A.

TOTAL RETURN TO INVESTORS (12 MONTHS TO 1/30) -34%

PRINCIPAL MARKET OTC CREDIT: NO CREDIT CAPTION: NO CAPTION DESCRIPTION: Color: see above.