U.S. Alleges Overcharging by Koll Subsidiaries : Audits: Company disputes RTC findings that it overbilled the government by more than $1 million for managing buildings.
Federal regulators allege that three Koll Co. subsidiaries overcharged the government $1.265 million in connection with its contracts to manage two office buildings in Orange County.
In recently completed audits, the Resolution Trust Corp.’s Office of the Inspector General alleged that Koll affiliates overcharged the federal government $649,000 for managing 12-story office buildings at 1920 Main St. and 1010 Main St. in Irvine.
A second audit alleges that Koll affiliates overcharged the federal government $616,000 in connection with management of a 14-story office building at 500 N. State College Blvd. in Orange.
In both cases, the alleged overcharges occurred in the late 1980s and early 1990s. The disputed charges occurred at buildings that fell under RTC control after Columbia Savings & Loan Assn.’s 1991 failure. Columbia and Koll acted as partners in the real estate development projects and federal regulators kept Koll on to manage the buildings after Columbia was seized.
The audits allege that Koll used office space without paying rent, awarded questionable bonuses to employees--including one bonus that was nearly three times an employee’s base salary--and charged the government for “questionable tenant improvement expenses.”
“We disagree with the findings of the RTC, and we’ve communicated that in writing to them,” Koll spokeswoman Linda Lane said Tuesday. “We’re working within the RTC process to resolve the differences.”
Lane declined to comment on specific issues raised by the audits. “The Koll Co. does not believe it is in our best interests to talk about them at this time,” Lane said.
However, the audits show that executives at Koll’s various operating units had earlier rejected charges of impropriety. Koll executives maintained that “its charging practice was consistent with the (RTC) management agreement,” according to the audits.
The RTC report links the overcharges to billings generated by Koll Management Services, Koll Construction Co. and Koll Co./Development Group at the RTC-owned properties in Irvine and Orange. The RTC’s Inspector General is recommending that Koll’s subsidiaries refund $1.265 million to the RTC and building tenants.
The audits allege that Koll “did not adequately control costs” and that it subsequently overcharged the federal government for its services. According to the audits, Koll executives responded to the Inspector General’s report this spring by maintaining that its services and charges were appropriate.
RTC investigators issued a report on the Irvine building in March. The second audit was initiated because results of the Irvine audit “showed that Koll . . . had allowed significant questioned costs to be charged” to the RTC and building tenants.
