Group Policy



This final report is prepared to document the findings of this investigation. This final report is based on interviews, supporting documents obtained as part of the investigation, and an understanding of the relevant facts.

The investigation was limited solely to a determination of the relevant facts. An allegation of misconduct is considered proven if a preponderance of the proof developed supports that conclusion. This final report offers no opinion regarding the consequences or implications of the investigation findings, possible disciplinary actions against implicated employees, or considerations of potential legal liability for the company or anyone else. This report does not contain the opinions of the investigator on any topic.

1 Investigation location

The company office is located at Penn Station, New York, New York.

2 The scope of the investigation

The scope of the investigation was limited to a specific allegation. The allegation investigated was whether the Senior Vice President of Procurement violated the Code of Business Conduct by maintaining an impermissible conflict of interest.

3 Investigative steps

The initial report was received for investigation on June 16, 2011. The investigation sought to establish whether the allegation could be proven by the available facts and, regardless of the outcome, the various policy and process improvements that might be improved.

Interviews were taken as part of the investigation. Bob Smith, the reporter was interviewed. Steve Frankel, the vendor manager, was interviewed. Larry Greenberg, the implicated Senior Vice President, was interviewed. A summary of each interview was prepared and retained in the investigation file.

Document that are material to the investigation findings include the following:

• The personnel file for Larry Greenberg

• The vendor application documents for Susan Carrington Alimentary Materials, Inc.

• The vendor agreement with Susan Carrington Alimentary Materials, Inc.

• Invoices from Susan Carrington Alimentary Materials, Inc.

• Online corporate documents for Susan Carrington Alimentary Materials, Inc.

• December 13, 2008 fax coversheet to the company offices.

• Email from Larry Greenberg to Meric Bloch, dated June 30, 2011.

Each of these documents has been retained in the investigation file.

4 Findings of Fact

Summary of findings: The allegation was proven. The investigation determined that the sole employee of the vendor is actually the wife of the Senior Vice President. The vendor, in its dealings with the corporate office, seriously obscured any connection to the Senior Vice President.

The investigation confirmed that the Procurement Department staff neither knew nor would likely have known from the available facts that the Senior Vice President was connected to the vendor. Regular company practices were followed in creating the vendor relationship. The vendor did not disclose any relationship to a company employee which would have alerted the Procurement staff to a possible conflict of interest. During the course of their various dealings with the vendor, the Procurement staff did not learn any facts which might have alerted them to the possible conflict of interest.

Specific factual findings:

My findings are as follows: The relevant company department is the Procurement Department (“Procurement”). Procurement is based in the Penn Station corporate headquarters. Among other duties, Procurement identifies and qualifies vendors to supply goods to company offices.

Larry Greenberg is the implicated employee. Greenberg is the Senior Vice President of Procurement. Greenberg has been on paid leave since the investigation began. This investigator knows Greenberg both personally and professionally over the past ten years.

Bob Smith is the reporter. Smith is a member of the accounts-payable department. Smith was interviewed as part of the investigation. Smith said that his golf partner, who works in a South Florida company office, was reportedly told that someone in Procurement had some improper relationship with a company vendor. This vendor reportedly provided paper towels to company locations within a specific territory. Smith could offer no further information, and he has no personal information.

The company uses multiple vendors for paper towels. For Florida offices, the vendor is Susan Carrington Alimentary Materials, Inc. (“SCAM”).

The Vendor Process

The company has a standard process by which it will enter into an agreement with a possible vendor. Procurement followed that process regarding the SCAM.

A vendor applicant completes a questionnaire seeking specific information and returns it to the corporate offices. The applicant must complete the required IRS documents to ensure that it may be properly paid by the company. Other corporate materials are sent.

The submitted materials are reviewed solely by Greenberg. Greenberg determines whether a vendor is added to the Company Vendor List.

If each of these submissions is acceptable, the corporate office sends the company’s standard vendor agreement to the applicant. Once executed, the vendor becomes qualified to do business with the company.

The vendor does not collaborate with the company for other business purposes. There is no agency or delegation of duties by the company to the vendor. There is no marketing, management, supervisor or similar relationship between the company and the vendor. The sole compensation to the vendor is the amount the company pays for the goods it purchases.

Susan Carrington Alimentary Materials, Inc.

SCAM is the implicated vendor. The VQQ lists an office address for SCAM as 4513 Edgarton Drive, Grove City, New Jersey. The VQQ was signed by SCAM’s president. The regular intake procedures were not properly followed.

SCAM supplied a Certificate of Liability Insurance as the company requires. The certificate is dated December 11, 2007, and the Company is designated as the certificate holder. SCAM’s name and address on the certificate are consistent with the information on the questionnaire.

The VQQ has a profile sheet in which the prospective vendor gives basic company information. The profile sheet lists SCAM’s owner as “Susan Carrington” with an email address of susan@. The sheet also lists a website address of .

SCAM and the company executed a Vendor Agreement, dated as of December 1, 2009 (the “Agreement”). The Agreement was signed by Carrington in her capacity as President.

During 2009 and 2010, SCAM has billed the company $56,859 for the paper towels. The invoices were for paper towels purchased by company offices in the southern region.

Some initial inquiries to senior management at the beginning of the investigation identified that Greenberg’s wife is named Susan, and that her maiden name might be Carrington. The investigation sought to confirm the allegation, and the corroborating information is taken in turn.

The incorporation certificate for SCAM was obtained by the New Jersey Secretary of State. The certificate lists a business address of 4513 Edgarton Drive, Grove City, New Jersey. SCAM was incorporated on April 16, 2006. Greenberg is not mentioned anywhere on the document.

Greenberg’s personnel file was reviewed. The file contains an “Emergency Contact Record,” dated August 14, 2003. The form lists the Grove City address as Greenberg’s home address. The form also lists “Susan Greenberg” as Greenberg’s wife, and she has the same home address.

SCAM, Carrington and Larry all share the same address. Greenberg was interviewed as part of the investigation. He denied knowing anyone named Susan Carrington. He stated that he did not recall reviewing SCAM’s materials. Susan Carrington refused multiple requests for an interview.

Using Greenberg’s personal information, a third-party Personal Public Records Report (the “Report”) was obtained. The Report corroborates Greenberg’s residence at the Grove City address. The report lists Susan Greenberg as someone who lives there. The Report says the address is a single-family home. The report does not list any data relating to Susan Carrington.

I am of the view that Susan Carrington is the wife of Greenberg The information learned in the investigation determined beyond a reasonable doubt that Susan Carrington and Susan Greenberg is the same person, and this person is Greenberg’s wife.

SCAM Misled the Company Staff

The investigation sought to determine what the Procurement staff knew about SCAM, Greenberg and Carrington. The company’s vendor file on SCAM was reviewed as part of the investigation. There is a fax coversheet in the file, dated December 13, 2008, indicating that Greenberg had sent the questionnaire and accompanying materials to the company offices from his company-assigned fax number.

Steve Frankel is the company’s vendor manager. His computer files were checked. Frankel had an entry for Susan Carrington for SCAM with the Grove City address. The other information is the same information found in the other documents. There is no reference in the contact list referring to Greenberg.

Frankel stated that the company executed the Agreement was signed because, at that time, Greenberg wanted to expand the vendor network. Frankel recalled, however, that the existing vendors had complained at or about that time that there were insufficient company purchases of paper towels. Frankel could not identify a valid business reason for expanding the number of vendors at that time.

SCAM regularly submitted invoices for paper towel shipments. Frankel’s responsibilities included processing these invoices. Frankel stated that Carrington was the “only person I talked to from there.” Frankel said that approximately “90 percent” of his contacts with Carrington were through the exchange of emails.

The investigation obtained a representative invoice from SCAM to the company, dated April 10, 2009. Some of its details are instructive. The email cover sheet is sent by susan@. The email directs all inquiries to Carrington. Rather than the Grove City address, the invoice lists a post office box in Dublin, New Jersey.

I contacted Greenberg for an interview. In his interview, he appeared cocky and uninterested. He denied any wrongdoing and was not a credible witness. However, he supplemented his interview with an email. In his email, he admitted doing it. He said that events in his personal life gave him no alternative.

Accordingly, the allegation against Greenberg was proven. He never disclosed, and affirmatively obscured, his connection to SCAM. Greenberg violated the company policy against employee conflicts of interest.

5 Post-investigation steps

Management was notified of the investigation findings on November 9, 2010. I recommend that Greenberg be terminated as a result of his dishonesty. Management will take the necessary steps to reinforce company policy. The matter will be referred to the legal department because SCAM is guilty of defrauding the company. A copy of the report will be sent to the reporter.

6 Recommendations regarding business processes and internal controls

I believe each of the following changes is essential:

1. Multiple people should evaluate vendor candidates to avoid possible future conflicts of interest.

2. Online resources should be used to identify vendor locations to determine whether the addresses are valid business locations.

3. Searches of corporate records should be made to determine the validity of representations made by potential vendors.

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