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LEE COUNTY — The Lee County School District intends to end its relationship with Office Depot after accepting a $297,063 refund check from the Boca Raton company, Superintendent James Browder said Tuesday.
“Based on the lack of integrity that Office Depot has demonstrated, I don’t believe we can continue doing business with them,” Browder told the School Board.
Browder said the company required him to sign a document saying he would not seek any additional overcharges in order to accept the refund.
Nonetheless, he vowed that he will continue a full audit and seek any additional money he believes the district is owed. He said he would withhold payment of $80,000 in outstanding bills from the company until the money has been received.
“If they want to do business in Lee County, they need to call me and make it right,” Browder said of the company, after saying he will send them a seven day notice that the district’s Office Depot contract is terminated.
As the district attempted to do an audit of the company, Browder said Office Depot officials did not cooperate with District Internal Auditor Bob Brown. He said the company twice refused to provide the data Brown was seeking when he traveled to Boca Raton to get it.
The announcement comes some 21 months after Fort Myers resident and former Office Depot employee David Sherwin first brought the situation to the attention of district officials.
Sherwin threatened Browder with a grand jury corruption investigation before the district began looking in the right areas and sought a refund.
District Purchasing Director Robert George resigned as the audit was announced in November 2009 for family reasons, George said.
Sherwin issued praise for the district after the decision and after being thanked by Browder.
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
“I think they did as good a job as they could right now,” Sherwin said of the district’s decision. “I think what Office Depot did in order to have them pay the money was nothing short of extortion. It’s criminal extortion. They’re extorting money from the school children and taxpayers.”
The refund check was for a switch in pricing plans Browder said the company could not prove was authorized.
Though the district switched contracts in Jan. 2009 and began purchasing from multiple vendors — and Sherwin asserts that contract overcharged the district, as well — the refund was for an earlier contract.
That earlier contract is a national piggybacking contract that is shared by about 10,000 government agencies and non profits across the country, some of which may be eligible for a similar refund.
Office Depot has not informed all of those agencies that they may be eligible for the refund, even though they may have thousands of other eligible customers.
In a statement, the company said it cooperated with the district and saved it money. The company denies all overcharging allegations leveled by Sherwin.
“We have enjoyed a long and positive relationship and our recent discussions regarding that relationship have reflected mutual cooperation,” the statement said. “Further, the Lee County School District has enjoyed incredible savings by purchasing from Office Depot.”
Sherwin has notified hundreds of governments across the country that purchased from the same piggybacking contract, but many remain unaware or refuse to take action for reasons unknown.
Locally, several other governments, among them the City of Naples, Edison State College, Lee County, and the City of Cape Coral, have collectively received hundreds of thousands of dollars in refunds from Office Depot as a result of the pricing switch.
Additional allegations are being investigated by the district and other agencies around the country, including Sherwin’s allegation that the company did not offer the piggybacking customers their best price, despite promising to do so. If proven, the allegations might result in even larger refunds.
Four federal departments and agencies in seven states are involved with investigations into the company’s government contract pricing.
The oft-critical School Board Member Bob Chilmonik praised Browder’s actions.
“I look forward to getting every single penny that these people owe us,” Chilmonik said, then raising his voice. “This is money on the backs of children and that, to me, is despicable. You don’t take money from children.”
DAVID SHERWIN/OFFICE DEPOT
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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