OfficeMax Accounting Scandal Reaches SEC

The scandal over accounting for vendor income that led to the ouster of OfficeMax president/CEO Christopher Milliken has now reached the Securities and Exchange Commission. The Itasca, IL-based cataloger/retailer announced that the SEC this week issued a formal order of investigation.

OfficeMax launched an internal investigation in December 2004, when the company received claims by a vendor to its retail business that certain employees had acted inappropriately in requesting promotional payments and falsifying supporting documentation.

Six employees have been fired for fabricating supporting documents for approximately $3.3 million in claims billed to a vendor. What’s more, certain rebates and other payments from vendors in 2004 were not recorded in the appropriate accounting periods. The scandal prompted Milliken, a 27-year veteran of the office products business, to resign in February.

OfficeMax amended its quarterly report that it overstated its cumulative net operating income in the first three fiscal quarters of 2004 by $4.3 million.

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