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New York State Reaches $20 Million Settlement With Food Service Supplier

4:25 PM, Jul 21, 2010   |    comments
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By JOSEPH SPECTOR
Gannett Albany Bureau

ALBANY -- The state has reached a $20 million settlement with food services provider Sodexo for overcharging 21 New York school districts as well as the public college system, Attorney General Andrew Cuomo announced today.

Of the school districts, the largest settlement went to Children's Village in Dobbs Ferry, Westchester County. The facility, which provides residential services to troubled youth, received $1 million, Cuomo's office said.

Another Westchester facility that helps youth, Abbott House, received $132,000 last year as part of an initial agreement. Officials at the school said they were pleased with the settlement.

The state found the company overcharged schools in New York for five years by not acknowledging rebates from suppliers. The investigation started when two former Sodexo employees came forward under the New York False Claims Act, which protects whistleblowers from retribution.

The settlement, unsealed Tuesday in federal court in Massachusetts, is the largest one ever in New York under the act that doesn't involve Medicaid fraud, Cuomo's office said.

"This company cut sweetheart deals with suppliers and then denied taxpayer-supported schools the benefits," Cuomo, the Democratic candidate for governor, said in a statement.

There was no immediate comment from Sodexo, a France-based company with 120,000 employees in North America. In the agreement, the company said the settlement isn't an admission of liability.

The schools impacted participate in state and federal lunch programs that require any rebates to be credited to them, Cuomo said. The company, however, received rebates that averaged about 14 percent of their billed costs.

As part of the false claims act, the whistleblowers will receive $3.6 million, the state will receive $15 million for the State University of New York, and the schools are getting $1.4 million -- the amount they were overcharged.

The whistleblowers were brothers John and Jay Carciero, former general managers for Sodexo in Massachusetts, according to a statement from their attorneys at Phillips & Cohen LLP, a Washington, D.C.-based firm.

The statement said the men were "outraged" when they discovered the practice. They were ultimately fired when they complained, the attorneys said. Jay Carciero is now deceased.

Here are the payouts to the schools involved:
-- Children's Village (Westchester County): $1.03 million
-- Abbott House: $132,662 (Westchester County)
--Albion (Orleans County): $2,918
-- Cheektowaga - Maryvale (Erie County): $2,806
-- Cleveland Hill Union FSD (Erie County): $1,757
-- Dunkirk City School District (Chautauqua County): $2,210
-- Elmwood Franklin School (Erie County): $1,264
-- Lackawanna City School District (Erie County): $11,597
-- Lakeshore CSD (Erie County): $26,022
-- Letchworth (Wyoming County): $1,370
-- Lewiston Porter CSD (Niagara County): $2,113
-- Lockport City School District (Niagara County): $7,551
-- Medina CSD (Orleans County): $2,022
-- North Tonawanda (Niagara County): $12,121
-- Royalton - Hartland CSD (Niagara County): $2,440
-- Salamanca City School District (Cattaraugus County): $2,637
-- Schenectady City School District (Schenectady County): $14,044
-- Sodus City School District (Wayne County): $2,397
-- Springville - Griffith CSD (Erie County): $2,874
-- Tonawanda City School District (Niagara County): $3,541
-- Tuckahoe Union FSD (Westchester County): $8,556
-- JCCA - Buffalo (Erie County): $59,381

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