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Failed telecom's chief files Chap. 11
By MARTHA McKAY Peter J. Salzano, CEO of the Newark telecommunications company at the center of a nationwide equipment leasing scandal, is facing personal bankruptcy. The Morris County resident filed for Chapter 11 bankruptcy protection Monday, listing debts of more than $1 million, according to court papers. Salzano's defunct company, NorVergence, has been accused by federal and state officials, including New Jersey Attorney General Peter Harvey, of defrauding as many as 11,000 small businesses across the country. In connection with his company's collapse, Salzano has been named in several lawsuits that contend he is liable for NorVergence's outstanding bills, which total in the millions. Michael Sirota, Salzano's lawyer, said his client isn't liable for those corporate debts, "but he needs the opportunity to address [the claims] in one forum in an orderly fashion." NorVergence filed for Chapter 7 liquidation in July. The company's abrupt end left its customers without phone, Internet or cell service, and with virtually worthless "Matrix" boxes that NorVergence had said would deliver deeply discounted service. NorVergence typically signed up customers for five-year Matrix leases and then sold the agreements to more than two dozen leasing companies. Although NorVergence stopped service, most of the leasing companies continued to bill customers and, in many cases, sued them for non-payment. Some leasing companies have offered settlements. Salzano's personal filing lists 20 creditors, but only six include dollar amounts. Those total $1.14 million, including $362,000 charged to an American Express corporate card and a claim of more than $681,000 related to a lawsuit filed in state court by De Lage Landen Financial Services, a company that bought leases from NorVergence. Sirota said the De Lage Landen lawsuit argues that Salzano signed a personal guarantee on the loans. Sirota said his client has been fighting that claim. "Someone at NorVergence used a [signature] stamp with Peter's name on it," Sirota said. The largest debt Salzano faces could be to the Internal Revenue Service. The company's bankruptcy papers, which like Salzano's personal filing are in U.S. Bankruptcy Court in Newark, say NorVergence owes more than $6 million in unpaid corporate income taxes. Sirota acknowledged that the IRS "is the largest disputed claim." Salzano, as CEO, could be personally liable for those taxes if NorVergence, the corporation, is unable to pay. Court records show that at the time of its bankruptcy, NorVergence had $53.6 million in assets and $87.3 million in debts. The company currently has less than $1 million in the bank, according to the bankruptcy trustee. Salzano's personal bankruptcy filing will stop court proceedings against him, at least temporarily. Among other cases, he faces fines levied by the Pennsylvania Attorney General's Office, which accuses NorVergence and him of violating that state's consumer fraud act. Salzano's bankruptcy court papers also list $28,889.53 in personal credit-card debt, and more than $70,000 owed on student loans he co-signed for two nephews. Salzano also runs Fairfield-based Network Digital Office Systems, a copier rental company that did business with NorVergence. Salzano's brother Thomas N. Salzano ran NorVergence, according to employee accounts, but was paid as a consultant and called himself chief managing officer. E-mail: mckay@northjersey.com (Not mentioned in the bankruptcy filings, but surely to be included, is the probe regarding five days before the June 30 court action, NorVergence managed to wire more than $160,000 to two related companies, according to court papers. One, Network Digital Office Systems, is run by NorVergence Chief Executive Peter Salzano. The other, Data Solutions, provided the consulting services of Salzano's brother, Thomas, to NorVergence. It is Thomas N. Salzano who was supposedly “the brains” behind the company. He allegedly had a bankruptcy from a similar “scam” and could not be named as president. Alex Wolf was the Chief Operation Officer, the person with the telecom sales background, and Robert J. Fine, reportedly president of NorVergence Capital and the one who arranged the “private label” contracts and placement of leases. Editor.)
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