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Schneiderman settles allegations against school food provider

By Nick Rees | Sep 19, 2012


NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced an $18 million settlement on Wednesday with a school food management service provider.

Company Group USA Inc. allegedly improperly charged 39 New York schools and school district lunch programs nationwide, receiving discounts from food vendors but not passing on the savings to the schools as required by law.

"Compass improperly profited by overcharging New York's taxpayers and shortchanging our schools," Schneiderman said. "There are no excuses for this kind of misconduct. On behalf of students, parents and taxpayers, we are pleased that New York's schools will get their money back, and that this corporation will be held accountable for siphoning funds meant to benefit students."

Through its national operating subsidiary Chartwells, Compass negotiates contracts, handles food-related procurement, and staffs and supplies culinary facilities for New York state scools.

Chartwells, Schneiderman alleged, did not disclose or pass through cost-saving rebates from vendors and suppliers to its educational customers from 2003 through 2010.

Compass, in addition to paying $18 million to settle the matter, of which almost $3 million in overcharges will be returned to schools and school districts, is required to make quarterly disclosures of the settlement for the next two years to all of its New York state educational customers and to provide detailed semi-annual reports of New York sales and rebating practices to the Taxpayers Protection Bureau.

Compass also agreed to a first-ever nutritional code of conduct to enhance nutritional standers that will result in higher quality food for New York school children.

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