Kids having their lunch money taken is a well-worn cliché since time immemorial. But it’s not so often that it happens to a school.
Whitsons Culinary Group, the food provider for East Hampton, Bridgehampton, East Quogue, and Hampton Bays schools, has to pay back $807,000 for “illegally overcharging” 30 school districts, according to New York State Attorney General Eric T. Schneiderman.
That’s a lot of bologna sandwiches.
According to a press release from Mr. Schneiderman’s office, “The Suffolk County-based Whitsons Culinary Group received savings from food vendors it worked with, but did not pass on those savings to customer schools, resulting in more than $800,000 in illegal charges. Whitsons must now pay $1.6 million to the state and affected school districts, and comply with a series of reforms to improve transparency in its contracting and service.”
The Whitsons case was pursued under the New York False Claims Act. The Fraud Enforcement and Recovery Act allows the state to collect triple damages from corporations or people who defraud the government, or violate their obligations to pay government entities or, in this case, school districts.
Richard Burns, interim superintendent of the East Hampton Union Free School District, said that the total refund due to East Hampton is around $3,900. The money will be allocated to the school’s cafeteria fund to help pay for any future shortages.
Seventy-five dollars will be coming back to Bridgehampton, and East Quogue will get a check for $5. Hampton Bays will not receive a refund as it was not included in the settlement.
The school districts range from Long Island to Manhattan to Ulster County, with the bulk of them in Westchester, where 13 districts were affected.
Holly Von Seggern of Whitsons, which is based in Islandia, said the overcharges were unintentional. She pointed to a confusing law put into effect in 2003, governing the allocation of rebates, “but it was not clarified and adopted by the [United States Department of Agriculture] until late 2007, when it became federal law.” The refunds are coming from that four-year period.” Whitsons revisited its rebate accounting procedures in 2007, when the law was clarified,” she said in a statement.
“Whitsons remains committed to ethical business practices and maintains strong partnerships with its clients. The company is proud of its reputation for integrity, high quality, and excellent service and continues to lead the industry with its innovative programs and strong focus on nutrition and education.”
Whitsons is not alone. Last year the international food provider Sodexo paid back $20 million to the New York Attorney General’s office to resolve an investigation into its rebate practices.