Report: #477791

Complaint Review: Los Angeles County, California, Internal Services Department

  • Submitted: Sun, August 09, 2009
  • Updated: Sun, August 09, 2009
  • Reported By: Fort Myers Florida
  • Los Angeles County, California, Internal Services Department
    Los Angeles, California

Los Angeles County, California, Internal Services Department (ISD) Los Angeles County involved with fraudulent office supply contract & kickbacks from U.S. Communities & Office Depot Los Angeles California

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The County of Los Angeles (CA), is a sponsoring agency of the national Office Depot/U.S. Communities contract for office and classroom supplies.

This national contract is valued at $700 million annually and is used by state and local agencies in all 50 states for the purchase of office and classroom supplies from Office Depot.

U.S. Communities has received over $20 million in kickbacks from Office Depot to cover-up allegations of fraud and overcharging on government contract.

Los Angeles County (LA County) receives a portion of those kickbacks from U.S. Communities. LA County is aware of massive violations of the contract of which they are the originating agency. Currently, six state Attorney Generals (Texas, California, Florida, Ohio, Colorado and Missouri) are investigating the contract for fraud.

However, the murky ties between the Internal Services Department (ISD) at LA County and Office Depot and U.S. Communities, call for a thorough investigation of corrpution, by all three agencies resulting in fraudulent overcharging to government agencies across the counrty.

NOPA Calls for California AG to look into kickbacks by Depot to US Communities.

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.

7/331/2009: San Jose Mercury News

-- Office Depot has spent the past year trying to resolve widespread accusations it overcharged government customers including California for scissors, hole punches and other desk-drawer staples. But the Florida retailer's legal woes continue to multiply. The company, while denying wrongdoing, acknowledged in financial filings this week that attorneys general in California and five other states, as well as federal authorities, are investigating its multimillion-dollar governmental supply contracts.

"We are currently cooperating with the Florida, Texas, Missouri, Colorado, California and Ohio Attorneys General with respect to civil investigations regarding our pricing practices," the company said in its second-quarter report. "We are also cooperating with the U.S. Department of Defense, the Department of Education and the General Services Administration with respect to their joint investigations with the Department of Justice."

The company in August repaid $2.5 million to California after a Mercury News investigation last year and a subsequent state audit alleged overcharges and other concerns. Georgia officials last year suspended Office Depot from doing business in the state for five months after its own audit cited $230,000 in overcharges.

Company officials did not specify the nature of the latest investigations, and a spokeswoman for California Attorney General Jerry Brown said the state justice department could not comment.

But the company's new legal woes appear to involve its supply contracts through U.S. Communities, a nonprofit government purchasing cooperative based in Walnut Creek. The co-op brokers contracts between public agencies and private vendors for items ranging from office supplies to artificial turf; it currently serves 36,000 cities, counties, school districts and other agencies.

The probes apparently were instigated by a former employee, David Sherwin, an account manager in Florida who left Office Depot in April 2008 after 12 years. In complaints to state and federal authorities, Sherwin alleges his former employer made false statements to its government customers by manipulating the U.S. Communities purchasing contract -- for example, by randomly changing prices and entering false cost data in the Office Depot ordering system. That allegedly caused the agencies to buy the company's products at higher prices than they had agreed upon.

Sherwin further alleged that three former Office Depot officials hold senior positions with U.S. Communities and that the nonprofit gets "kickbacks" from the company for lining up government buyers.

U.S. Communities acknowledged that three former Office Depot officials work for the organization as program managers for various contracts, including Office Depot. But the agency said they do not have oversight over the organization or a decision-making role in the Office Depot contract.

But Sherwin isn't the only ex-employee to accuse Office Depot of dirty dealing with government customers. Earl Ante, a former Office Depot salesman from Fremont, filed a federal lawsuit this week accusing his former bosses of firing him for refusing to falsify data that showed the company overcharged the city of Berkeley hundreds of thousands of dollars.

Berkeley officials conducted their own investigation of their contract with Office Depot and concluded the city was overcharged $289,000 over two years. Office Depot repaid the city in April.

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