ED Magedson – Founder
Office Depot & Officemax Office Depot Meger with Officemax Office Depot Misleads Shareholders on Whistleblower Lawsuit Liability in SEC 10Q Filing Boca Raton Florida
Does Office Depot's SEC 10Q Filing Accurately Reflect the Status and Potential Liabilities of whistle-blower lawsuit?
Stock Market Insider Report (SMIR NY)
July 14, 2013: Office Depot (ODP NYSE) Boca Raton, FL
Recent coverage in the office supply publication Proficiency Post touches on a little known whistle-blower lawsuit peculating through the federal court system (State of California ex. el David Sherwin vs Office Depot, CV 12-9952 FMO) against office supply giant Office Depot.
News reports indicate that former senior account manager David Sherwin blew the whistle on the company for systematically overcharging thousands of local California government agencies for office products from 2001 through 2010. A federal whistle-blower lawsuit was unsealed in 2012, and in April of 2013 Office Depot received a significant legal setback when their motions to dismiss the case were summarily denied by a federal judge. An additional motion is set to be heard on July 18, 2013, in which Depot makes one last attempt to have the case limited in scope or dismissed. Of interest to SMIR is Office Depot reporting of the lawsuit on their SEC 10Q filings under legal proceedings. Specifically, Office Depot has down played the lawsuit as "not material" despite numerous reports in the press placing potential liability in excess of $500 million. Additionally, even after Office Depot lost it's motions to dismiss on April 9, 2013, they still included them in their end of April 10Q as if no ruling had yet been made on them.
The questions raised by Proficiency Post are important issues concerning accurate SEC filings, and bring into question whether Office Depot is down playing the potential liability of the whistle-blower lawsuit in order to smooth the way for their "Merger of Equals" with OfficeMax.
On July 30, 2013 Office Depot will release it's second quarter 2013 10Q. By then their final motion to dismiss should have been ruled on, and Office Depot will face the prospect of having to unload a bomb shell in their disclosure statement that in fact the potential liabilities are material in fact and case. Should this happen it would be quite understandable for shareholders of both Office Max and Office Depot to believe they have been misled by Office Depot. Additionally, this would bolster Starboard Value Funds drive to unseat four directors and reconstitute the entire board at August's annual share holders meeting. In any case the whistle-blower's lawsuit is sure to provide plenty of fireworks in upcoming months. http://search.conduit.com/?ctid=CT1925886&octid=CT1925886&SearchSource=11&CUI=UN16303745821854316&SSPV=&Lay=1&UM=1&fq=&SAT=SAT_ID
The lawsuits allege that Office Depot used two price plans for a U.S. Communities contract and did not give the lowest price point for office supplies to government agencies.
A California judge has denied motions by Office Depot to dismiss a lawsuit filed by whistleblower and former Depot employee David Sherwin and the state of California.
The lawsuits, revealed to the public in October, pertains to allegations that Office Depot used two pricing plans on a US Communities contract with local government agencies and that the company did not give the agencies the lowest price point for office products.
Office Depot in its first quarter 10-Q filing with the Securities and Exchange Commission said that it had filed motions to dismiss the lawsuits, but court documents filed on April 9 said that the motions were denied without prejudice. According to the court documents, a scheduling conference and hearing on Office Depot's motion to dismiss Sherwin's lawsuit will remain on the calendar.
In the 10-Q filing, Office Depot that it intends to "vigorously" defend itself in the lawsuits, and also mentioned that adequate provisions have been made for probable losses on one of the claims.
Several local government agencies have accused Office Depot of overcharging it for office supplies. Late last year, the city of Houston alleged that Office Depot overcharged it by as much as $6.6 million.
Office Depot (NYSE: ODP) has denied these allegations in several cases even though it was required to refund $1.7 million to the city of Dallas and $4.5 million to Florida for overcharges.
Arizona's Maricopa County in October also demanded a refund of $5.3 million in overcharges.
This report was posted on Ripoff Report on 07/15/2013 11:16 AM and is a permanent record located here: http://www.ripoffreport.com/r/Office-Depot-Officemax/Boca-Raton-Florida/Office-Depot-Officemax-Office-Depot-Meger-with-Officemax-Office-Depot-Misleads-Sharehol-1067119. The posting time indicated is Arizona local time. Arizona does not observe daylight savings so the post time may be Mountain or Pacific depending on the time of year.
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