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FBI Investigates Office Depot’s CompuCom Business Unit

The FBI is investigating whether Office Depot’s CompuCom employees obtained sensitive information by monitoring email accounts at Walmart, according to The New York Times.

The report states:

“…the F.B.I. accused the Compucom employees of sifting through internal Walmart correspondence in search of information that could give the firm an edge over competitors. In at least one instance, the filing says, the Compucom employees obtained information that may have helped the firm submit a winning bid.”

CompuCom is cooperating with the investigation, the Times reported.

Admittedly, that report — published March 8 — is now one month old. But most of the resulting media coverage described an investigation into a “Walmart vendor” rather than naming CompuCom as the investigation’s target right up front.

The alleged scheme occurred in late 2015 through early 2016, the original Times report says. But the resulting FBI investigation is yet another business challenge that CompuCom parent Office Depot certainly doesn’t need.

Office Depot, CompuCom Business Challenges

Office Depot acquired CompuCom for $1 billion — or roughly 10X annual EBITDA — in 2017 to offer IT solutions, consulting and managed IT services to SMB customers.

Among the recent challenges:

  • Office Depot earlier this week disclosed that CompuCom will generate weaker-than-expected revenues in Q1 of 2019, hurting overall performance at the company. The shortfall involved at least one major CompuCom customer that had delayed or shifted its IT spending. Office Depot didn’t say whether the customer in question was WalMart.
  • Office Depot in March 2019 agreed to pay an FTC (Federal Trade Commission) fine to settle remote computer support fraud charges. The alleged scheme, which also involved Support.com, essentially tricked customers into buying PC cleanup services that weren’t necessarily required.

Amid the recent revenue challenges, Office Depot CEO Gerry Smith this week said the company still believes in its long-term business strategy and the CompuCom business unit. Neither he nor CompuCom mentioned the FBI investigation as part of the earnings warning earlier this week.

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