Network Technologies Group, a telecommunications firm known as NTG, collapsed amid accounting fraud in 2002. NTG hired consultant John Collard as interim CEO to turn around the company. Collard found signs of fraud almost immediately, and the turnaround effort quickly became a liquidation.

Collard's consulting firm sued NTG and some board members in 2003. Collard claimed the board misled him about NTG's financial situation and did not pay him for all of his work. In an opinion issued last week, the Court of Special Appeals upheld Anne Arundel County Judge Ronald Silkworth's ruling that Zietz and Stewart made "material misrepresentations" when negotiating Collard's hiring. For example, the directors knew NTG was "in danger of collapse" but did not tell Collard how dire the company's financial situation was, according to the unreported opinion by the appeals court.

Collard had sought more than $350,000 in fees. But the appeals court upheld Silkworth's decision ordering Zietz and Stewart to pay Collard's consulting company $59,500.

"We're certainly pleased that the Court of Special Appeals has affirmed the negligent misrepresentation case," said C. Edward Hartman III, an attorney representing Collard. But Hartman said he was disappointed that Collard's other claims for reimbursement were denied.

Zietz and Stewart's attorney, James Heidelbach of Gebhardt & Smith, declined comment.

Stewart is general partner at Spring Capital Partners, which was an investor in NTG. He declined comment on the ruling.

Zietz formerly worked with the Abell Venture Fund, which was also an investor in NTG. Zietz could not be reached for comment.

In another case with a separate set of facts, the Court of Special Appeals last year upheld the dismissal of fraud claims by NTG investor Bon Secours Community Investment Fund against Zietz and Stewart. Bon Secours had claimed NTG's outside directors and accountants should have uncovered and disclosed the fraud. But the appeals court upheld a lower court's dismissal of the claims against the directors, saying Bon Secours failed to prove that outside parties were responsible for its loss on the investment.

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