Auction to sell last of tainted company

Fells Point telecom's allegedly `cooked' books led to downfall July 12

August 27, 2002|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

The office of Network Technologies Group Inc. once buzzed with workers, but now tables stacked with tools and a parking lot full of trucks are nearly all that remain of the Baltimore telecom that crumbled amid an alleged accounting scandal.

Those and other items will be auctioned off today at the company's Fells Point headquarters as NTG enters the final phase of its liquidation, said John M. Collard.

Collard is the turnaround specialist who was hired by the telecom's board as interim chief executive only to discover the irregularities that led to its downfall.

"They'll just start right over in this corner," Collard said of the auction as he toured the company warehouse filled with drills, jackhammers and equipment for splicing fiber-optic cables.

A privately held company founded in 1996, NTG installed cable for utility and telecommunications companies, including Comcast Corp., AT&T Corp. and MCI.

NTG closed July 12 after it was discovered that the company allegedly had "cooked" its books to increase its line of credit with Mercantile-Safe Deposit and Trust Co.

Collard, who also heads Strategic Management Partners Inc. of Annapolis, said he discovered the company had overstated profits by $4 million by creating $2 million in phony receivables invoices and by failing to list $2 million in accounts payable.

Ellin & Tucker Chartered of Baltimore, NTG's accounting firm, has said it was unaware of the accounting irregularities. The audit for last year wasn't completed because there were several open items that NTG's management never provided the accounting firm, Ellin & Tucker has said.

"I'm surprised that someone of Ellin & Tucker's stature could allow something like this to go on," Collard said.

When NTG closed, about 125 workers lost their jobs - and their last three weeks' pay. Also, NTG deducted money from workers' paychecks for their 401(k)s, but never sent the money to the firm handling the accounts. And checks NTG had written for employee health insurance in June bounced, so employees were not covered.

A source close to the company has said the FBI and the state attorney general's criminal investigation division have begun an investigation. Computers of senior executives as well as servers and company records have all been turned over to authorities.

The public auction begins today at 10 a.m. and continues until about 4 p.m. at company headquarters at 911 S. Ann St.

The auction will begin with the smaller items in the building, then shift about noon to the parking lot for the sale of the vehicles and construction equipment, said Mike Holzman, general manager of Atlantic Auctions Inc., the Bel Air auctioneer.

Buyers run the gamut from other telecom companies to individuals. And items up for bid range from trucks with buckets attached for working on overhead cables and vans to computers, fax machines, staplers and rulers.

Collard estimated the auction could bring in as much as $1 million, with all of the money going to the bank.

"Everything will go to [Mercantile] and [Mercantile] still will not come out whole," Collard said.

By noon yesterday, about 100 potential buyers had stopped to check out the merchandise.

Bob Frazier, who owns Frazier CATV Construction Company Inc. in Aberdeen, was looking for trucks and hardware for his telecom company. "I'm an auction addict. Usually you can get very good equipment a lot cheaper than you could if you buy outright from somebody."

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