Thursday, December 1, 2005

A Corruption Case Involving Real Red Tape

Here's one you don't see every day.  The U.S. Attorney's Office for the Middle District of Tennessee announced the arrest of two Veterans Administration officials for taking kickbacks for the purchase of, none other than, red tape.  A press release (here) describes the conduct:

Joseph Haymond and Natalie Coker have been charged by criminal complaint with accepting bribes in exchange for buying red tape for the VA at inflated prices. Joseph Haymond is the Director of the VA's Consolidated Mail Outpatient Pharmacy (CMOP) in Murfreesboro, and Natalie Coker, who still works at the CMOP, was the Assistant Director during the kickback scheme. The Murfreesboro CMOP, which has an annual budget of more than $300 million, mails prescription drugs to eligible veterans at subsidized prices.

According to the complaint, Haymond and Coker orchestrated the purchase of more than 100,000 rolls of red tape at inflated prices between August of 1999 and July of 2001. Haymond and Coker each allegedly received a kickback of $1.00 per roll of red tape ordered by the CMOP. The wholesale cost of the tape was $2.50 per roll, but the CMOP paid $6.90 per roll to its vendor, a 176 percent markup.

The defendants are alleged to have earned over $100,000 each from the kickback scheme.  No word on whether they also solicited bribes to cut through the red tape, or whether they caused the VA to purchase other items at inflated prices, such as toilet seats and hammers. (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/12/a_corruption_ca.html

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