Schneiderman reaches $330,000 settlement with Illinois food distributor

NEW YORK (Legal Newsline) -- New York Attorney General Eric Schneiderman announced Wednesday a $330,000 settlement with an Illinois food distributor for allegedly overcharging New York state and local institutions, including schools and homes for the elderly.

US Foods Inc. allegedly overcharged 67 state institutions by failing to pass on cost savings it received from manufacturers.

Since April 2009, US Foods allegedly failed to disclose and pass through to New York institutions the cost-saving discounts it received for growth and volume programs.

Under the terms of a contract with the New York State Office of General Services, US Foods was required to disclose and pass on the discounts to local and state institutions.

"Financial transparency and accountability are requirements when doing business with the state of New York and my office is here to ensure that contractors are playing by the rules," Schneiderman said. "Rules that require the full disclosure of discounts are meant to pass savings on to local and state government agencies and institutions that benefit from these contracts."

Settlement proceeds from US Foods will be distributed to the 67 institutions that bought food products based on their level of purchases. The entities include homes for the elderly and disabled, schools, the New York State Senate and the New York State Museum.

The inquiry into US Foods was part of an industry-wide probe into whether food service companies were overcharging government customers.

In 2012, Schneiderman's office recovered $18 million in a settlement with Compass USA Inc. to resolve allegations of failing to pass on food service rebates to schools and other governmental customers.