City of Naples latest to learn about Office Depot overcharging

City of Naples officials have received a report from Office Depot showing they paid $7,462 more per year after the company switched them to a pricing plan they don’t remember asking for.

The company’s pricing plans and contracts are alleged to have deceived government agencies across the country into being overcharged by millions of dollars. Office Depot denies the allegations.

Lee County government $160,467

City of Cape Coral $51,603

Edison State College $24,234

Sarasota County School District $41,124

Charlotte County government $75,146

City of Naples $12,042

Lee County School District $297,063

City of Pembroke Pines $22,000

Other agencies, among them the city of Cape Coral and the Sarasota County School District, have received similar reports from Office Depot, all of which preceded credits being issued to those agencies by the Boca Raton company.

Also, this week, City of Fort Myers Purchasing Director Laurie Victory said she would launch a full investigation if the report Office Depot sends her shows that city paid more under the second pricing option.

They are the newest developments in the story of David Sherwin, a Fort Myers man and former Office Depot senior account manager, who has launched a campaign to hold his former company accountable for fraud and overcharging allegations and pressure local officials to protect taxpayers.

Despite Naples now possibly being in a position to receive a credit from Office Depot, Sherwin was less than congratulatory when hearing the news. If city officials request a credit from the company, Sherwin said it will only be for a portion of the money he says they were overcharged.

“The city of Naples is really trying to give the Collier County School District some competition for being the most inept handlers of this situation,” Sherwin said, referring to the School District officials’ hesitation to investigated his claims, which they said they would do Tuesday.

Sherwin’s comments reflect his frustration in attempting to get local officials to respond to his allegations.

The Collier County School District, Lee County School District, Edison State College, Lee County government, Lee County Port Authority, Fort Myers and Cape Coral have also been pressured by Sherwin to investigate.

Though all of the agencies he has targeted have either received credits for some of Office Depot’s alleged overcharges or indicated they are looking into them, most of those announcements came more than a year and a half since Sherwin first shared his allegations with them.

Furthermore, Sherwin was appalled to hear the comments of Naples purchasing manager J.F. Workman, who told the Daily News he had originally requested the report received today in early 2009, then lost it and doesn’t remember what it said.

“I think I had this once before and I misplaced it someplace,” Workman said. “I misplaced it and am not sure where it went.”

Sherwin asserts a full audit of his allegations would uncover the city was overcharged $17,500 per year. His estimate of the pricing switch difference — before the city received its report — was $8,171 dollars, off by $709.

“To find it so unreasonably unimportant that they lost it, that’s unconscionable,” Sherwin said. “If this is going on in office products, what’s happening with electrical contracts, road contracts and building contracts? What’s going on with contracts worth significantly more money, if that’s what is happening with this?”

Workman and others in the city’s finance department began conducting an audit of the city’s Office Depot purchases after the Daily News began asking questions about the city’s response to the allegations.

Naples Finance Director Ann Marie Ricardi said if a company deceived government agencies into purchasing from a contract that was more expensive it is “sad.”

“We are going to review when they changed our pricing option, first of all,” Ricardi said, “because I do not believe we ever received anything in writing telling us we changed our pricing option.”

Naples Mayor Bill Barnett suggested the city may end its contract with Office Depot, and said any money received from Office Depot won’t lead to a celebration at city hall.

“I won’t have a happy face, but I will certainly have a kind of neutral expression saying, ‘Hey, give us the money back that’s owed us and we’ll get back to our life,’” Barnett said. “And if they ever want business again they‘ve got a hell of a lot of explaining to do.”

When asked if she would launch an investigation if the second pricing option was more expensive Victory, the Fort Myers purchasing director, was specific.

“We will do it, absolutely. You know, if there has been any type of unethical operations or unjust pricing or anything like that, that is unacceptable,” Victory said. “Our association with Office Depot would cease immediately.”

CONCLUDED INVESTIGATIONS

The Daily News documents government inquiries into Office Depot's government contract practices as we become aware of them or when they conclude. Many of these inquiries were full-blown investigative audits, while others consisted of government officials calling Office Depot and asking for a refund. For a full listing of all the inquiries, including descriptions of their findings and related documents, click here.

  • Number of concluded inquiries: 25
  • Number of concluded state-level inquiries: Seven, including two conducted in North Carolina and Florida, and one each in Georgia, Nebraska, California and Missouri.
  • Number of second pricing option refunds issued: Nine, not including any refunds issued due to statewide settlements in Missouri or Florida or refunds not disclosed by the government agencies receiving them
  • Total amount of second pricing option refunds or credits: $683,679, not including those issued from the $320,000 and $4.5 million accounts set up by the Missouri and Florida attorneys general, respectively
  • Total amount of all refunds, credits or other settlement costs: $11,409,295, including the second pricing option refunds, settlements with the states Georgia, California, Florida and Missouri, and a refund paid to the City of Berekely, Calif.
  • View the complete list of all concluded investigations, including their findings and related documents here.

ONGOING INVESTIGATIONS

When documentation verifying David Sherwin's claims of certain ongoing investigations can be found, they will be added to the list. Currently, Sherwin said the state of Washington's Office of Special Investigations and the Dallas County, Texas fraud auditor are also examining Office Depot's government contracts.

  • February 2009: Office Depot releases in its annual report that three federal agencies, the Departments of Defense and Education and the General Services Administration, are working with the Department of Justice in investigating the company’s government contract pricing practices. Sherwin refused comment on the investigation. (Read filing, page 16)
  • April 2009: Office Depot releases in its quarterly report that it is also being investigated by the Texas Attorney General's Office in relation to pricing practices, primarily with government customers. (Read filing, page 21)
  • April 2009: Detroit Public Schools Inspector General John E. Bell says in the Detroit News that he is looking into the district's purchases through Office Depot's national piggybacking contract with Los Angeles County.
  • July 2009: Office Depot announces in its quarterly report that it is also being investigated by the Colorado, California, and Ohio Attorneys General in relation to pricing practices, primarily with government customers. (Read filing, page 30)
  • November 2009: Collier County School District Superintendent Dennis Thompson orders a review of allegations the district has been overcharged by Office Depot. The district purchases through the company's national piggybacking contract with Los Angeles County. (Read story)

THE DOCUMENT TRAIL

  • Background on David Sherwin: Discharge paper from the Air Force, certificates detailing training received while an inspector general with the Florida Department of Health and Human Services, an article detailing the biggest case Sherwin handled while with HRS, and Sherwin's arrest reports. (Read documents)
  • Documents provided by David Sherwin: Beginning with a June 2006 performance review in which Sherwin said he is encouraged to sell L.A. County option two pricing to increase IMU (profit), continuing with a series of e-mails leading up to the one which Sherwin said got him fired (contains explicit language), a cease and desist letter Sherwin said he received from Office Depot (which he ignored), and ending with the minutes of a meeting between L.A. County and Office Depot officials, in which issues with the contract are discussed. Office Depot officials have not confirmed the authenticity of the documents. (Read documents)
  • L.A. County Master Agreement 42595: A copy of the original agreement shared by about 10,000 government agencies. (Read contract)
  • Second pricing option: A list of the largest agencies using the second pricing option sent to Los Angeles County in October 2008.(Read documents)
  • The new pricing option: In February 2009, Office Depot announced it will be doing away with the L.A. County agreement’s two pricing plans, and transition all customers to a new, simpler pricing plan on March 30, 2009. In a release, the company says the new plan will offer "enhanced transparency and accountability." (Read release)
  • David Sherwin's communication with state and federal agencies: Beginning with his communication with the offices of the Florida Attorney General and Inspector General, continuing with an e-mail from the Securities and Exchange Commission, and concluding with letters from the states of Pennsylvania, Texas and Alabama. (Read documents)

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