4 top officers of city firm are indicted on fraud charges

NTG collapsed last year amid accounting scandal

January 23, 2003|By Stacey Hirsh | Stacey Hirsh,SUN STAFF

Four top officers of Network Technologies Group Inc., a Baltimore telecommunications company that folded last summer amid an accounting scheme involving misbooked invoices, were indicted yesterday on federal bank, mail and wire fraud charges.

Each officer faces 10 counts of fraud, and each count carries a penalty of up to 30 years in prison and a $1 million fine. Federal sentencing guidelines make it unlikely that any of the officers would face the maximum penalty if found guilty.

"These charges are based on a deliberate pattern of accounting fraud by the officers," said U.S. Attorney Thomas M. DiBiagio.

The officers charged are Michele Tobin, 47, a company founder and its former chief executive officer, who now lives in Colorado; Victor Giordani Jr., 55, also a company founder and its former chief operating officer, of Baltimore; Thomas Bray, 48, NTG's former chief financial officer, of Kingsville; and Beverly Baker, 51, NTG's former controller, of Catonsville.

About 125 workers lost their jobs when NTG closed its Fells Point offices July 12. A privately held company founded in 1996, NTG installed cable for utility and telecommunications companies, including Comcast Corp., AT&T Corp. and WorldCom Inc.

As NTG began to unravel, turnaround specialist John M. Collard was brought in to try to save it. Collard started uncovering accounting irregularities.

When the company folded, Giordani told The Sun he was surprised to find out what was happening at NTG.

But yesterday, Giordani and three others where charged with defrauding NTG's lender, Mercantile-Safe Deposit and Trust Co., and two of its investors - Abell Venture Fund of Baltimore and Smith Whiley & Co., a Connecticut investment company.

The defendants are expected to surrender to federal authorities in Baltimore in the next two weeks for an initial court appearance, DiBiagio said.

The 16-page indictment alleges that NTG kept $1 million of accounts payable off the books, so the company would appear more profitable than it was during 2001. Also, the company allegedly used false entries to beef up by more than $1 million its accounts receivable records that served as collateral for its $3.5 million credit line with Mercantile.

In the spring of 2001, NTG asked a local brokerage firm to help it raise more money. Abell and Smith Whiley agreed to invest $750,000 and $1 million respectively, based on false financial statements from NTG, according to the indictment.

"These firms were then fraudulently induced to invest in NTG," DiBiagio said.

While at first blush it looks like a loss for only the three companies named in the indictment, DiBiagio said the loss is much wider in scope. That money, he said, could have been used instead to create jobs in the city or to help fund another company.

"The victims are much more than just these three firms," DiBiagio said.

He and Jennifer Smith Love, assistant special agent in charge of the FBI's office in Baltimore, both said during a news conference yesterday that fighting corporate crimes is a priority for their agencies.

The FBI and the U.S. attorney's office are committed to fighting not just violent criminals, Love said, but also "those who steal with the new weapon of choice - the fountain pen."

Her remarks came days after John M. Rusnak, the Allfirst Financial Inc. currency trader in Baltimore who lost $691 million in one of the biggest banking fraud scandals in history, was sentenced to 7 1/2 years in federal prison. Rusnak was also prosecuted through DiBiagio's office.

DiBiagio said his office is trying to show, through both the Rusnak case and by indicting the top officers at NTG, that corporate crime in Maryland comes with serious consequences.

"We are changing a culture in Maryland," he said.

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