School districts in all 50 states are at extreme risk of being overcharged on the Office Depot/U.S. Communities national contract for office and classroom supplies.
Office Depot and U.S. Communities have engaged in kickbacks, fraud overcharging, mis-representation of pricing, and ground zero for this national scandal is Walnut Creek (CA).
What really goes on at U.S. Communities and who are the shadowy figures that enrich themselves at this murky organization? How are they tied to the $100 million in annual alleged overcharges by Office Depot?
On the state level, the National Office Products Alliance (NOPA), an independent office products trade association, issued a press release a few weeks ago urging the the California Attorney General to look specifically at Office Depot's Walnut Creek-based US Communities contracts, which they allege resulted in "kickbacks" perhaps exceeding $20 million. A representative from US Communities said that these allegations are false, and clarified that the nonprofit -- which matches public entities with the cheapest office supply deals -- receives just one to two percent of the sales price from the vendors (including Office Depot, among others) to cover their administrative costs.
Office Depot inc., including its affiliates and/or agents, has engaged in deception, fraud, false promise, misrepresentation, unfair practices, and/or the concealment, suppression, or omission of material facts in connection with the sale of office products to state & local governmental entities and nonprofit or charitable entities, and such was done in conspiratorial concert with U.S. Communities its affiliates and/or agents thereof.
Current investigations at the State level by Attoreny Generals:
Amount of alleged 'Bait & Switch' overcharging on the national U.S. Communities agreement:
$100 million or more in overcharges per year
Amount of kickbacks from Office Depot to U.S. Communities over 3 years:
$20 million in kickbacks +
Current fraud investigations of Office Depot's federal contracts:
Department of Justice (DOJ)
Department of Defense (DOD)
Department of Education (DOE)
General Services Administration (GSA)
News reports on the investigations:
BAY AREA NEWS
Attorney General Investigating Office Depot
Company accused of overcharging public agencies, including Berkeley and San Francisco
By JACKSON WEST
Updated 4:23 PM PDT, Tue, Aug 4, 2009
Next time you think to complain about wasteful government spending, you might note that privateers sometimes try to profit from public contracts.
Office Depot is being investigated for widespread overbilling, and has already paid $2.5 million back to the State of California.
In Berkeley, an audit concluded that the company had overcharged the city for supplies, and has had to pay back $289,000.
A former employee is accusing the company in a civil suit of asking him to falsify records in order to coverup the excess money charged to Berkeley.
And the National Office Products Alliance, a trade association, has called on the state attorney general to investigate US Communities, a government purchasing cooperative based in Walnut Creek which does some business with Office Depot, over allegations that it has received $20 million in so-called "kickbacks." A representative of US Communities says the allegations are "baseless" and a "total misrepresentation" of the nonprofit's role in facilitating contracts.
Beyond California, Office Depot is being investigated in Florida, Missouri, Texas, Colorado, Ohio and by the nation's General Services Administration, the Department of Defense and Department of Education.
San Francisco is currently conducting its own audit, and is looking for a new office supply provider.
So much for assuming that big box shops like Office Depot always offer the best prices.
Attorney General Investigating Office Depot | NBC Bay Area
Aug 4, 2009 ... Company accused of overcharging public agencies, including Berkeley and San Francisco ... Beyond California, Office Depot is being investigated in Florida ... ink should be reason enough for a full federal investigation. ...
http://www.nbcbayarea.com/news/politics/... - - Cached - Similar pages
Jul 6, 2009 11:52 am US/Mountain
Colorado AG Investigates Office Depot Pricing
DENVER (CBS4) ?
Office Depot may have been cheating school districts out of money. The company acknowledges it is under investigation by the Colorado attorney general's office.
The probe involves a major contract between Office Depot and the purchasing agent for public agencies in Colorado. Allegations have been made about "bait and switch" tactics on the pricing of items to institutions.
The company provides supplies to school districts in Colorado and throughout the country under a national contract negotiated through an organization called U.S. Communities.
The detailed criminal complaint was filed by a former Office Depot account manager David Sherwin. It states that the company engaged in trickery and deception, resulting in fraudulent overcharges.
"The state of Colorado is one of the 10 states that has been impacted the greatest in the United States," Sherwin said.
In North Carolina an audit found a $300,000 overcharge of state agencies. In California Office Depot paid $2.3 million to settle allegations of overcharges. Georgia terminated its $40 million contract after finding problems in pricing.
The Cherry Creek School District discovered irregularities in prices charged by Office Depot about a year and a half ago and has since resolved the issue.
In a statement to CBS4 the company wrote that it is aware with the Colorado attorney general's investigation and "will cooperate fully."
There is also a federal investigation. It is reportedly focused on purchases from Office Depot by the Department of Defense and the General Services Administration.
Colorado AG Investigates Office Depot Pricing - cbs4denver.com
Jul 6, 2009 ... Office Depot may have been cheating school districts out of money. The company acknowledges it is under investigation by the Colorado attorney general's office . ... Inside a Denver-area Office Depot store. CBS. Click to enlarge ... In a statement to CBS4 the company wrote that it is aware with the ...
http://cbs4denver.com/investigates/Offic... - 60k - Cached - Similar pages ........................................................................................................................................................................................................
NOPA Reports California & Ohio Join Other States in Opening Investigations of Office Depot
Refer to a friend
Business Wire 2009
2009-07-21 20:32:04 -
Office Depot has disclosed on its investor website : that the Attorneys General of California and Ohio have launched civil fraud investigations into its $700 million dollar U.S.
Communities national contract that thousands of local governments, school districts and public institutions draw upon to purchase office and school supplies. California and Ohio join Colorado, Florida, Missouri and Texas in opening such investigations
Former account manager in Office Depot's Business Solutions Division, David Sherwin, a protected whistle-blower in Florida where the company is headquartered, has been credited with the launching of the investigations.
Today, the National Office Products Alliance (NOPA) called upon the Office of the Attorney General of California to include in its investigation of Office Depot a thorough examination of the role played by the Walnut Creek, CA-based U.S. Communities organization which has allegedly received as much as $20 million in kickback payments from Office Depot for sponsoring the national contract now under investigation in six states.
California's Department of General Services recently ended its state-wide contract with Office Depot and negotiated a settlement agreement with the company for alleged overcharging. Other states, including Georgia, also have negotiated settlement agreements with the company within the past two years.
Additionally, the U.S. Departments of Defense and Education and the General Service Administration, with coordination from the U.S.
Department of Justice, are conducting their own investigations into Office Depot's handling of federal government office supplies contracts.
According to NOPA, these two new investigations again highlight the inherent problems associated with reliance on a single office supplies contracts by government agencies at all levels. Strategic sole-source contracting has damaged competitive independent small businesses around the country, reducing vendor choice and raising prices for government customers, said Chris Bates, President of NOPA. The idea that sole-source contracting offers a best value' proposition should be questioned by every federal, state and local government and institutional entity in light of the results from so many audits and investigations.
Office Depot blames employee for Berkeley overcharges
Salesman claims he was told to falsify charges
By Doug Oakley
Contra Costa Times
Posted: 08/07/2009 10:10:33 AM PDT
Updated: 08/07/2009 10:53:54 AM PDT
Office Depot blames a former Fremont salesman for overcharging the city of Berkeley $289,000 for office products after the man sued the company saying he lost his job for refusing to falsify data in the case.
In April, Office Depot repaid the city after an investigation of the city's contract revealed the overcharges. Office Depot is facing similar problems with its contracts all over the country. Attorneys general in six states and three federal agencies are investigating the office supply giant for contract overcharges.
The salesman, Earl Ante, says in his lawsuit filed in federal court in San Francisco that he lost his job in the fall after he refused orders to falsify data in the company computer when the company found out Berkeley was about to audit its contract.
Office Depot initially declined to comment on the suit but decided to break its silence on its investor-relations Web site with a full-on assault against Ante.
"(A)ny overcharges to the City of Berkeley were caused by Mr. Ante himself, who was responsible for managing that relationship," the posting states.
The statement also says that Ante gave Berkeley officials paperwork showing a 55 percent discount on office products, but then gave Office Depot paperwork showing only a 10 percent discount.
"Mr. Ante proceeded to service the City of Berkeley account for two years without correcting his error," the post says.
In addition, the post says Ante was laid off in November as part of companywide layoffs of 200 people.
But Ante's lawyer, John McMorrow of Fremont, said he has documents showing that Ante's Office Depot supervisor told him to falsify the data in the overcharges to Berkeley.
"He received the instructions (to falsify data) on Oct. 24 at 1:05 p.m. on a Friday, and he refused to comply," McMorrow said.
"The following Monday he attempted to access the company's computer system only to find out he was locked out of the system. He then e-mailed his boss from his wife's computer and confirmed the content of the conversation (about falsifying data) they had on Friday."
When Ante lost his job a month later, McMorrow said, he was offered a severance package, but he refused it because he would have had to sign an agreement forbidding him to sue the company.
McMorrow said the suit is set for trial in May, but the two sides have been ordered to mediation starting Thursday.
Fort Myers, Florida
U.S.A. Click here to read other Rip Off Reports on Office Depot