PHILADELPHIA, July 9, 2013 — /PRNewswire/ — Two of the biggest document-shredding companies in America, Iron Mountain Corporation (“Iron Mountain”, NYSE “IRM”) and Shred-It USA (“Shred-It”), have agreed to pay a total of $1.1 million to settle a lawsuit alleging that they defrauded the government by failing to shred sensitive documents as required by their contracts with the United States government.
The settlement follows a multi-year investigation by the United States Department of Justice triggered by a lawsuit filed by Pennsylvania resident Douglas Knisely, owner of a family-operated document-shredding business.
A third Defendant, Cintas Corporation (“Cintas”, NASDAQ “CTAS”), a multi-billion company based in Cincinnati, Ohio, continues to contest allegations that it defrauded the federal government by failing to properly shred sensitive documents…
According to Mr. Knisely’s Complaint, since at least 2006, Iron Mountain, Shred-It, and Cintas have been paid millions of dollars pursuant to contracts with the United States to shred highly sensitive documents for federal government agencies, including: the Department of Defense; Department of Homeland Security; Department of Justice; Social Security Administration; Department of the Treasury; and the Department of Veterans Affairs.
Iron Mountain, Shred-It, and Cintas obtained these lucrative government contracts as a result of their application to the GSA to become approved GSA Schedule 36 vendors of document-shredding services. The GSA Solicitation to become an approved document-shredding vendor stated:
A) SHREDDINGS: include both on-site and off-site for shredding services, which is designed to handle a variety of classified and unclassified materials. Shredders shall be designed to produce residue particle size not exceeding 1/32 inch in width with a 1/64-inch tolerance by ½ inch in length. There is no need to separate paper grades or remove staples, clips or other bindings.
To protect the security of government documents, the solicitation unambiguously required that document-shredding vendors use shredders designed to produce residue particles not exceeding 1/32 inch in width (with a 1/64-inch tolerance) by 1/2 inch in length.
The Solicitation further requires vendors to certify to the United States the destruction of materials, as follows:
CERTIFICATE OF DESTRUCTION
A signed certificate of destruction must be issued upon completion of each job. The certificate shall indicate the date of destruction, identify the material destroyed, method of destruction, and be signed by the individuals designated to destroy and witness the destruction. Destruction officials shall be required to know, through their personal knowledge, that such material was destroyed.
According to the Qui Tam Complaint, Iron Mountain, Shred-It, and Cintas have repeatedly failed to shred sensitive documents of numerous federal government agencies using shredders that were designed to produce residue particles not exceeding 1/32 inch in width (with a 1/64-inch tolerance) by 1/2 inch in length. Employees of Iron Mountain and Cintas admitted, as alleged in the Complaint, that their employers did not possess equipment that could shred documents to sizes that small.
Cintas, for example, stated that it used a pierce-and-tear shred process that produced a standard shred size of 5/8 inch wide by 2 inches long – which is approximately 100 times larger than the size mandated by the GSA solicitation. Additionally, according to the allegations in the Complaint, by not using the shredders mandated by the GSA to produce residue particles not exceeding 1/32 inch, Defendants were able to obtain additional revenue by re-selling the improperly shredded government documents to paper recyclers. Documents shred using 1/32 inch shredders are generally unsuitable for recycling purposes.
You can read the rest at Iron Mountain And Shred-It Pay $1.1 Million To Resolve Lawsuit Over Failure To Properly Shred Sensitive Government Documents in the Herald Online