OFFICE-DEPOT CAUGHT SCAMMING ANOTHER U.S. COUNTY

[Anonymous]

http://www.news-press.com/article/20091022/NEWS0104/91021063/1075
OFFICE-DEPOT CAUGHT SCAMMING ANOTHER U.S. COUNTY
Lee County schools to review Office Depot purchases,Investigation spurs agencies to look for new contracts
FLORIDA
:The Lee County School District is again reviewing its purchases with
Office Depot, the office supply company accused of a complex
overpricing scheme that may have cost governments across the country
millions of dollars.Additionally, Lee County and the city of Fort Myers
are working to obtain agreements with different vendors once their
contract with the Boca Raton-based firm expires in January.But those
actions aren’t enough when there are still hundreds of thousands of
taxpayer dollars to be recovered, according to Fort Myers whistleblower
David Sherwin, a former sales representative for Office Depot; and
Chuck Short, director of internal audits at the Lee Clerk of
Court.Office Depot, which did not return a request for comment
Wednesday, is being investigated by attorneys general in six states,
including Florida, and five federal agencies.Similar to a number of
governments across the country, several local entities have already
received refunds from the company amounting to more than $130,000.

But
Sherwin, formerly a fraud investigator with the Air Force and district
inspector general in Fort Myers, said there is much more money to be
recovered — at least $250,000 for the school district alone.Sherwin
said those officials who have not conducted an independent audit are
being irresponsible with taxpayer money and could be held criminally
liable. He plans to ask for an investigation by the statewide grand
jury on public corruption requested by Gov. Charlie Crist last
week.Several local entities continue to maintain contracts with Office
Depot despite the allegations and numerous refunds.“Everyone who has
done a proper audit has found significant overcharges,” Sherwin said.
“Any official who is buying from Office Depot right now is comparable
to investing in Bernie Madoff after he was arrested and convicted.”

The contracts
Locally,
those that held contracts with the company include the school district,
the county, Fort Myers, Cape Coral, Edison State College and the Lee
County Port Authority.

Short and Sherwin explained the alleged scheme like this:
All
agencies piggy-backed off a competitive bid obtained by Los Angeles
County, Calif., through an enterprise called U.S. Communities. Through
this contract, they were guaranteed Office Depot’s lowest possible
pricing for items such as pens, paper, ink and tape. But, in 2006,
Sherwin, allegedly at the direction of Office Depot, switched the
agencies from an Option 1 plan to an Option 2 plan — an average of 8 to
16 percent more expensive.Additionally, there was another,
less-expensive plan available through the state of Florida, Short
said.When Sherwin left Office Depot in April 2008, he sent numerous
e-mails to all of the above agencies, notifying them of the overpricing
and recommending independent audits to find it themselves. All said
they looked into it, though some conducted random spot-checks rather
than a complete audit.Cape Coral and Edison State College had Office
Depot review the charges and both collected refunds.But the scheme was
complicated and without an independent audit, Sherwin and Short said,
the full scope of overpricing is almost impossible to uncover. Short
conducted a $35,000 audit for the county and found $58,000 in
overcharging, which was refunded.Short, who has been working with
several of the investigating attorneys general, said he is convinced
any agency that was switched from the Option 1 to Option 2 plan was
significantly overcharged.

The action
The school district
held a $3 million contract with Office Depot. Schools spokesman Joe
Donzelli said when the district reviewed its purchases last year, it
didn’t find any overcharging. In fact, Donzelli said the district found
the company undercharged for certain items.Last week, Sherwin announced
his plan to accuse Lee schools Superintendent James Browder and 14
other local officials of being criminally negligent for failing to
conduct independent audits in a request for an investigation by the
governor’s statewide grand jury.Donzelli said within the last two
weeks, the district decided to “conduct a more thorough review” of the
purchases.“We’re not writing this off,” Donzelli said. “As of right
now, our auditors, financial accounting staff, procurement staff — no
one has found the smoking gun. But we’re continuing to conduct a random
sampling. If we find evidence of malfeasance or fraud that would
warrant a full-blown audit, we will do that.”

[Author]

October 23, 2009 at 10:43 AM