Kickback scheme may have involved millions
More details have emerged in the case involving four Home Depot merchants who were terminated last July for allegedly accepting bribes from some of their suppliers. Three of those buyers were named in a civil complaint filed by the U.S. Attorney’s Office in Atlanta, which claims they were the recipients of vehicles, properties, appliances, cash sums and other gifts.
Most of the alleged bribes took place from late 2005 to July 2007, although an earlier scheme involving a product development merchant may have operated from 2002 to 2005.
Home Depot spokesman Ron DeFeo said the company continues to cooperate with the authorities in their investigation, which so far has involved the Internal Revenue Service, the FBI and the Bureau of Alcohol, Tobacco and Firearms.
No criminal charges have been filed, and a Justice Department spokesman in Atlanta would not comment on the investigation. But the civil complaint, filed December 2007, alleges mail and wire fraud and attempted money laundering. Based on these violations, the federal government is attempting to seize gym equipment, homes, a 2004 Cadillac Escalade and a 2006 Infiniti SUV.
James Robinson, Home Depot’s divisional merchandise manager for hard flooring, was home on Dec. 12 when federal agents came for the Infiniti and the Cadillac. Hired by Home Depot in 1999, Robinson had worked as the global products manager for tile from 2001 until his promotion in April 2006.
According to the complaint, Robinson used bribe money to purchase two pieces of property near Nashville, Tenn., both of which are in forfeiture proceedings. On Dec. 21, Robinson voluntarily turned over $146,000 in cash to federal agents in the presence of his lawyer, court papers state.
Ronald Johnston, Home Depot’s global product manager for rugs since April 2005, received cash payments, a 2004 Cadillac Escalade, a fully equipped fitness room, a home theater installation, a refinished basement and $8,276 worth of high-end kitchen appliances in bribes, the government asserts. Johnston’s home in Marietta, Ga., now on the market for $839,000, is also subject to government forfeiture.
The third merchant named in the complaint, Anthony Tesvich, worked for Home Depot as a product development merchant, responsible for finding global sources for flooring products. Prosecutors allege that Tesvich collected more than $10 million from foreign suppliers from 2002 to 2005 and deposited the money into bank accounts that he controlled. The government also claims that Tesvich, who resigned from Home Depot in 2005, acted as a middleman in the subsequent kickback schemes involving the other merchants.
International suppliers who had relationships with Tesvich, according to the complaint, are: Willieco, a Taiwanese manufacturer of vinyl tile; Chevron, a Chinese power tool maker; DC Mill, a maker of doormats in India; Taizhou Eagle Group, a supplier of plastic ceiling panels and rug pads in China; and Travertine Brothers, a stone tile supplier in Turkey.
Roberto Jakubowicz, CEO of Megatrade, told authorities that he mailed checks directly to Robinson in exchange for increased sales with Home Depot. Megatrade, based in Venezuela, makes ceramic tile.
Dominion Homes faces Nasdaq delisting
Dublin, Ohio-based home builder Dominion Homes is in the midst of closing a deal to go private but still faces suspension of its stock on the Nasdaq as of March 31, according to a report in BusinessFirst Columbus (Ohio).
The company violated Nasdaq rules when its stock fell, making the company have a total market value under the stock market’s minimum of $5 million. The company also violated rules when it failed to separately announce that company accountants questioned Dominion’s ability to continue due to operating losses and credit problems.
In January, the builder announced plans to go private and buy shareholders out at a cost of 65 cents per share, or $5.5 million cash. The deal means Dominion will be taken private by a group of investors that includes a company with ties to its CEO. The buyout group consists of companies affiliated with Angelo Gordon & Co. and Silver Point Capital and the company’s largest shareholder, BRC Properties.
Dominion chairman and CEO Douglas Borror, also the principal of BRC Properties, will remain in his role with the company.
Biometrics OEM files for bankruptcy
Orlando, Fla.-based original equipment manufacturer (OEM) Sequiam has filed for bankruptcy reorganization in the U.S. Bankruptcy Court for the Middle District of Florida, according to the Orlando Business Journal.
The company recently received a licensing agreement with Black & Decker to provide biometric door locks for the company’s Kwikset division. Still, the manufacturer’s stock dwindled to around 2 cents per share recently.
The company said it accumulated $30 million in debt over the past six years on research and development, according to the report. It also said that an investor failed to honor a March 2007 agreement to advance the company $800,000.
Company founder and CEO Nick VandenBrekel recently resigned for personal reasons.
The company said it will continue to conduct business while the filing and reorganization takes place.