NTG shuts down:
CEO alleges accounting irregularities
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NTG Press Coverage Summary
Network Technologies Group Inc. of Fells Point laid off all 125 employees and closed its doors Friday after alleged accounting problems were uncovered, according to the company's Interim CEO John M. Collard.
Collard said Friday that he had discovered what he believes to be irregularities in the accounting practices at the telecommunications company, which "significantly altered the company's financial position."
NTG laid off all of its workers because it could not meet biweekly payroll, approximately $280,000, Collard said. Collard said that Mercantile-Safe Deposit & Trust Co. was the firm's major lender.
Collard was named CEO July 1 after CEO and co-founder Michele A. Tobin left the company to "pursue other interests." according to company officials. Collard is chairman of Strategic Management Partners Inc. of Annapolis, a turnaround management company hired by the NTG board of directors.
Tobin could not be reached for comment.
After reviewing the company's finances, Collard said he discovered what he believes to be falsified invoices for receivables from one of its major clients. Collard said he believes that it was done in an attempt to inflate the company's assets used as collateral for financing from Mercantile.
Network Technologies Group provides infrastructure services like wiring and cabling for communication companies, cable television, wireless services and utility industries around the country. It also has construction and engineering capabilities like wetland restoration, and building substructures.
Collard said today that "there could be criminal activity" but said he has not yet notified any law enforcement agencies regarding the allegations.
He said he was solely focused on dealing with employees who were upset because they had lost their jobs.
NTG was founded in 1998 by Tobin and co-founder Victor Giordani. The company's Web site claimed revenues of $22 million in 2000, two years after its start. Clients include Comcast, Adelphia, AT&T, Qwest, Nextel, BGE, Corvis, MCI and Allegheny Power.
Major investors are Smith & Whiley & Co. of Hartford, Conn., and the Abell Venture Fund of Baltimore.
The company had been able to secure several rounds of venture capital financing in the past few years. In 1999, Network Technologies received $1.5 million from the Abell Venture Fund, the venture capital arm of the Abell Foundation. In 2000, Network Technologies nabbed $3.5 million in venture capital from Spring Capital Partners LC, a Baltimore venture firm.
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