Additional coverage of this story
NAPLES — Lee County School District officials are examining their Office Depot purchases again. And again, they’re not likely to find anything, according to the whistle-blower who says he helped Office Depot mislead public agencies like the district.
They’re not likely to get the public’s tax dollars refunded, as other Southwest Florida agencies have, whistle-blower David Sherwin says, because they’ve always been looking in the wrong place.
“It’s comparable to a person telling a farmer that someone is stealing apples out of their orchard, and the farmer goes and takes inventory of their oranges,” Sherwin said after learning of the actions district officials took in response to allegations they were being overcharged by Office Depot.
It’s the latest development following Sherwin’s declaration last week he would seek criminal indictments of Superintendent James Browder and other area government officials through a statewide grand jury Gov. Charlie Crist announced he is seeking last week.
Office Depot refunds issued to date:
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
Sherwin said the officials failed to follow-up on allegations they were being duped by Office Depot, which is currently being investigated by six states and four federal agencies in relation to its government contract practices.
Specifically, Sherwin was outraged Browder would refuse to conduct an extensive audit of his district’s office and school supply purchases. The Lee County Clerk of Courts had offered to conduct the audit, after completing a similar audit for Lee County of the exact same contract. The audit found overcharges and the county received a $58,000 refund. Browder refused the offer.
In response, Browder noted the district had looked at the purchases and found no reason to pay for the audit, estimated at $20,000 to $40,000. Then, on Thursday, Lee County School District Internal Audit Director Bob Brown said the district would take another look at the purchases.
“We are going to basically use the same procedures,” Brown said. “We’re just going to do a different time period, compare those invoice prices to a couple of different sources.”
The problem, though, says Sherwin, is the district isn’t listening to the other agencies that have reported overcharges, the media’s reports of the allegations, and the constant stream of e-mails he has sent out to district officials since becoming a whistle-blower in the Florida Attorney General’s investigation of the contract.
Brown said the district has been comparing the prices it paid to prices listed on the Office Depot catalog and saved versions of the Office Depot Web site at the time of the transactions to ensure all three match up.
However, what the district should have been doing is what other agencies have done, Sherwin said, comparing the prices it paid before and after the contract switched to a new pricing plan, which was first made available to the company’s contract holders Jan. 2, 2006.
“Do you know how many times we’ve given them specific instructions on what they should be doing, and you’re telling me this guy didn’t even know what he was doing?” Sherwin said. “When you have someone that doesn’t understand the allegations, I’m dumbfounded. That’s why the government is so broke.”
Many of the allegations surrounding the contract Office Depot has with more than 10,000 agencies across the country, including some in Southwest Florida, circulate around the pricing option, known as “option two.”
Sherwin, who lives in Fort Myers, was the one who sold option two to Southwest Florida government agencies, including the Lee County School District, which spends more on office and school supplies than any other agency in the region, about $2.5 million a year.
As an Office Depot employee, Sherwin alleges he was told to sell option two as lower pricing, a cost-savings. But option two was more expensive, Sherwin asserts. Selling it as a cost-savings was deceptive and therefore fraudulent, he says. They’re allegations Office Depot flatly denies.
Brown said that because the district’s contract at the time of the first analysis was for option two prices, and not the original, option one prices, he had not conducted a comparison between the two. He also said — after learning that other agencies had recouped money by comparing prices before and after the pricing plan switch — he would look at the other method.
“I certainly will go back and ask for option one prices,” said Brown. “Whether we have any recourse, that’s another story.”
Sherwin said the taxpayers should be concerned it took this long for the district to listen, and continues to accuse other agencies, including the Collier County School Board, Lee County Board of County Commissioners, City of Fort Myers and the City of Cape Coral, of failing to do everything they could have done or should be doing to protect taxpayers.
“The school district has just proven to be completely negligent and incompetent,” Sherwin said. “The taxpayers should be outraged at this.”
DAVID SHERWIN/OFFICE DEPOT
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.
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)