Source: Record, The; Bergen County, N.J.
Publication date:
January 16, 2009
By KEVIN G. DeMARRAIS, STAFF WRITER
The alleged mastermind behind a Newark-based telecommunications company accused of defrauding its customers out of hundreds of millions of dollars was indicted for money laundering and theft Thursday by a Louisiana grand jury.
The 13-count indictment of Thomas N. Salzano, which was handed down by a Calcasieu Parish grand jury, included five counts alleging theft of almost $100,000 from businesses that had signed long-term equipment leases with his company -- NorVergence -- for discounted telephone and Internet service.
Tammi Arender, a spokeswoman for Louisiana Assistant Attorney General David Caldwell, said "the investigation into others who might also be indicted is ongoing."
Salzano could not be reached for comment.
The indictment is the latest in a string of legal problems for the company, which filed for Chapter 7 protection in U.S. Bankruptcy Court in Newark in 2004.
The abrupt action threw 1,300 people out of work and left thousands of small-business customers holding expensive leases for equipment that failed to deliver the services promised.
Customers sued to get out of the leases, which NorVergence sold to banks and leasing companies for hundreds of millions of dollars.
Authorities said it was part of a scheme that cost small- business owners throughout the nation millions of dollars by failing to deliver on promises of cheap phone and Internet service.
Later in 2004, the bankruptcy trustee filed a lawsuit seeking to recover $144 million from eight insiders, including Salzano, and at least 26 banks and leasing companies.
Some of the money that customers owed was eliminated under pressure from regulators in several states, including New Jersey, where the attorney general and the Division of Consumer Affairs reached an agreement with a group of financial companies in 2005 to forgive approximately $15.9 million owed by New Jersey small businesses.
Last September, Caldwell filed criminal charges against an Iowa bank accused of defrauding investors and filing false reports on its activities related to NorVergence leases.
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E-mail: demarrais@northjersey.com
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