Thomas Bray, former chief financial officer of the now-defunct
Network Technologies Group Inc., became the second company official to plead
guilty to one count of fraud yesterday in the case of a Baltimore
telecommunications firm that collapsed amid an accounting scandal.
part of a plea agreement with the U.S. attorney's office, nine counts of wire,
mail and bank fraud against Bray are to be dismissed at sentencing.
"The statement of facts make it
clear that Mr. Bray's sin is one of omission, not commission," Gerald C. Ruter,
Bray's attorney, said after the defendant's appearance in U.S. District Court in
Bray faces up to 30 years in prison and a $1 million
fine. A sentencing date was not set in court yesterday, and Bray was released on
his own recognizance.
Bray and three other former company executives are
accused of defrauding Network Technologies Group's lender, Mercantile-Safe
Deposit and Trust Co., and two of its investors - Abell Venture Fund of
Baltimore and Smith Whiley & Co., an investment company based in Hartford,
Michele Tobin, 47, former chief executive officer of NTG, pleaded
guilty last week to one count of wire fraud as part of a plea agreement with the
U.S. attorney's office.
A privately held company founded in 1996, NTG
installed cable for utility and telecommunications companies, including Comcast
Corp., AT&T Corp. and WorldCom Inc.
The company inflated its accounts
receivable, which served as collateral for its line of credit with Mercantile,
according to court documents. The company also produced false financial
statements that a local brokerage firm used to attract NTG investors, the
Ruter said Bray signed financial documents that were
prepared by others, and that he shouldn't have signed them.
"It was a
mistake," Ruter said, adding that Bray is remorseful.
But Ruter said
Bray's role was minor compared with those of the other three Network
Technologies officers charged with fraud in the case.
Bray, 48, was hired
as NTG's chief financial officer in the fall of 2000. By the time the company
closed in July, he was earning $175,000 a year, according to the plea
According to court documents, Bray agreed to plead guilty to
charges that there was a fraud scheme, that he knowingly took part in it and
that he used or caused the use of interstate wires (such as faxes or e-mail) to
execute the scheme. He agreed to cooperate with federal law enforcement
officials and to testify in court.
Defense and prosecuting attorneys
agreed to disagree on Bray's role in the offense and his abuse of trust, as well
as on the loss amount, according to the plea agreement.
in the plea agreement that the Abell Foundation lost about $2.25 million, Smith
Whiley lost $1 million and Mercantile took a net loss of about $2.1 million from
the line of credit it extended to NTG.
Bray should receive a lesser
sentence if he continues to cooperate with authorities, and he is free to ask
for more leniency at sentencing, the plea agreement says.
He and the
other NTG officers were each charged with 10 counts of mail, bank and wire fraud
last month after an investigation of the company. Beverly Baker, 51, NTG's
former controller, and Victor Giordani Jr., 55, a founder and former chief
operating officer, pleaded not guilty this month.
The troubles at NTG
were exposed when turnaround specialist John M. Collard was brought in by the
company's board of directors July 1 to try to save the company. Collard, who
owns Strategic Management Partners Inc. of Annapolis,
uncovered accounting irregularities and closed the company July 12.
125 workers lost their jobs when NTG shut its Fells Point
offices. Money that had been deducted from their paychecks to go into 401(k)
accounts was never deposited there, and the employees did not receive health
benefits for several weeks before the company closed, Collard has
Bray and the other NTG officers were indicted last month, but talks
about a plea agreement between Bray's attorney and the U.S. attorney's office
apparently were under way for months. A letter from the U.S. attorney's office
to Ruter is dated Nov. 27.
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