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Feds investigate office supply vendor

Apr. 18, 2013 - 03:28PM   |  
By JIM McELHATTON   |   Comments
General Services Administration Inspector General Brian Miller
General Services Administration Inspector General Brian Miller (STAFF)

The government is investigating whether an office supply contractor has been improperly selling products made in China in violation of the Trade Agreements Act, court records show.

The General Services Administration’s inspector general’s office has been investigating Florida-based Capitol Supply Inc. for more than two years, according to a motion the IG filed earlier this week in U.S. District Court in Washington. The motion asks a judge to force Capitol Supply Inc. to turn over billing, sales and other information in response to two subpoenas.

Separately, the Justice Department this week joined in a False Claims Act lawsuit filed against Capitol Supply. The suit, filed back in 2010 but unsealed on Monday, accuses the company of selling illegal office products to the government.

The Justice Department complaint Monday said Capitol Supply had “falsely certified” to GSA that office shredders it was selling to federal agencies originated from the U.S. or other countries, when they actually were manufactured in China, a so-called “non-designated” country under the Trade Act.

Under the federal acquisition rules, vendors generally cannot supply the government with items made in countries barred by the Trade Agreements Act.

While the Justice Department’s complaint focused on about $400,000 in shredders sold by Capitol Supply, government lawyers left open the possibility of expanding their complaint if investigators uncover evidence that other office products sold by the company also came from prohibited sources.

Capitol Supply sold roughly $23 million worth of office supplies to federal agencies last year and $35 million in 2011, according to USASpending.gov, the government’s online contracting database. Its biggest federal customer is the Defense Department.

The IG’s office is still seeking sales and country of origin data for other office supply products sold by the company, according to court records.

The original False Claims Act complaint against Capitol Supply was filed by Louis Scutellaro, owner of Mario Industries, a federal contractor based in Virginia. An attorney for Scutellaro declined to comment.

Capitol Supply and an attorney listed as representing the company did not immediately return messages Thursday.

The False Claims Act allows citizens with evidence of fraud to sue on behalf of the government. If they win, they collect in a share of the damages. The Justice Department can join a case or decline, a decision that can have a big impact on a case.

Former federal prosecutor Brian Albritton, who runs a blog on the False Claims Act, said it’s always important when the Justice Department decides to join a case.

“When they’ve intervened, that means the government has found a case to which to commit its limited resources,” Albritton said. “It raises the case’s profile and seriousness … because now the U.S. government is standing directly behind it.”

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