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  • twomules80 twomules80 Sep 8, 2011 5:51 PM Flag

    Law360: Office Depot Overcharges Detroit Schools and Dallas County

    Depot attacks DPS IG, Auditors, Legal and Whistleblower

    Whistleblower Says Office Depot Bilked Detroit Of $5.2M

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    By Greg Ryan

    Law360, New York (September 6, 2011) -- Detroit's school district revealed Thursday that Office Depot Inc. had allegedly overcharged it by $5.2 million for office supplies, after a former Office Depot employee blew the whistle on the purported fraud.

    A contract with Detroit Public Schools promised the school district most favored public entity pricing, but San Francisco was charged less, according to an annual report from the school district's inspector general. The report does not identify the contracted company by name, but whistleblower David Sherwin told Law360 on Tuesday it was Office Depot.

    Office Depot has been accused by government agencies across the country — including Dallas County, Texas, in August — of overcharging for office supplies under an agreement offered through the U.S. Communities Government Purchasing Alliance. The company is still facing investigations from the U.S. Department of Justice and attorneys general from California, Texas, Ohio and New York, among others, Sherwin said.

    Office Depot on Tuesday denied it had overcharged Detroit schools by $5.2 million, saying the school district had misinterpreted the contract. It blamed Sherwin for confusing the school district and other government agencies.

    “We believe the auditor was initially influenced by an incorrect and baseless interpretation that was disseminated by a disgruntled former employee,” the company said.

    public auditors who do not have a complete or accurate understanding of the agreements at issue,” it said.

    Sherwin urged the Detroit school district to launch a civil suit against Office Depot.

    “Office Depot has displayed a reckless pattern of overcharging government agencies across the country since 2008. There may not be another company in the country under as many current state and federal investigations as Office Depot,” Sherwin said.

    A representative for the Detroit school district could not be immediately reached for comment.

    The district was tipped off to the alleged fraud in October 2009, the report said. The purchases at issue were made from July 2006 to November 2009, according to the report.

    On Aug. 29, the auditor for Dallas County released a contract compliance review that said Office Depot had overcharged the county by $1.8 million for office and classroom supplies from Jan. 1, 2006, to Dec. 11, 2009. As with the Detroit school district, the figure was derived by comparing the county's charges with those of San Francisco, as well as those of Los Angeles County.

    San Francisco's city attorney, meanwhile, accused Office Depot in December 2009 of failing to fork over $5.75 million in required discounts under a contract. The city and the company reached a $4.25 million settlement in December 2010.

    Several states have also reached settlements with Office Depot over alleged overcharging.

    In June, Colorado Attorney General John Suthers announced that Office Depot had agreed to pay $412,000 to settle allegations that it overbilled nearly 115 Colorado governmental agencies and nonprofits for office supplies for more than three years.

    In June 2010, Florida's attorney general said the company would pay about $4.5 million to resolve claims it violated the Florida Deceptive and Unfair Trade Practices Act through alleged overcharging.

    --Additional reporting by Bibeka Shrestha. Editing by John Williams.

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