Manager Accused in Kickback Scheme
Retail giant Best Buy overcharged $31 million
A former Best Buy vendor-relations manager is accused of taking kickbacks from a computer parts supplier for his role in a scheme that illegally overcharged the Richfield, Minn.-based retail giant $31 million over a four-year period, according to felony charges filed recently in U.S. District Court in St. Paul.
Robert Paul Bossany, 37, of Prior Lake, Minn., was charged with one count each of conspiracy and money laundering after federal authorities said he received cash, checks and gift cards from a computer parts supply company he was hired to oversee.
That company, identified as Illinois-based Chip Factory Inc., routinely underbid prices on an online business-to-business auction site. After placing the lowest bid on the auction site, Chip Factory would win the contract for parts, which court documents say it didn't even have. Chip Factory then would charge Best Buy eight to 10 times the bid amount, according to sources contacted by the Minneapolis Star-Tribune, which broke the story.
The scheme lasted four years, from 2003 and 2007. During that period, Chip Factory invoiced Best Buy $60 million for computer parts -- about half of it fraudulently, according to the charges. Court documents say that Chip Factory sent weekly Federal Express and UPS packages to Bossany's home that contained magazines or CD or DVD containers stuffed with cash, checks or gift cards.
The case was investigated by the U.S. Postal Inspection service, the IRS criminal investigative division and the FBI after Best Buy began an investigation of its own.
Employees at Best Buy, as well as the operators of the online auction site, had questioned the high prices Chip Factory charged. Bossany was fired, and Best Buy took "appropriate disciplinary action" against his managers, some of whom were also fired.