Here's a hardcopy . was front page of the Dallas Morning News on 9/19

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Sent: Tuesday, September 19, 2006 11:26 AM
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Subject: dallasnews.com article from Sherri Taylor

 


Sherri Taylor [[log in to unmask]] has sent you an article from
dallasnews.com.

Story: Fair
<http://www.dallasnews.com/sharedcontent/dws/news/dmn/stories/091906dnmetcou
pons.33989db.html>  suit alleges ticket scam

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Fair suit alleges ticket scam

Officials say $1.5 million lost after coupons destined for shredding were
resold

11:47 PM CDT on Monday, September 18, 2006

By KATIE MENZER / The Dallas Morning News 

 Robert Smith and David Margulies
<http://www.dallasnews.com/sharedcontent/dws/img/09-06/0919coupons.jpg> 

REX C. CURRY/Special to DMN 

Robert Smith (left), the fair's general counsel, and David Margulies discuss
a suspected coupon scheme. Officials say an unusual number of 2004 State
Fair of Texas coupons that were supposed to be destroyed were used during
the 2005 fair. 

The State Fair of Texas filed suit Monday against a document-disposal
company that fair officials say helped sell food and ride coupons on the
black market instead of shredding them. 

The fair says it was bilked out of about $1.5 million in the alleged scheme.


Iron Mountain Inc. was hired in 2004 to destroy used and extra coupons,
according to the suit. The fair said that the 50-cent coupons were not
destroyed and that Iron Mountain employees and others sold them at a
discount in 2005 at businesses near the company's shredding plant in Dallas'
Stemmons Corridor. 

"We've done extensive research over the last 12 months to determine the
distribution network," said Robert Smith, the fair's general counsel. "It
was a network within the corridor of businesses." 

A spokesman for Iron Mountain said in an e-mail Monday that the company had
cooperated with a Dallas police investigation and had done its own inquiry
into the matter. 

"It is our understanding that the Dallas Police Department concluded that
there was no evidence against Iron Mountain or its personnel of any
wrongdoing," Laura Sudnik said. 

She said she could not co! mment fu rther because the company had not
received a copy of the lawsuit. But the company believes "that any complaint
will be without merit," she said. 

The suit names Iron Mountain and a handful of employees who were working
there at the time the alleged scheme was under way. Former or current
workers and residents at a Deluxe Inn motel and employees of a McDonald's
also were named. 

The fair said it will ask a Dallas County district court for recovery of its
losses, attorneys' fees and punitive damages, which could reach into the
millions of dollars. 

According to its Web site, Iron Mountain is the "global leader in
information protection and storage services" with more than 15,500 employees
and 850 facilities worldwide. 

Iron Mountain made national headlines last year when Time Warner Inc. said
the Boston-based security company misplaced computer tapes containing
personal information on 600,000 current and former Time Warner employees. 

The company also admitted to losing information about customers from Los
Angeles' City National Bank, and Sen. Charles Schumer, D-N.Y., asked the
Federal Trade Commission earlier this year to investigate Iron Mountain's
security and privacy policies. 

Bharti Patel, manager of the Deluxe Inn and a defendant in the suit, said
she first heard of a coupon scam six months ago when she received a call
from an investigator. 

"I told him I didn't know anything about the tickets," she said Monday,
adding that she did not know why she was named in the suit. 

A woman who said she was the owner of the McDonald's on John Carpenter
Freeway said she also didn't know about the case. 

Coupons are used at many fairs to help track sales and keep business honest.
At the Texas fair, visitors may buy coupons only at authorized booths on the
fairgrounds to purchase food and rides from vendors. Those vendors turn the
coupons into fair officials, who pay them a percentage of their value. 

The coupons are color-coded and n! umbered so that fair officials can track
their progress. Fair policy allows fairgoers to keep unused coupons for use
in following years. 

But when a large number of 2004 coupons began showing up at the 2005 fair,
officials knew something was amiss. They hired two firms of private
investigators to follow the trail. 

The investigators paired with Dallas police officers and interviewed
fairgoers who were using 2004 coupons. In the final four days of the fair,
they identified 137 fairgoers who tried to redeem coupons that had never
been sold at the official coupon ticket booths. 

Ultimately, the police declared that no crime had occurred and told the fair
that the coupon situation was a civil matter. 

"The fair had a contract with the disposal company," said Lt. A.F. Diorio of
the northwest operation bureau's investigative unit. "If they didn't destroy
them, then that was in violation of that contract." 

Fair officials said they have no idea how many people bought the
illegitimate coupons, but they estimate about 3 million were sold. 

According to the suit, the coupons had been bought by people from across the
area, including Dallas, Lancaster, Mesquite, Richardson, Red Oak, DeSoto,
Balch Springs, Midlothian, Duncanville, Murphy, Plano, Mansfield, Irving,
Rowlett and Grand Prairie. 

"They claimed to have received them from street purchases, shopping center
parking lots, barber shops, relatives, employers and a bus station," the
lawsuit says. 

"The magnitude of the pilferage of SFT property could not, in all reasonable
probability, have existed without the intentional direction of upper
management at the IM shredding facility, or through their gross negligence
and absolute abrogation and dereliction of duties or through carelessness
and negligence." 

The fair destroyed its own coupons until 2001, when Iron Mountain was hired
to do the job. The company was paid $10,000 each year to destroy coupons
that had been used by fairgoers and unissued ones.! 

Under protocol, Iron Mountain employees were to pick up the coupons at the
fairgrounds, sign for them and drive them back to their facility to be
shredded, fair officials said. Fair employees would follow behind in their
vehicles to oversee the process. 

But in 2004, Iron Mountain employees said their shredder was broken, so they
told the fair that the coupons would be kept on site in locked bins until
their equipment was working again, according to the lawsuit. 

The fair claims that Iron Mountain didn't maintain the integrity of the
bins, however, because each employee had keys or combinations to unlock
them. 

Fair officials said vendors did not lose money last year and were paid by
the fair whether the coupons they had received from fairgoers were
legitimate or not. Officials confiscated prohibited coupons from fairgoers
in the final days. 

Fair officials have hired another company to shred coupons this year. That
company has mobile equipment, which it will bring to the fairgrounds to
destroy the coupons while the fair's internal audit team watches. 

When the fair opens Sept. 29, officials said they will continue to honor
previous years' coupons, but fairgoers must exchange them for new coupons at
one location on the fairgrounds. 

"We're going to try to make it as simple as possible," Mr. Smith said. 

Staff writer Jason Trahan contributed to this report. 

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COUPON REDEMPTIONS 

The State Fair of Texas will honor previous years' coupons bought at
fairground booths. But fairgoers will need to swap them for 2006 coupons at
an exchange center on the south concourse of the Coliseum. The center will
be open from 10 a.m. to 10 p.m. each day of the fair. 

 


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