Former NorVergence chief's new venture falls just as hard

By MARTHA McKAY

NorthJersey.com

A year ago Thomas N. Salzano stood at the helm of NorVergence, a multimillion-dollar telecommunications company on the brink of a spectacular flameout.

Three weeks ago, Salzano scuffled with police after he was unceremoniously booted from his Kenilworth office that housed Charity Snack, his latest venture, for non-payment of rent.

On the surface, the companies couldn't have less in common: NorVergence was a reseller of phone service with hundreds of millions of dollars of leases; Charity Snack raised money for breast cancer by putting cardboard boxes in nail salons.

But the similarities were striking.

Both companies relied on a high-powered sales force working from a script; employees described draconian work rules including docking pay for minor infractions; and when the business soured, some employees say they weren't paid what was owed to them.

And both companies fell hard: NorVergence crashed in a bankruptcy that has spawned a slew of investigations; Charity Snack lost its office and its affiliation with the charity for which it said it was raising money.

Federal investigators continue to sift through the ashes left by the NorVergence bankruptcy in July 2004. This month, the FBI interviewed a former NorVergence employee with ties to Salzano in connection with the business' spectacular demise, according to sources with knowledge of the investigation.

Last week, a U.S District Court judge ordered a $181.7 million default judgment against NorVergence in a case brought by the Federal Trade Commission.

And creditors now assert the company owes $550 million.

Of that, former employees claim $6 million in unpaid wages and health benefits. And the IRS says NorVergence went bankrupt owing $6 million in taxes. The company has cash on hand of $520,000, said Michael Holt, a lawyer for the bankruptcy trustee.

Settlements reached

And federal agents are still scrutinizing the byzantine finances of NorVergence and its principals.

Salzano's title was chief managing officer, and he was paid hundreds of thousands of dollars as a consultant while his brother, Peter J. Salzano, served as CEO.

NorVergence's abrupt end threw 1,300 people out of work and left thousands of small-business customers without phone and Internet service.

Legal battles raged when customers who bought virtually worthless NorVergence "Matrix" boxes tried to get out of equipment leases that NorVergence had sold to more than 40 banks and leasing companies. In many cases, settlements have been reached, brokered by state attorneys general, providing some relief to deeply angry NorVergence customers.

Peter J. Salzano filed for personal bankruptcy this year and faces numerous claims and lawsuits in connection with his role in the company, including scrutiny by the FTC.

"Peter Salzano has an impeccable background and enjoys an unblemished reputation throughout the state of New Jersey and at all times while the CEO of NorVergence he acted in good faith," said Joseph A. Hayden Jr., a prominent criminal defense attorney hired by Peter Salzano. "At no time did he ever attempt to engage in any fraud or injure any customer of members of the public."

Thomas Salzano could not be reached for comment and his lawyer did not return calls for comment.

Interviews with former employees reveal that Thomas Salzano has started at least three new companies in the past year, one called Retail America Inc. and another called Certa Clean Inc.

Cash collections

Then came Charity Snack.

From January through June, the Kenilworth-based company collected cash for the American Breast Cancer Foundation using thousands of cardboard boxes, filled with cookies and candy. Printed on Charity Snack's cardboard box is a promise to donate 30 percent of its profits to charity.

The company's sales staff placed an estimated 4,000 to 5,000 boxes in nail salons, auto-repair shops and other walk-in businesses throughout New Jersey, according to former employees. By April, the business was growing fast, bringing in as much as $20,000 a week in cash, the employees said.

Mia Saric, who started work at Charity Snack in February, said 269 of her boxes brought in $2,963 in one two-week period.

Saric said her pay was docked $25 if she was five minutes late to a morning meeting. Former NorVergence employees have described a boiler-room-like atmosphere with draconian work rules including being docked for pay if they were late.

History of failures

She described Salzano and his son, Dustin, who worked at the business, as wildly enthusiastic about Charity Snack's prospects. Salzano talked about "going national," she said.

Saric described her boss as a high-energy workaholic who drank caffeine-rich Red Bull, drove a black BMW and urged employees to listen to the recordings of motivational guru Anthony Robbins.

Saric said she quit after she began to question some of Salzano's business practices and uncovered his connections to several bankruptcies. Prior to NorVorgence, Salzano started several businesses that failed.

Charity Snack's income apparently wasn't enough to cover its rent on an office suite in a commercial condominium at 4 Mark Road in Kenilworth, according to Kenilworth police, who gave the following account:

On June 30, the landlord locked Salzano out of his office for non-payment of rent. Police showed up and Salzano said he would speak to his lawyer about the situation.

A short time later, Salzano returned and smashed through the plate glass door of the office using a hammer. A witness told police that Salzano left shortly after breaking the door with "something hidden under his shirt."

Non-profit cuts ties

About four hours later, police returned to find Salzano sitting behind his desk. He was arrested and charged with criminal mischief, a misdemeanor to which he later pleaded not guilty, according to the Kenilworth police.

The American Breast Cancer Foundation, which is a registered non-profit based in Baltimore, has cut ties with Charity Snack but won't say how much money it received from Salzano's business.

"They [Charity Snack] are no longer authorized to raise funds on our behalf," said the foundation's director, Phyllis Wolf, who would not elaborate.

Whether Charity Snack is still in business is anyone's guess.

On a recent afternoon, the Kenilworth office that housed Charity Snack was locked and the front door repaired. Dozens of the company's empty cardboard collection boxes were piled next to a Dumpster nearby.

Three Elmwood Park businesses - an auto-glass shop, a nail salon and a travel agency - said last week that a man from Charity Snack had showed up recently to collect the boxes they'd agreed to display. They were filled with money.

One was told by the Charity Snack representative that the company was "moving." The other two were told that Charity Snack was going on vacation for the summer.

E-mail: mckay@northjersey.com