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Federal agents raid University Loft headquarters

July 13, 2010

Federal agents on Tuesday raided the headquarters of University Loft in Hancock County, spending hours at the contract-furniture maker seizing records.

Agencies involved included the Department of Defense, the Air Force, the Defense Criminal Investigative Service, and Immigration and Customs Enforcement.

The agents were executing a sealed search warrant, said Mary Bippus, spokeswoman for U.S. Attorney Tim Morrison. She would not disclose the contents of the warrant.

No arrests were made, Bippus said.

The company last year was awarded a multi-million-dollar contract to supply metal furniture for the Marine Corps’ Camp Lejeune base in North Carolina.

CEO James Jannetides was not immediately available for comment.

In a written statement issued Tuesday, University Loft said: “Our company was approached by federal agents with a search warrant seeking business records. The government did not reveal to us the object of their search, but we are cooperating with them in every way requested and will continue to do so. University Loft is confident it is in compliance with all applicable laws.”

Jannetides founded University Loft in 1986. Four years ago, it built a $22 million, 508,000-square-foot headquarters in the Hancock County town of Mount Comfort.

It’s not clear how many employees the company has in Mount Comfort. University Loft added 30 workers last year to fulfill the Marine contract.

This is not the first time University Loft has been investigated by the federal government. A year ago, the company agreed to pay $400,000 following an investigation by the U.S. Justice Department alleging the company violated trade agreements. The Justice Department said the settlement resolved allegations that the company knowingly sold Malaysian-made furniture to government agencies, which violated the Trade Agreements Act.

To strengthen government trade policy, the act sets requirements for the country of origin selling products to the United States. University Loft failed to comply with the rules under contracts it received from the General Services Administration that allowed it to sell to the military and other government entities, the Justice Department said.

University Loft issued a prepared statement at the time saying it "disputed the claims and concluded that it had at all times acted in good faith and engaged in no wrongdoing." However, the company said it "determined that it was more cost-effective to settle the case than litigate it."

The settlement followed a federal investigation of alleged false claims and contract fraud against University Loft brought in a lawsuit by California competitor Furniture by Thurston Inc. Furniture by Thurston received a $66,000 share of the recovery.

Under the False Claims Act, private citizens can bring a lawsuit on behalf of the United States and share in any recovery obtained by the government.

The case was investigated as part of the National Procurement Fraud Initiative. The government formed the National Procurement Fraud Task Force in 2006 to promote the early detection and prosecution of procurement fraud associated with the increase in government contracting activity, particularly for national security programs.

In its statement, University Loft said the primary issue in the case was whether it was permitted under the Trade Agreements Act to ship furniture directly from Malaysia to overseas U.S. military bases. The company said government contracting officials authorized and requested such shipments to save shipping costs. However, the Justice Departments said the practice violated the trade act even if it was requested by government officials.


 

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