A Baltimore telecommunications business shut down yesterday and its 125 workers lost their jobs after company officials uncovered accounting irregularities that included misbooked and phony invoices.

John M. Collard, who took over as interim chief executive officer of Network Technologies Group Inc. on July 1, said the company had been inflating the accounts receivable that served as collateral for its line of credit with Mercantile-Safe Deposit and Trust Co. That allowed NTG to borrow more money, he said.

"As it started unraveling and it started coming out, believe me, we saw a lot of surprised faces - not only in the building, but at the bank and with the investors," he said.

A privately held company founded in 1996, Network Technologies Group, or NTG, installs cable and other infrastructure for cable, utility and telecommunications companies, including Comcast Corp., AT&T Corp. and MCI.

Collard, a turnaround specialist who heads Strategic Management Partners Inc. in Annapolis, was hired by NTG's board to replace CEO and co-founder Michele Tobin. The board, Collard said, told him it was not getting enough information and that the audit report had not been approved.

Tobin did not return calls yesterday.

Mercantile officials declined to comment yesterday, saying the bank does not discuss customer loans or its relationships with customers.

Collard said yesterday that when he arrived at the company's Fells Point headquarters, he found that NTG had overdrawn its account at Mercantile by $200,000. He went to a customer, Comcast Corp., to collect money due, only to find that there was a big discrepancy between what the two companies believed was owed.

As he began investigating, Collard discovered that some invoices from other customers were posted on the Comcast account.

In addition, Collard found that NTG had billed other customers for work that hadn't been done and that fake invoices had been created. Also, the company inappropriately included invoices that secured performance bonds in the collateral base, Collard said.

"When they did that, the bank, believing that they had collateral, lent additional money," he said.

Collard said he had not been in touch with law enforcement about the accounting irregularities.

"I've made no contact with the district attorney or anything of that nature," he said, "and how we're going to proceed. I'll let the proper authorities who do that sort of thing guide me."

Collard said Mercantile "could lose as much as a million dollars, and everyone else will lose whatever they had invested."

Abell Venture Fund of Baltimore is an investor in the company, as is Spring Capital Partners LP, also in Baltimore, which invested $3.5 million in subordinated debt with warrants in 2000, according to its Web site.

According to Spring Capital's Web site, it invested in NTG after a $1.5 million equity investment from the Abell Venture Fund, an arm of the Abell Foundation.

Spring Capital and the Abell Foundation did not return phone calls seeking comment yesterday.

Smith Whiley & Co., a Connecticut-based investment company, invested an unknown amount in NTG. Gwendolyn Smith Iloani, president and chief executive of Smith Whiley and an NTG board member, declined to comment yesterday.

Victor Giordani, NTG's co-founder and its chief operating officer, said yesterday that he was surprised to find out what was happening at his company, situated at 911 S. Ann St.

Giordani said the company had a great team of workers and got a lot of repeat business. Some employees, he said, are working without pay to complete jobs that were almost done as the company liquidates. Some were being paid with money out of the manager's pockets to finish those jobs, he said.

The company is working to find other contractors to finish orders on jobs that were midway toward completion or hadn't been started, Giordani said.

Collard said the company has no plans to file for bankruptcy protection. It will liquidate, collect accounts receivable, sell the assets and give the proceeds to the bank.

"There isn't a company to save; there's just no company," Collard said.

The company had revenue of $30 million to $31 million in 2000, Collard said. But NTG was hurt by the blow-up in the telecom sector, and Collard said revenue had dropped to about $23 million by the time he got there.

A year ago, the company had about 300 workers, but more than half of those have been laid off. When the company closed yesterday, it had 125 workers. About six will stay to help liquidate the company, Collard said.

Collard said police cars were at the site to maintain order yesterday morning as employees got the news. Workers won't get their last paychecks, he said.

"The employees were good, qualified, hard-working people, and this is through no fault of their own," Collard said. "They're the victims in all of this."

Collard said he tried to find investors to help get the company back on its feet. "It was only late [Thursday] night, after exhausting every possibility here, that it became painfully obvious that the investors were not going to put any more money in," he said.

Sun staff writer Andrea K. Walker and researcher Jean Packard contributed to this article.