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Charlton paper company alleged to have paid bribes to inflate invoices – News – telegram.com

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WORCESTER – A Charlton company that sells paper is being accused by a large international direct mail supplier of bribing its purchasing agent to accept invoices inflated by hundreds of thousands of dollars.

A lawyer for L&P Paper Inc. of 267 Southbridge Road, was in U.S. District Court in Worcester on Friday for a status conference with North American Communications Inc.

Court records show L&P, incorporated since 2003, sued NAC in November, alleging it failed to pay it for nearly $660,000 in paper products.

But NAC, which advertises itself as sending 5 million mailings daily, countersued in January, alleging that L&P and its president, Martin Gubb, inflated what it charged for paper by bribing the company’s purchaser.

The countersuit alleges that of the approximately $15 million L&P billed NAC for paper products between 2013 and 2017, at least $560,000 was fraudulently obtained by unfair price hikes.

The alleged fraud was discovered, NAC said, after L&P’s former longtime credit manager contacted NAC and blew the whistle.

“This individual reported that for many years, L&P and Gubb had instituted a scheme that involved bribery of NAC’s purchasing agent to fraudulently extract from NAC an amount of money for the paper sold that was above its reasonable and fair value,” the company charged. “The former employee stated that L&P and Gubb had carried out this scheme by giving NAC’s purchasing agent over $10,000 in gift cards, plus other things of value, and that Gubb had openly bragged about this scheme.”

NAC said in its filing that the former employee provided it with specific purchase orders in which it had been overcharged, and described the scheme as “business as usual” for L&P, “suggesting that other customers of L&P were victims of a similar scheme.”

NAC said it brought the allegations to its purchasing agent, who acknowledged Mr. Gubb had sent her gift cards and a large TV, among other electronics, along with $3,000 for garage and vehicle repairs and $2,000 toward her mortgage.

“L&P declines to answer the allegation of bribery based on the privilege against self-incrimination,” a lawyer for L&P wrote in answer to the counterclaim.

The counterclaim states that when confronted, Mr. Gubb did not deny giving things of value to the purchasing agent, but “claimed that any overcharges or premium prices on paper were justified by the level of service L&P provided to NAC.”

L&P in its answer said the conversation had been inaccurately portrayed.

NAC further alleged that L&P sued its former credit manager for “vague allegations of tortious interference.” Records on file in Worcester Superior Court show that L&P did sue the employee, and included emails indicating the separation was acrimonious.

“The last thing you want to do is get me pissed off,” the employee wrote to Mr. Gubb, according to an exhibit. “Trust me.”

NAC wrote in its countersuit that after L&P sued its former employee, he stopped cooperating in its investigation into the alleged fraud. L&P denied that its lawsuit was meant to intimidate the man, who has yet to file an answer.

Lawyers for both sides were in court Friday to update US. District Court Judge Timothy S. Hillman on the status of the case.

James D. O’Brien Jr., a lawyer for L&P, said that ironically, the case is “paper intense,” with thousands of documents spanning years needing to be produced during pretrial discovery.

“Who would have though a paper company would have generated so much paper?” Judge Hillman quipped as lawyers on both sides chuckled.

Judge Hillman scheduled a further status conference for January to determine whether the two sides might be able to settle the case through mediation.

Attorneys for both companies declined to offer substantive comment on the case outside the courtroom. No one answered the phone at L&P Friday afternoon, and a voicemail box for Mr. Gubb was full.

 

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