Local News

Audit: Firm Paid Nearly $15,000 In Kickbacks Statewide

Posted March 2, 2006

— A new state audit released Thursday found that a company overcharged nearly 45 state and local agencies for supplies while giving workers who ordered those supplies nearly $15,000 in kickbacks.

The company, defunct Stone Cold Chemical Co., sold cleaning supplies to agencies across the state. Employees who bought or ordered supplies from Stone Cold, based in Loganville, Ga., were sometimes given "premiums," which were essentially gifts.

List Of Transactions

Full Audit

(PDF file)

A state audit report released Feb. 20 found the company gave seven N.C. Transportation Department workers gifts ranging from golf balls to gift cards from Dillard's and Victoria's Secret. The goodies came in return for using DOT funds to buy supplies at more than $7,900 above fair market value.

The audit released Thursday from North Carolina Office of the State Auditor found that 44 agencies had 203 transactions with the company for a total of $150,401. Workers at those agencies were given a total of $14,700 in gifts.

Many agencies received under $100 in gifts, but several received large amounts. For example, the Denton Waste Water Treatment received $4,303 and the Lee Stephens Recreation Center in Asheville received 2,306.

In the Triangle area, the Person County Public Works received a gift of $463 after spending $10,291. The Chatham County Animal Control Department received $350 for spending $4,244. Several other agencies in the Triangle received smaller amounts.

Top executives of Stone Cold were charged in Florida in September 2003 with bribing state and local government workers to buy millions of dollars worth of its products.

So far, 10 state and local government workers and six company employees in Georgia have pleaded guilty to charges that included racketeering and conspiracy to commit bribery. Investigators in Maryland, Oregon and Pennsylvania have also launched probes of Stone Cold transactions.

Investigators said as many as 5,000 public employees in 48 states may have accepted kickbacks in return for buying supplies at inflated prices from Stone Cold. The company's sales representatives specialized in targeting lower-echelon employees with the authority to make small purchases that didn't require approval by a central purchasing office, Patterson said.

The audit report said DOT employees accepted gifts totaling nearly $470. Accepting the gifts appeared to violate North Carolina law prohibiting transportation employees from receiving an item of value item in return for committing or aiding the commission of fraud on the state, the report said. The felony carries a maximum fine of $20,000 and dismissal from office.

North Carolina auditors learned of Stone Cold's business tactics at a conference last summer and traveled to Florida to review records seized there, Patterson said.

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