OFFICE DEPOT's WISTLEBLOWER IS READY TO SING……..
OFFICE DEPOT's WISTLEBLOWER IS READY TO SING……..
2008-06-10 at 11:12:08 am #20333http://www.palmbeachpost.com/business/content/business/epaper/2008/06/06/m1a_odpcontracts_0607.html
State probes Office Depot pricing
2008DELRAY BEACH — Florida’s attorney general is investigating Office
Depot Inc. for alleged “bait-and-switch” tactics in its office supplies
contract with state and local agencies.The central allegation: Office
Depot bid low but sold high. The state is looking into whether the
company offered low-price items in its contract but later sold
Five states have put their office supplies contracts with Office Depot Inc. under the microscope.
Carolina: In May 2007, the state auditor reviewed its contract with
Office Depot and found pricing errors. In response, Depot credited the
state about $41,000.
Georgia: The state canceled its $40
million, 11-month-old contract with Office Depot in February, saying
the retailer frequently mispriced items. An analyst hired by
independent office products dealers estimated that the state was
overcharged by more than $1.2 million; an auditor hired by the state
said the errors totaled about $200,000.
officials launched an audit in March in response to concerns that the
state was overpaying. State legislators questioned company executives
last month about the concerns.
Nebraska: The state auditor said
in April that Office Depot had overcharged by as much as 400 percent on
some items. The state is seeking new bids for its office supplies
Florida: The attorney general is investigating
concerns raised by a former Office Depot employee accusing the company
of “bait and switch” in its contract with the state.
What are these?
civil inquiry comes on the heels of similar investigations in at least
four other states where auditors have questioned the Delray Beach
retailer’s pricing, citing frequent overcharges for pens, envelopes,
scissors and other supplies.”The Office Depot investigation is active
and ongoing,” said Sandi Copes, spokeswoman for the Florida Attorney
General’s Office. “We investigate when we believe there may be
violations … particularly when there is a discernible pattern of
alleged behavior that would violate the law.”Office Depot spokesman
Brian Levine said Friday that the company would cooperate with any
state agencies if asked. He called the pricing allegations “baseless,”
citing a “tremendous amount of misinformation.”"We work very hard each
and every day to ensure that we are fully compliant with our
contractual arrangements, and we pride ourselves on our commitment to
pricing integrity,” Levine wrote in an e-mail.
At issue is
Office Depot’s four-year contract with Florida worth a potential $180
million. There is no guaranteed dollar value in the contract but sales
totaled $46 million in 2007, the first year of the agreement, said
James Miller, a spokesman for the state Department of Management
Services. That includes sales to state offices, cities, counties,
airport authorities and other government agencies.The attorney
general’s inquiry was prompted in part by complaints from a former
Office Depot employee who managed government contracts for the retailer
for 11 years.David Sherwin of Fort Myers, a self-described
whistle-blower who says he was fired in April when he took his concerns
to management, has sent information to local, state and federal
officials alleging that the retailer has fraudulently overcharged more
than 500 government agencies by millions of dollars over the past
Sherwin is not the first to question the firm’s contracts.
in four states have examined Office Depot’s pricing practices. North
Carolina got a $41,000 refund; Georgia canceled its contract;
California legislators have questioned company executives; and Nebraska
is seeking new vendors, saying the state may have been overcharged by
as much as 400 percent in some cases.Levine said each contract is
different, and that refunds and audits are part of the “ordinary course
In Georgia, a group of mom-and-pop office products
dealers claimed Office Depot bid low to secure the lucrative contract,
then charged more through price increases or product substitutions.The
independent dealers hired consultant Rick Marlette to analyze the
firm’s contracts in Georgia and California. Marlette, a pricing analyst
for the office products industry based near Atlanta, found more than $1
million in mistakes in each state.Perhaps the most egregious example
cited in his report: Office Depot priced a pair of 8-inch stainless
steel scissors for 15 cents in its Georgia bid. The company later sold
those scissors to the state for $4.”There was no way you can sell
merchandise at the prices they were bidding and make a profit,” said
Marlette, adding that wholesale cost of those scissors is around $2.
“We felt they never had any intention to honor those prices.”Marlette’s
conclusion that Office Depot overcharged Georgia by $1.2 million was
only partly upheld by the state’s own inquiry, which found $200,000 in
overcharges.”The states have to take responsibility in this as well
because they allowed a lot of this to happen,” Marlette said. “No one
ever looked at it.”Office Depot executives have dismissed the mounting
criticisms as unfounded. Company executives said in April they were
reviewing their 19 state contracts and working with state officials to
resolve any concerns.
New details on overcharging allegations against Office Depot
County – New details on a story that WINK News brought you back in
April, about allegations of Office Depot overcharging our local
governments by hundreds of thousands of dollars. Details of those
accusations will soon go to the Office of the Attorney General in Fort
Myers.”My report that I have is about 230 pages right now,” said former
Office Depot account manager, David Sherwin.
Sherwin is planning
to present that report and give an investigative statement Tuesday, at
the Office of the Attorney General in Fort Myers.”The specifics, the
elements of the crime and who specifically in Office Depot has evidence
that should be subpoenaed, which people have actually committed fraud
or obstruction of justice,” said Sherwin.Sherwin claims the office
supply company has overcharged both local and county governments for
years. For example, Sherwin says with the Lee County School Board -
over a three year period – the alleged amount of fraudulent overcharges
ranges from $375-750 thousand.In a written statement provided by Office
Depot – the company maintains the “allegations are baseless” and “we
pride ourselves on our commitment to pricing integrity.”But several
government agencies here in Southwest Florida have been looking into
overcharging, such as the Lee County Clerk of Courts and the Collier
County School District. The accusations have also stretched to several
other states, including Georgia.As for Sherwin’s upcoming statement,
Office Depot statesthey can’t confirm who their ex-employee has
contacted, but they “consistently cooperate with all regulatory and
legal agencies.”Sherwin however says this meeting is crucial.” This is
the most important step within the State of Florida,” he added.