FACTS about Public Roofing Procurement, and Oversight. Copyright 2010 by Robert R. Solomon

Thursday, September 7, 2017

The DOJ, SEC, and Tremco: Don't let their scam (Tremco) , become your problem.

Friends:

If you want to crawl in bed with Tremco, by all means, do.  It will be crowded however, because you'll have to share the bed with the DOJ, and SEC.  

The purpose of my work is simple:  Expose public roofing scams, protect taxpayers, and educate Administrators.  My job is compounded by Administrators who see me as the "bad guy" as I dare to comment on my chosen discipline. 

Private owners (the people who earned their money) are no trouble at all, and welcome the "heads up".  Public Administrators seem omnipotent, and literally hate anyone who offers an alternative.  You are the enemy, and believe me, will throw every resource they have (actually the public has) to destroy you.

The topic of conversation is meaningless to them, and follow their typical knee jerk philosophy.  People who have ZERO credential, ZERO experience, and ZERO money.

Volunteering, and investing thousands of hours in research, are meaningless.  The fact that I have not accepted a dime from anyone for 14 years is also insignificant.  I stopped accepting money because it would be used against me, and I would be punished.  

By refusing money, and personal advancement, I'd effectively removed the club from hands that wish me harm. I've found that once you remove money from the conversation, all that's left is the truth.

The very FEW Administrators that think clearly, and do not have an industrial fog machine in their heads, are a delight.  They are so rare however, that I keep a digital camera on me to PROVE that I've seen one.  Sort of like people who photograph flying saucers, and Loch Ness Monsters.

My point?  I do not want to see you in jail, and I don't want people who lie, cheat, and steal, anywhere near our schools.  That comment is a 2 for 1 deal, because you can't have one without the other.  Sad as it is.

Okay, let's see how much fun everyone is having with that stolen money.  I've said what I need to say, so now you can see what the law says:

http://www.debevoise.com/~/media/files/insights/publications/2016/09/20160923a_sec_complaint_serves_as_reminder_to_carefully_consider_disclosure_obligations_relating_to_government_investigations.pdf

NEW YORK 
Matthew E. Kaplan mekaplan@debevoise.com 
Alan H. Paley ahpaley@debevoise.com 

WASHINGTON, D.C. 
Jonathan R. Tuttle jrtuttle@debevoise.com
Ada Fernandez Johnson afjohnson@debevoise.com 
Jil Simon jsimon@debevoise.com

Client Update SEC Complaint Serves as Reminder to Carefully Consider Disclosure Obligations Relating to Government Investigations Registrants, particularly those involved in highly regulated industries, frequently must determine whether and when a government investigation and related pending or threatened litigation must be disclosed in its periodic reports filed with the Securities and Exchange Commission (“SEC”).

On September 9, 2016, the SEC filed a complaint against a company and its general counsel that should serve as a reminder for any registrant subject to a government investigation to ensure that it has robust procedures in place to review disclosure requirements in connection with government investigations in light of the facts uncovered by any internal investigation and the course of settlement discussions with the government.

The SEC complaint alleges violations of the federal securities laws due to the company’s failure timely to disclose a loss contingency, or record an accrual for, a U.S. Department of Justice (“DOJ”) investigation into an alleged violation of the False Claims Act. In SEC v. RPM International Inc. and Edward W. Moore, filed in the District Court for the District of Columbia against RPM International Inc. (“RPM”) and its general counsel and chief compliance officer, Edward W. Moore, the SEC alleges that RPM and Moore violated the antifraud, books and records, and internal control provisions of the federal securities laws.

The gravamen of the complaint is that, in light of its own review of the facts underlying the DOJ’s investigation and negotiations with the DOJ about a settlement, RPM knew that it faced, but failed to account for and disclose, a material loss that was probable and reasonably estimable and accordingly required both accrual and disclosure under the relevant accounting and financial reporting rules.

NEW YORK Matthew E. Kaplan mekaplan@debevoise.com Alan H. Paley ahpaley@debevoise.com WASHINGTON, D.C. Jonathan R. Tuttle jrtuttle@debevoise.com Ada Fernandez Johnson afjohnson@debevoise.com Jil Simon jsimon@debevoise.com Client Update September 23, 2016 2 www.debevoise.com

SEC COMPLAINT’S FACTUAL ASSERTIONS One of RPM’s wholly owned subsidiaries, Tremco, Inc. (“Tremco”), provided roofing materials and services under a contract with the federal government. In 2011, the DOJ began an investigation after a qui tam complaint was filed under the False Claims Act against RPM and Tremco.

The qui tam complaint alleged that Tremco overcharged the government under certain contracts by, in part, failing to provide required price discounts. RPM became aware of the DOJ investigation in March 2011 when Tremco received a subpoena from the government. Mr. Moore, as RPM’s general counsel and chief compliance officer, was responsible for overseeing RPM’s response to the DOJ investigation. In September 2012, RPM’s outside counsel met with the DOJ to discuss the investigation.

During the meeting, RPM’s counsel informed the DOJ that, based on an analysis by a consultant, Tremco had overcharged the government by at least $11 million. In early October, RPM issued its earnings release and filed its 10-Q for the first quarter ended August 31, 2012. Neither the earnings release nor the 10-Q disclosed the existence of the DOJ investigation or reflected an accrual for the potential liability. In December 2012,

RPM and its outside counsel discussed a settlement offer that RPM planned to submit to the DOJ. The settlement offer totaled between $27 and $28 million, which reflected the amount RPM then believed it had overcharged the government. In early January 2013, RPM issued its earnings release and filed its 10-Q for the second quarter ended November 30, 2012 without any reference to the DOJ investigation.

Less than a week later, RPM submitted a settlement proposal to the DOJ offering to settle the False Claims Act violation for $28.3 million. On March 29, 2013, the DOJ countered RPM’s settlement offer with $71 million. Six days later, RPM issued its earnings release and filed its 10-Q for the third quarter ended February 28, 2013, which for the first time disclosed the existence of the DOJ investigation and recorded an accrual of $68.8 million for the potential liability with respect to the violation of the False Claims Act. RPM’s annual report on Form 10-K for the year ended May 31, 2014, filed in July 2013, discussed the DOJ investigation and the related accrual that RPM had recorded in the third quarter.

However, the 10-K indicated that the disclosure of the investigation and the recording of the accrual had been made in a timely Client Update September 23, 2016 3 www.debevoise.com manner and failed to disclose any material weakness in RPM’s internal control over financial reporting at any point during the prior fiscal year.

On August 28, 2013, the DOJ announced its settlement with RPM for $61 million. The SEC complaint alleges that, in light of the DOJ’s investigation and RPM’s own review of the facts, RPM faced a material loss that was, at the time RPM issued its earnings release and filed its quarterly reports for the quarters ended August 31, 2012, November 30, 2012 and February 28, 2013, probable and reasonably estimable, which triggered a requirement that RPM disclose the loss contingency and record an accrual on its books.

The SEC complaint further alleges that RPM’s 10-K was misleading because the disclosure of the DOJ investigation and the recording of the related accruals were not in fact timely and there had been a material weakness in internal control over financial reporting throughout the year.

In addition to RPM, the SEC names Moore as a defendant. The SEC complaint asserts that Moore oversaw RPM’s response to the DOJ investigation, but failed to disclose material facts about the investigation to fellow RPM officers, the audit committee, and the independent auditors.

Specifically, Moore allegedly knew—but failed to timely inform RPM officers, the audit committee, and the independent auditors—that RPM was in settlement discussions with the DOJ or that RPM determined that Tremco had overcharged the government between $27-28 million. The complaint also asserts that Moore made material misrepresentations to the independent auditors about the investigation, including falsely telling the independent auditors that no claims had been asserted, even though the DOJ had sent him a copy of the qui tam complaint.

According to the SEC’s complaint, these misrepresentations caused RPM to submit materially false and misleading filings to the SEC from October 2012 to December 2013. IMPLICATIONS The SEC takes the position that by acknowledging to the DOJ in September and October 2012 that Tremco had overcharged the government by at least $11.4 million, RPM was required under Accounting Standards Codification 450 (“ASC 450”) to disclose the loss contingency and to record an accrual of at least that amount.

Furthermore, because that amount was material to RPM’s first quarter net income, the MD&A included in the 10-Q for the first quarter ended August 31, 2012 should have disclosed the existence of the investigation and that it would have a materially unfavorable impact on RPM’s net income.

Client Update September 23, 2016 4 www.debevoise.com By the time of the filing of RPM’s next 10-Q, the company’s internal analysis of the overcharges to the government reached between $27 and $28 million and it was planning to submit a settlement proposal for that amount.

Although this analysis and proposed settlement had not been shared yet with the government at the time RPM filed its second quarter 10-Q, the SEC complaint charges that the failure to record an accrual of at least this amount was a further violation of ASC 450 and the failure to disclose the impact of the investigation in the MD&A was a violation of applicable disclosure requirements.

The obligation to disclose a government investigation and to record an accrual is a highly fact specific analysis.

As in this case, the facts uncovered by any internal investigation and the discussions and settlement negotiations with the government can be some of the most critical pieces of the determination.

CONCLUSION The SEC’s complaint against RPM serves as a reminder about the importance of transparency in the process around evaluating disclosures, particularly around areas of judgment such as accrual decisions. It also underscores the importance for internal transparency among general counsel, c-suite employees, and the audit committee when dealing with situations as dynamic and unpredictable as government investigations and settlement negotiations.

Companies should keep in mind that decisions around recording accruals and disclosures of loss contingencies should be made in consultation with independent auditors as well as, in many cases, outside counsel. Finally, the RPM case is a reminder to those individuals—such as attorneys and compliance officers—who sit in “gatekeeper” roles at companies that the SEC will carefully scrutinize their conduct. 

---------------------------------------------------

Tremco, and Purchasing Cooperatives, are the biggest scam going today.  Believe me, when they come for Tremco, they'll come for you too.  You ARE the one who signed off on a single "Preferred" vendor after all.  They may want to know why there is no competition for public money.  I hope you have a good answer, because I don't.

I know all this reading is brutal, but if I can keep you out of a horrifying situation,  will feel like I've succeeded.

Thank you for the time you spend with me here.  I am humbled that you care one bit about what I have to say. 

NOTE: Retired 2003, do not solicit nor accept compensation or personal advancement of any kind.

Reject negativity in all forms, and always remember to keep looking "UP".


Much Respect.

Robert R. "Ron" Solomon
Public Procurement Analyst
State Certification  CCC 1325620
RobertRSolomon@aol.com

Monday, September 4, 2017

BUYING A TAXPAYER FUNDED ROOF. WHAT YOU MUST KNOW.



BUYING A TAXPAYER FUNDED ROOF.  WHAT YOU MUST KNOW.

A Private owner may do anything they like (following code, and safety requirements).  It’s their money, and can spend it without question, or oversight.

Publicly funded projects are just the opposite.  The taxpayers are the “Owner”, and all aspects of the project are subject to scrutiny.  Administrators do not possess either the credential, or experience, to make such complicated decisions. 

NO Administrator has the right to “exclude’ fair competition in favor of a “single “Preferred Vendor”.  That is called “Collusion’, and in some cases “Bid Rigging”.  An Administrator’s job is to provide “Serviceability, and Value” to the public, and not play favorites.
 
You might find yourself in a position to “explain” your actions to those you serve, and I suggest you be excessively prepared, or be made a spectacle.  “Ignorance’ isn’t going to cut it in court, I promise.

What can a Public Administrator do to achieve “Serviceability, and Value”, without exposing your district to suit?  I see this quite a bit, and one roofing manufacturer was recently fined $65,000,000.00 for abusing GSA contracts.

I happen to think they deserve it for strangling Administrators with a “Predatory Sales Model”.  If you ever hear the phrase “We handle it all”, RUN.  Anyone with knowledge can sue your district in a ‘Qui Tam” (Lincoln Law) suit, and probably win.   So, at that point, you’ve been ridiculed in court, lost your job, and your school district is on the hook for huge sums of money. 

Please do not take my word for this, and contact your School District Attorney.   They will confirm what I’ve said as true, and will advise the same, I’m sure. 

So Ron, how do we navigate this maze, and buy a roof without the problems you’ve described?




1.)      NEVER buy a roof through a “Purchasing Cooperative”.  The Purchasing Cooperative is nothing but a commissioned salesman, makes money on commission, and therefore have no incentive to compete.  Quite the opposite is true.  STAY AWAY from this obvious scam.  You CANNOT buy roofing material in “Bulk” for less money than I can.   Then, there’s the issue of storage, and triple handling.

2.)      Manufacturers offered by Purchasing Cooperatives (normally Tremco, or Garland) will typically charge 40-60% MORE, and they don’t even make many products they sell.  They have it made by someone else, and then “Private Label” it.  The only difference is that it’s marked up 300-400%.

3.)      Contact Roof Consultant’s Institute, and ask their ethics board how to move forward from there.  RCI is highly respected, and I know many of them personallty.  Factually, I was trained by the first, and only two time President of RCI, the late Mr. Bob Lyons.

https://wikiroof.blogspot.com/search?q=RCI  

RCI, Inc.
        1500 Sunday Drive, Suite 204
Raleigh, NC 27607-515
800-828-1902


        http://www.rci-online.org/

4.)      They will help you establish a “Standard” that best suits your needs, and will serve as an “apples to apples” type comparison.  This is normally included with the names of 4 manufacturers who will competitively bid the project.
These are names you know, like GAF (world’s largest roofing material manufacturer).  Firestone (backed by billions in Bridgestone assets)., Johns Manville (A Berkshire Hathaway Company), and Carlisle Syntec, leaders in fairness, and quality roof systems.

5.)      RCI will share the names of several respected roofing consultants in your area to draw up bid documents, roof plan, details, warranty term, etc.
NEVER allow one person to read sealed bids in privacy.  The best method is in an auditorium, where bids are opened, and read aloud to the public.  Any protests can be done with everyone present.




Playing with taxpayer money can ruin your life if not careful.  The Garland, and Tremco, Sales Representatives get a 25% “Commission” for getting you to sign up (unlike GAF, Firestone, Johns Manville, and Carlisle).   

NOTE: Retired 2003, do not solicit nor accept compensation, or personal advancement of any kind.

Type ‘School Roofing Scam” into your browser, and then do the same on YouTube.  The only two manufacturers listed are Garland, and Tremco.  What does that tell you Mr. Administrator, who is preparing to replace a $2,000,000.00 roof?

Roll the dice if you must, but will strongly suggest not gambling with your future, and freedom.  NO amount of money is worth that.

“The “Sole Source” argument is a foolish one, and a “come on” to certain heartbreak.  I’ve seen enough of it to last 4 lifetimes, and still, feel sorry for them each time.  Many of them are actually featured on this blogsite.

Friends, I do not share opinions, but hard data.   If you need assistance, or have a question, feel free to write to my central address:


I help all people who ask for help.  It is my privilege to serve you.  I DO NOT ACCEPT MONEY for any reason, so you can compare that to the Salesman’s 25% “Commission”, and make a literate, logical, informed, decision based upon public record..

Our schools are wasting literally billions of dollars listening to slick sales representatives, holding slick paperwork.  Not one bit of that matters if there is no true “Competition” among manufacturers. 

The manufacturers compete, and each manufacturer notifies their applicators to bid the final installed roof.

Manufacturers do not submit “Final” bids, their applicators do. 

My best advice:  Stay away from Tremco, Garland, and Simon.  99% of your problems lie with them.  And it gets worse when I start comparing manufacturer warranties.  Much worse. 

I am very thankful you care one bit about what I have to say, and very appreciative of the time you spend with me here.

Reject negativity in all forms and always remember to keep looking “UP”.

Respect.

Robert R. “Ron” Solomon
Public Procurement Analyst
Florida State Certification
CCC 1325620

Tampa, Florida  33647

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