|Collard suing NTG, board members||
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NTG Press Coverage Summary
John M. Collard, the Annapolis consultant who uncovered alleged accounting fraud at Network Technologies Group Inc., is suing NTG and several board members claiming he was misled about the company's financial condition and still hasn't been paid for his services.
The $300,000 lawsuit was filed in Anne Arundel County Circuit Court on March 3. Collard is also seeking $45,000 for attorney's fees. The suit was technically brought by Collard's consulting firm, Strategic Management Partners Inc.
"What I'm suing for is to get paid," Collard said.
Collard was hired by the NTG board in late June to turn the company around after CEO Michele Tobin decided to leave the company because — she told employees — she is suffering from cancer. Collard was named interim CEO of the company.
Within days on the job, Collard uncovered alleged accounting irregularities at the Fells Point telecommunications firm. He later found that company executives had allegedly doctored company records to attract more than $5 million in investments and loans.
Collard was forced to shut the company down July 12 and lay off all 125 workers. He liquidated the company's assets a month later in an attempt to repay some of the $3.5 million line of credit given to NTG by its bank, Mercantile-Safe Deposit & Trust Co.
Tobin, as well as three other NTG officers, were indicted Jan. 22 by a federal grand jury on 10 counts of fraud. Tobin and Thomas Bray, NTG's former chief financial officer, each pleaded guilty to one count of wire fraud. The two other officers charged, Victor Giordani Jr., the former chief operating officer, and Beverly Baker, the former controller, pleaded not guilty and could face trial in April. Each count of fraud is punishable by up to 30 years in prison and a $1 million fine.
Collard says that he and his company, Strategic Management Partners, were misled by the NTG board and have not been paid. Besides NTG, the defendants named in the suit are Nora Zietz, Robert Stewart, Gwendolyn Smith Iloani and Maritza Alverez. Except for Alverez, all were NTG board members representing various investors. Zietz, who now works for Johns Hopkins University, worked for the Abell Foundation at the time; Stewart is a managing partner for Spring Capital Partners, and Iloani and Alverez work for Smith Whiley & Co. Although Alverez was not a board member, she was involved in Collard's hiring, Collard said. Collard is not suing any of the former officers.
None of the defendants could immediately be reached for comment.
Under a contract signed with NTG, Collard was supposed to receive a refundable retainer of $15,000 and a weekly salary of $10,000.
On July 11, the day before NTG was shut down, Collard amended his employment contract so that he was to be paid $250 an hour.
Collard won't reveal exactly how much he eventually got paid, saying only it was "not very much." But the check for his retainer bounced, he said.
Although NTG is technically insolvent, Collard says that NTG board members are covered by a $1 million directors and officers liability policy that he says covers misrepresentation by board members. His lawsuit charges one count of negligent misrepresentation.
"Within days of being assigned as the CEO of NTG, Collard learned the financial statements that NTG and the directors had presented were grossly inaccurate," the lawsuit says. "Collard learned that the true financial position of NTG was significantly worse than NTG and its directors has represented in the financial statements and verbal assurances it provided to [Strategic Management Partners] during the contract negotiations between the parties."
Smith Whiley, which invested $1 million in NTG through the Bon Secours Community Investment Fund LP, is also suing NTG, the four indicted NTG officers, several NTG board members and NTG's auditor, Ellin & Tucker Chartered, for $6 million.
That lawsuit was filed in Baltimore City Circuit Court on March 3 and alleges violation of state securities law, various charges of negligence and misrepresentation, and civil conspiracy. Ellin & Tucker officials have not returned calls seeking comment.
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