Naples gets $12,000 refund in Office Depot pricing change controversy

— The city of Naples has received a $12,042 check from Office Depot, making them at least the seventh local government agency in the state to receive a refund for a pricing switch some of the governments don’t remember authorizing.

Finance Director Ann Marie Ricardi said the city plans at this point to keep buying from Office Depot, which it pays more than $100,000 a year for office supplies.

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

“I’m not planning on changing vendors,” Ricardi said. “We continue to receive good pricing, good delivery and good service.”

David Sherwin, the Fort Myers resident and former Office Depot senior government salesman who has helped four federal, seven state and numerous local governments become involved with investigations into the company’s pricing practices, was extremely critical of Ricardi’s decision.

“At some point in time, she is just going to end up looking very, very foolish,” Sherwin said. “That will be fine with me, because there is a number of government people who will go down with the Office Depot ship, it looks like.”

Sherwin has said Office Depot has been overcharging government agencies in numerous ways, an allegation the company denies. Among those overcharging allegations was the pricing switch.

On multiple occasions, Office Depot officials have been asked if they could produce one agency that paid less under the second pricing option. The question has up until now been ignored.

The contract the city of Naples purchases from is held by more than 10,000 government agencies and nonprofits across the country, meaning that an organization in nearly every community in the country may be eligible for a refund under the pricing switch.

Office Depot said it has informed these agencies they may be eligible for a refund due to the pricing switch, but no proof of this has been submitted, no agencies have corroborated this, and many agencies remain unaware of the situation.

And again, the pricing switch is just one of Sherwin’s allegations, which continue to be investigated. The Lee County School District, for instance, has been investigating his allegations since November and is expected to make an announcement during the School Board’s Tuesday evening meeting. Sherwin estimates the district, which spends $2.5 million a year on office supplies, has been overcharged by at least a half million dollars.

Ricardi said the city will switch to a modification of the current contract it purchases from. The modified contract is offered by the state, and is being investigated by the state attorney general.

She also said the city is looking into Sherwin’s other allegations and is working with the city of Clearwter, Fla., Detroit, Mich., Public Schools, the county of Hillsborough, Fla., and the Lee County School District, which are all investigating Sherwin’s other allegations.

“My basic research was simply pricing comparisons with billing sheets,” Ricardi said, noting that the agencies she is working with employ dedicated, professional auditors.

Nonetheless, Sherwin insists the decision to continue purchasing from Office Depot is ludicrous, especially when both Staples and OfficeMax have similar nationally-available piggyback contracts.

“If there’s an allegation of major impropriety, wouldn’t it be easy to say, ‘Hey, Staples has got a contract, why don’t we just switch to that, and be done with this mess,’ but no, they don’t,” Sherwin said. “I think that eventually they’re going to pay the piper.”

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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