Chalk, Ex-MSP Star, Pleads Guilty to ID Theft

Former managed services pioneer and shining star of the channel Terrence Chalk has ended a three-year criminal battle by pleading guilty Aug. 31 to several charges of identity theft and fraud, according to press reports.

Chalk, the former CEO of the defunct MSP Compulinx Managed Services of White Plains, N.Y., will face up to seven years in federal prison for stealing the identities of his employees and using those identities to secure more than $1 million in loans. Chalk will appear for sentencing in U.S. District Court in Westchester County on Dec. 2.

Chalk was arrested and indicted in 2006 after federal investigators discovered he was using employees’ identities to apply for loans and lines of credit. Also charged were his nephew Damon Chalk, who still faces charges in connection to the scheme, and Addriely Hernandez of Mount Vernon, N.Y., in connection with Terrence Chalk’s identity theft scheme and a separate incident in which the pair are accused of attempting to defraud a Connecticut car dealership.

At the time of his 2006 indictment, prosecutors said Chalk faced more than 165 years in prison and up to $5.5 million in fines if convicted. Under the terms of his guilty plea, Chalk is now looking at seven years behind bars for the identity theft case, racking up more than $100,000 in authorized credit card charges and the car dealership fraud.

The plea closes a chapter on a managed services pioneer who was widely recognized for building the model that so many other solution providers are replicating today.

The company started out as Computek, a provider of managed network and storage services. In 2004, it acquired Linx Logic, a division of consulting giant Ernst & Young Technologies. Under the new moniker Compulinx, the company developed its own software and expanded its capacity, allowing it to be among the first MSPs to offer its infrastructure and services to other MSPs.

Chalk was seen as a visionary and lauded by business and industry groups for his achievements and market leadership. Just six months prior to his indictment, Chalk was inducted into the Westchester County Business Council’s Hall of Fame. In 2005, Compulinx was listed as a "Channel Elite" member of the Institute for Partner Education & Development, the consulting and education unit of Everything Channel.

Press reports of the court proceedings note that Chalk blamed cash-flow problems with his managed service business for his fall from grace. Because customers were slow in paying for their managed services, Compulinx suffered serious cash-flow gaps and Chalk was unable to secure adequate lines of credit. That’s when he started using the identities of employees on bank loan applications.

Employees filed lawsuits against Compulinx even before the FBI investigation was concluded, alleging that Chalk and his company had failed to pay them for months.

Chalk remains in custody without bail pending his sentencing on Dec. 2.