3M Sues Distributors, Alleges $2.5M Fraud
Maplewood-based 3M Company on Thursday announced that it is suing a group of its former distributors, accusing them of submitting false rebate claims and point-of-sale information that led them to fraudulently receive more than $2.5 million.
3M filed its suit in U.S. District Court in Minnesota. It accuses APO Health, Inc.; Universal Medsurg Supplies, Inc.; Universal Medical Distributors International, Ltd.; and Kenneth R. Leventhal-all of which conducted business as Universal Medical Distributors-of violating the Racketeer Influenced and Corrupt Organizations Act (RICO), as well as engaging in fraud, civil conspiracy, negligent misrepresentation, and breach of contract.
The suit indicates that 3M discovered the improper claims following an audit in January, according to a report by the Star Tribune. 3M also reportedly claims that Leventhal, CEO of Universal Medical, admitted to submitting the false information.
3M is seeking damages totaling triple the amount of the funds Universal Medical received as a result of the RICO violations, the Minneapolis newspaper reported, although it didn't specify the sum. 3M also seeks unspecified damages for the additional allegations. The Star Tribune said it was unable to reach Universal Medical for comment before publishing its story.
According to the U.S. Justice Department, RICO was designed to eliminate the infiltration of organized crime and racketeering into legitimate organizations operating in interstate commerce, but it encompasses illegal activities relating to any enterprise affecting interstate or foreign commerce.
3M is Minnesota's fifth-largest public company based on its 2009 revenue, which totaled $23.1 billion. The company reported revenues of $26.7 billion in 2010.