• Report: #477975

Complaint Review: Office Depot

  • Submitted: Mon, August 10, 2009
  • Updated: Mon, August 10, 2009

  • Reported By:Bangalroe Alabama
Office Depot
2200 Old Germantown Rd., Delray Beach, Florida Nationwide U.S.A.

Office Depot Office Depot Corporate Information Across The Country: Nationwide

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Office Depot Business Solutions Division (BSD), is under investigation by six state Attorney Generals (Florida, Texas, Ohio, Colorado, Missouri & California), and five federal agencies (Departments of Justice, Defense, Education, GSA, & SEC).

Office Depot has been accused of a wide ranging scheme to fraudulently overcharge federal, state & local government agencies across the country.

The largest single contract is coupled with a shadowy organization known as U.S. Communities that has three past Office Depot executivs in senior management positions.

The alleged overcharging of government agencies is said to be in excess of $100 million per year.

Jul 6, 2009 11:52 am US/Mountain
Colorado AG Investigates Office Depot Pricing
Rick Sallinger
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


news local-beat
Attorney General Investigating Office Depot
Company accused of overcharging public agencies, including Berkeley and San Francisco
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


I-Team Follow-Up: State AG putting Office Depot under microscope

NBC-TV-St. Louis By Leisa Zigman, I-Team Reporter

KSDK -- The I-Team has new information since its Office Depot investigation aired Monday night.

Missouri Attorney General Chris Koster has sent a civil investigative demand to Office Depot to determine whether the office supply giant has engaged in deception and fraud. The attorney general wants Office Depot to supply not only pricing documents, but specific details about charges to government entities and non-profits in 2006, 2007 and 2008.

Six states, including Missouri, have placed Office Depot under the microscope for allegedly overcharging government entities and nonprofits.

Koster and Missouri State Auditor Susan Montee want to know if Office Depot owes a refund to Missouri schools, churches, cities, towns and state offices.

The civil investigative demand sent to Office Depot states:

"The attorney general has information that 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 Missouri government entities and nonprofit or charitable entities."

"We are willing to step into the shoes of local agencies and bring this action forward if fraud is found," Koster said.

Office Depot e-mailed the following reaction:

"While we intend to vigorously defend any allegations of wrong doing lodged against our company, we will fully cooperate with the Missouri Attorney General's Office, as we do in all government and regulatory inquires."

At issue is whether schools and government agencies agreed to do business with Office Depot at specific prices, but were switched to higher priced items without their consent or through deceit.

"These government contracts are effective in all 50 states," said David Sherwin, a former senior executive for Office Depot who handled government accounts. "Missouri, Illinois, Texas, Florida, North Carolina, California, and across the country. It's somewhere between one billion and 1.2 billion in contracts office depot receives every years."

Sherwin pointed out the alleged deception to his superiors. Office Depot fired Sherwin last April for what the company called workplace misconduct. He is now a whistle blower aiding Florida's attorney general in that state's investigation.

Office Depot calls Sherwin a "disgruntled employee whose negative campaign includes numerous false, misleading, and baseless allegations."

"If in fact the definition of disgruntled is an employee who refuses to take part in what he considers criminal activity, refuses to continue to take part in deceptive pricing practices resulting in over charging millions of dollars to government entities, then you betcha, I was disgruntled," Sherwin said.

The I-Team has confirmed that all investigations involving Office Depot are civil, not criminal.



NOPA Reports California & Ohio Join Other States in Opening Investigations of Office Depot
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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.


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 uproar over the fraudulent overcharging by Office Depot in California exploded today with accusations flying back and forth between Office Depot and the attorney for the fired Depot employee (Earl Ante).

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.



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.

Subject: Three Ex-Office Depot Executives now senior managers at U.S. Communities.......Re: BACKGROUND...US Communities/California Communities/HBCapital Resources/Law Offices of Stephen Hamill (GM/CEO of all) all located at Suite 700, 2033nN. Main Street, Walnut Creek, CA 94596

Three (3) ex-Office Depot executives are now senior managers at U.S. Communities: Kevin Jurhing, Paul Terragno, Chris Robb, all were instrumental while at Office Depot in setting up the fraudulent schemes, which they now oversee as U.S. Communities Executives under the direction of Stephen (Steve) Hamill.


Stephen Hamill
at Law Offices of Stephen A. Hamill
2033 North Main Street M
Walnut Creek, CA 94596-3722

News Article Thursday, May 22, 2008
Public agency, private benefit
By Brian Joseph

SACRAMENTO - What do $3.70 lattes, an Indian casino and a BMW dealership have in common?

An obscure California agency thinks they're all public benefits worth tax-free money.

The agency, the California Statewide Communities Development Authority, issued about $4.2 billion in tax free bonds in 2007, ranking behind only the states of California, Ohio and New York.

County supervisors and city council members statewide formed the agency. Last year, their political associations pocketed $4 million from it.

The Bay Area businessmen who staff it made even more.They collected $10 million.

For 20 years, they have operated out of the public view, using a public agency to help finance their special interests while siphoning off tax revenue for projects of dubious public value.

They have taken a public agency and made it a private benefit.

"This is the ultimate in invisible government," said Orange County Supervisor Chris Norby, who's been suspicious of the agency since he was a Fullerton City Councilman in the 1990s. "It's kind of the worst of both worlds," he said, "public and private."

According to its Web site, California Communities only funds projects of "tangible public benefit," projects that "contribute to social and economic growth and improve overall quality of life" in California. And indeed, the agency has backed numerous affordable housing and hospital projects of unquestionable public value.

But California Communities also has borrowed on behalf of private enterprises, a legal transaction that helps those businesses compete against less-connected rivals.

In Emeryville, their tax-free bonds financed a 60,000-square foot roastery that allowed Peet's Coffee and Tea to expand from Northern California to the rest of the nation.

In the Coachella Valley, their bonds paid for a casino hotel at the Cabazon Band of Mission Indians' Fantasy Springs Resort.

In Elk Grove, they financed impact fees for a BMW dealership.

In Richmond, they refinanced a Chevron refinery's pollution controls.

In Carlsbad, they paid to expand the Gemological Institute of America, the "World's Most Trusted Name in Diamond Grading."

And in Orange County, their bonds bought a new athletics and fine arts center for St. Mary and All Angels School, a private institution serving less than 700 students.

The people behind California Communities defend their approach as 100 percent legal and note that local governments and state authorities must sign off on their proposals. They say the projects that benefit private companies were approved to create jobs.

"This is actually an area in which there's always debate around the country about whether government should play a role in helping create expansion opportunities for businesses," said Chris McKenzie, vice chairman of the California Communities board and executive director of the League of California Cities.

"Congress and the state have not established any kind of threshold. They haven't even said you have to create one new job. What they've said is the issuer has to be convinced that this is necessary in order to preserve this economic activity."

But there are consequences when the agency issues bonds: The state loses tax revenue.

Exactly how much is difficult to calculate because of the many variables.

Assuming that only Californians of average income purchased California Communities bonds and that interest rates ranged from 3 to 6 percent, the Orange County Register calculated that the state loses $24 million to $49 million a year in taxes on the agency's outstanding debt.

But that number is very rough. Bond buyers tend to be wealthy people in high tax brackets, which would increase the amount of lost tax revenue. And as California Communities itself notes, it's very difficult to estimate the average interest rate on its debt with more than 650 bond offerings in the market.

No elected officials

According to the Thomson Reuters financial reporting service, California Communities was the nation's fifth largest debt issuer in 2007. But the agency claims to have no revenue, expenses, liabilities or assets. In fact, California Communities doesn't even draft an annual budget.

Instead, California Communities claims that the millions it generates is the property of three contractors - the League of California Cities, the California State Association of Counties (CSAC) and a business called HB Capital Resources.

The League and CSAC are two of the best-known special interest groups in Sacramento. They represent the political interests of every county and hundreds of cities in California. Each year, they are paid a portion of the agency's fees to develop programs and "promote" California Communities to its members. In 2007, each group took home more than $2 million.

Both associations say they use the California Communities proceeds to keep their membership fees low.

"If we didn't have that revenue stream, we would raise dues," McKenzie said. "Who pays that? The taxpayers."

The associations, however, are more that just contractors. The cities and counties that created California Communities have given them power to appoint members to the agency board. These two private organizations literally control a public agency.

And who have they appointed to the board? Why, their own executives: McKenzie; Paul McIntosh, CSAC's executive director; Tom Sweet, executive director of the CSAC Finance Corporation; Dan Harrison, the League's director of administrative services; and Jean Hurst, CSAC legislative representative.

Not a single elected official sits on the California Communities board.

'We get paid well'

Staffing is also a separate function, provided by the private firm HB Capital Resources, which received the largest profits from California Communities.

A company of about 30 people, HB Capitalis named for its two principals, Stephen Hamill and Jerry Burke, who operate several enterprises from an office in Walnut Creek. With names like "U.S. Communities" and "Canadian Communities," these firms offer "public benefit" services to government and private groups.

Hamill declined to say how much of the $10 million collected from California Communities was profit, acknowledging only that "We get paid well." He noted, however, that HB Capital operates without profit guarantees and estimated that more than 50 percent of staff time is spent on projects that never appear before the board.

Despite being a private company, Hamill said, HB Capital is devoted to serving the public. He noted that both he and Burke have a background in local government.

"It's easy to say profit or money is evil and ignore the public benefit that's offered," he said. "We don't want to be making money unless there's a benefit we provide."

But not everyone is convinced this arrangement is proper. The State Treasurer's office has been examining the agency and believes it's a conflict of interest for HB Capital to be paid a portion of bond fees when part of its job is to recommend how many bonds to approve.

The Treasurer's office also contends that California Communities intentionally schedules its meetings to avoid public scrutiny and generally operates more like a private business than a government agency.

In a recent court case, Hamill stated, "Many of CSCDA's business practices, procedures, and marketing strategies are confidential and are not available on the Internet or anywhere else in the public domain."

"The notion that the business plan of a public entity is, in any way, secret, confidential [or]hidden from the public runs counter to every notion of open government and accountability to taxpayers," said Tom Dresslar, spokesman for State Treasurer Bill Lockyer.

"It's a bad way to do the public's business."

Public funds shifted to political action committee

Despite the potential conflicts of interest, California Communities has operated without much scrutiny since it was founded in 1988. But that might soon change, thanks to the upcoming election.

Administrative Support Office U.S. COMMUNITIES


U.S Communities
2033 North Main Street, Suite 700
Walnut Creek, CA 94596

E-Mail info@uscommunities.org

Staff Stephen Hamill
General Manager



Bangalroe, Alabama

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This report was posted on Ripoff Report on 08/10/2009 04:36 AM and is a permanent record located here: http://www.ripoffreport.com/r/Office-Depot/nationwide/Office-Depot-Office-Depot-Corporate-Information-Across-The-Country-Nationwide-477975. 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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