CEO of MSP Provider Compulinx Under Arrest

Terrence D. Chalk, 44, of White Plains was arraigned in federal court in White Plains, along with his nephew, Damon T. Chalk, 35, after an FBI investigation turned up the curious lending and spending habits. The pair are charged with submitting some $1 million worth of credit applications using the names and personal information -- names, addresses and social security numbers -- of some of Compulinx's 50 employees. According to federal prosecutors, the employees' information was used without their knowledge; the Chalks falsely represented to the lending institutions, in writing and in face-to-face meetings, that the employees were actually officers of the company.

Terrence Chalk is also charged with racking up more than $100,000 in unauthorized credit card charges. If convicted, he faces 165 years in prison and $5.5 million in fines, prosecutors say. Damon faces a maximum sentence of 35 years imprisonment and $1.25 million in fines.

No one was answering the phones at Compulinx Wednesday morning, and the company's Web site was not responding. Terrence Chalk, a member of Westchester County Business Council's Hall of Fame, is well known in the channel as an early adopter of the managed services model and innovator of the "coopetition" model, which helped bring other service providers into the MSP space.

"We've seen a lot of different companies in the channel try to get into managed services, and a lot of them want to partner with us to reach some of those opportunities," Chalk told VARBusiness last year. "Having a network of partners expands your prospects."

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Compulinx was known as Computek until 2004, when it acquired Linx Logic, formerly part of Ernst and Young Technologies. The company developed its own proprietary software platform for hosting customers' networks, dubbed Manage:Now, and moved on to launch its own partner program that allows other resellers to team on managed-services projects.

Compulinx also manages a massive IT infrastructure, which includes four data centers, more than 300 servers and a whopping 40 TB of storage. Any disruption to Compulinx's operations would seemingly be troubling for the company's partners and customers, but as of Wednesday morning, few were commenting.

Compulinx was among the seminal members of Ingram Micro's VentureTech Network (VTN) organization, which bolsters the profile of some 300 SMB solution providers nationwide. A spokesperson for Ingram Micro Wednesday said Compulinx was "moved out of VTN well over a year ago" and was also no longer listed with the Ingram Micro Services Network as of January 2005.

Ingram wasn't alone in giving Compulinx a seal of approval over the years. CMP Technology's own Institute for Partner Education and Development (IPED), in conjunction with Babson College, named Compulinx a Channel Elite member last year.

Chalk's attorney, Mayo Bartlett of White Plains, said Wednesday afternoon that he hadn't spoken to his client about the potential technology fallout for Compulinx' clients. Bartlett added that he hoped the Compulinx business could continue uninterrupted despite the CEO's legal woes.