UPDATE: A Tainted Picture of MSP Provider Compulinx Emerges

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One day after the arraignment of its CEO on identity theft and fraud charges, work at MSP firm Compulinx has come to a sudden halt, and Terrence Chalk's claims of a robust business with an international clientele and a growing bottom line are looking more and more like smoke and mirrors.


Former business associates of Chalk say claims that Compulinx had hundreds of customers with data hosted on a massive IT infrastructure of 300 servers and 40 TB of storage in four data centers is nothing more than urban legend.


"[Chalk] got very politically connected, and he made a lot of promises that resulted in an image that he walked on water. But the bottom line is, he had one cabinet in our facility, that was it," says Christopher Furey, CEO of Savvy Networks in Tarrytown, N.Y. "The other three data centers don't exist."


Furey, who served with Chalk on a number of boards, including the Westchester Information Technology Cluster, says his company was forced to discontinue Compulinx collocation services on July 4, 2006, after a series of bounced checks. Furey says Compulinx tried to remove its equipment when outstanding charges could no longer be paid by check or credit card. The matter was ultimately settled for cash, he says.


As for claims that Compulinx employed some 50 people, Furey, who has hired some former workers from his White Plains, N.Y., competitor, calls that claim "patently ridiculous."


"There's about six people left working there [at Compulinx]," Furey says.


While more questions than answers remain about the fate of what may be just the remnants of Compulinx in the wake of the criminal investigation, a picture is emerging of a company that has been in financial trouble for months -- and of a CEO with creative ideas about how to circumvent financing difficulties.


Federal law enforcement officials Tuesday raided the White Plains, N.Y., home of Chalk, Compulinx's CEO, and arrested the well-known Westchester County businessman with charges of stealing the identities of his employees in order to secure fraudulent loans, lines of credit and credit cards. Chalk, 44, was arraigned in federal court Wednesday along with his nephew, Damon T. Chalk, 35, on charges related to submitting some $1 million worth of credit applications using the names and personal information -- names, addresses and social-security numbers -- of Compulinx employees.


Since the arraignment, the Compulinx Web site has gone dark and phones at the White Plains company have gone unanswered. Numerous messages left on the Compulinx Services Center voicemail have not been returned.


The U.S. Attorney's office in White Plains, which is handling the case, has not determined what will happen to Chalk's business assets and would not comment on whether the Chalks had compromised customer data at the same time they are accused of misappropriating employee information, according to Yusill Scribner, spokesperson for the agency. Calls to the FBI field office that handled the investigation were not immediately returned.


The Chalks' own attorney, Mayo Bartlett of White Plains, says he hadn't spoken to his clients about the potential technology fallout for Compulinx's clients, adding that he hopes the Compulinx business could continue uninterrupted. Messages left on Terrence Chalk's voicemail seeking comment on the future of the company were not returned.


NEXT: Stories of Compulinx's "credit problems" emerge.

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