City alleges it was overcharged millions on office supplies from Office Depot

HOUSTON (KTRK) -- The city of Houston says a store you've likely shopped at bilked the city out of millions of your tax dollars. An audit released late Friday afternoon accuses Office Depot of overcharging city taxpayers for more than 4 years.

In all, the city says it was overcharged more than $6 million and there's suspicion the overcharging was no accident.

This is the latest in a string of complaints against Office Depot. Cities across the country have alleged similar overcharging. Much of it first brought to light by a former Office Depot employee who's notified cities across the county of potential problems -- issues now confirmed by the city of Houston.

Who would think that a few cents here on paper, and a few cents there on pens or cartridges or tape, would somehow add up to millions and millions of dollars? City of Houston Controller Ronald Green does.

"This wasn't nickels and dimes on Office Depot's part?" we asked Green.

"Not at all," he replied. "We think an upwards of $6.5 million, on the high end."

According to the audit, thousands of supplies had no price on city invoices from Office Depot; other items had prices that changed without reason; and some items were delivered to the city without the proper discounts applied.

It was so frequent and so widespread that, Green says, there's no way it was an accident.

"It opened up the door really for a lot of fraud, if you will," Green said.

"That's a strong word," we said.

"And I think it is," Green said. "I think someone knew what was going on here."

"And they made a lot of money of the taxpayers of Houston?" we asked.

"They made a lot of money," he said.

Here is just one of the irregularities the city auditor found: The first time the city bought easel pads, it paid $7.50 under this Office Depot contract. Then the auditor says the price climbed to $31.49, then dropped down to $30.99, and then back again to $7.50, before climbing again to $30.99 toward the end of the contract. All the price change were without explanation, says the auditor, and while the city should've been getting the cheapest price available.

"The vendor should be successful and make money, and we're for that. But the whole thing should be clear, it should be up front and then it should be honored," city of Houston auditor Dave Schroeder said.

Houston is far from the only city alleging overcharging by Office Depot.

According to government audits available online and press reports nationwide, Dallas settled with the company for $1.7 million, Florida for $4.5 million; Phoenix says it was overcharged by $5.3 million, while San Francisco alleges $4.25 million. Add in some other smaller cities and the alleged nationwide overcharges easily top $16 million nationwide.

Now Houston wants cash, too.

"I think that there is some nefarious intent on the side of Office Depot. We've been shown that by the way they've responded to us and not being transparent in providing information," Green said.

In a written reply to the Houston audit, Office Depot denies the charges and challenges the way the audit was conducted. The company says:

"The City of Houston auditor's assertion that the City was entitled to certain additional discounts is simply wrong. The auditor's report rehashes old claims originally made by a disgruntled former employee, that are based on inaccurate legal interpretations of Office Depot's former contract that the City was not a party to and which contract expired at the end of 2010.

"These very claims were considered and expressly rejected by the Florida Attorney General's office back in 2010, after it conducted a two-year investigation into the same allegations. Office Depot cooperated with the City of Houston's auditor and appreciated the City's patronage of Office Depot on the contact."

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Millions raised for March of Dimes at Houston event

  HOUSTON (KTRK) -- The tiniest Texans are getting support from the March of Dimes.

The organization held the 41st annual Houston March for Babies on Sunday.

About 40,000 people walked for five miles around the University of Houston campus.

The local walk raised $3.7 million -- and counting -- to prevent preterm birth rates, birth defects and infant mortality

The organization says the Houston march has been its top fundraising event for the past two years.

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Three sentenced to prison for stealing millions from oil giant

  HOUSTON (KTRK) -- Three former employees of Davis-Lynch have been handed lengthy prison sentences for stealing millions from the oil company and using it to buy lavish items.

Nancy Moreno, 55, was sentenced to serve 30 years, Yvette Ybarra Trevino, 47, was sentenced to serve 15 years, and Ernest Trevino, 44, was sentenced to serve 20 years in prison, according to the Harris County District Attorney's Office. A judge also ordered that restitution of approximately $13 million be paid to the company as a condition of parole.

The former employees of Davis-Lynch were charged after an internal audit revealed more than $13 million had been stolen from the company and company equipment was found at the home of Moreno. Further investigation led authorities to discover that the employees used the money also to purchase luxurious homes, jewelry and vacations.

"Davis-Lynch was founded as a small, family- operated business, and Nancy Moreno was trusted completely. She would have coffee with the CEO in the morning, chat with him about news and such, and then steal him blind when his back was turned," Assistant District Attorney Wendy Baker said in a statement. "She started as the company receptionist, and although she had no formal training or college education, she eventually rose to act as the chief financial officer for the business. She and her codefendants were trusted, valued employees who betrayed the Davis-Lynch families."

Three others also have been charged in the case.

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HISD to lose millions if Gov. Perry approves budget

  Demond FernandezHOUSTON (KTRK) -- Under the proposed budget approved Saturday by the Texas Legislature, the Houston Independent School District would lose out on nearly $200 million over the next two years.

The district has been making cuts to deal with the lack of funding, but administrators, parents and teachers are speaking out about this budget decision.

They all say that school districts like HISD are in some serious trouble.

"I think that it's a lot of politics and the kids are suffering," parent Taryn Phillips said.

HISD could stand to lose more than $78 million dollars in state funding next school year, and the estimates hit the district even harder in 2013 with $126 million in cuts approved by the Senate and House.

"Of course our economy needs a lot of help right now, but still you got to think about the children, and think about, 'Is it worth cutting back on that or other things?'" parent Julia Smith said.

After learning about its budget reduction estimates from the state, HISD released a statement.

"Schools in Houston and elsewhere will still suffer significantly in years to come," the statement read.

"The substantial reduction in state funding will undoubtedly have an impact in our students' education," it continued.

Gayle Fallon with the Houston Federation of Teachers agrees.

"Parents are not going to like what school looks like next year because they're going to have kids coming back to very large classes," Fallon said.

Fallon predicts the state's budget estimates may lead to unsafe and understaffed schools.

She says one of the only solutions could be an unpopular one if the school board lessens the burden by raising taxes.

"As a taxpayer in Houston, I'm not thrilled with a tax increase, but I'd rather pay the money now than pay it into the criminal justice system when we turn out an illiterate generation that can't get a job," Fallon said.

Parents, HISD administrators and the teachers union all say they will be waiting and watching to see what lawmakers ultimately decide.

The district has already laid off employees, cut programs and closed schools to make up part of the expected budget gap, but trustees believe their only option could be a roughly 4 cent tax rate hike.

The district's current tax rate is 1-15 per $100 valuation.

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