Tech community hit hard by NTG failure
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NTG Press Coverage Summary
Members of Baltimore's technology community were caught off guard last week when news broke that local telecommunications firm Network Technologies Group Inc. shut its doors and laid off all 125 workers.
Although the company recently hired a turnaround consultant and interim chief executive in the wake of the resignation of CEO and co-founder Michele Tobin, the company's demise amid allegations of accounting irregularities shocked many in Greater Baltimore.
"People were surprised," said Penny Lewandowski, executive director of the Greater Baltimore Technology Council. "Nobody had a clue."
Interim CEO John M. Collard said last week he uncovered what he believed were accounting irregularities at the Fells Point firm. Collard said he discovered what he believed were falsified invoices for receivables from Comcast Corp., one of its major clients. He could not be reached for comment for this story.
Collard said he believed that the false invoices were created in an attempt to inflate the company's assets used as collateral for financing from its major lender, Mercantile-Safe Deposit & Trust Co.
Newton A. Fowler III, a technology and venture capital attorney and partner with Venable, said news of NTG's failure hurts the short-term momentum of Baltimore's technology community. Fowler said local technology companies have just started to make a comeback from the technology crash of 2000 with both customers and venture capital firms like the Abell Venture Fund and Spring Capital Partners LP that invested millions in the company.
"This type of story certainly undermines that," Fowler said. "It's going to make it harder. It doesn't help the investment climate."
Lewandowski said the local technology community will survive the alleged scandal.
"Certainly, it made people think, when something like this happens in your own backyard," she said. "Does this taint the technology community? No. This doesn't have anything to do with the New Economy."
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. The company provided infrastructure like wiring and cabling for communications companies. Clients included Comcast, Adelphia, AT&T, Qwest, Nextel, BGE, Corvis, MCI and Allegheny Power, according to the site, and the firm was able to secure several rounds of venture capital financing in the past few years.
Last week, Collard said that "there could be criminal activity" involved with the NTG accounting situation, although at the time he said he hadn't contacted law enforcement officials about the allegations.
As of July 17, neither the Baltimore City State's Attorney's Office nor the Maryland Office of the Attorney General had initiated an investigation into the matter.
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