This article originally was posted at Legal Schnauzer. It has been updated for SeekingAlpha.
Orkin is perhaps the best-known brand in the pest-control business. The company is based in Atlanta, under the Rollins Inc. umbrella, so it has a particularly strong presence here in the Deep South.
Our region has a stout bug population, with creepy-crawlies coming in all sorts of shapes and sizes. So it's disconcerting to learn that Orkin has a history of fraud, racketeering, incompetence, and general chicanery.
In the company's advertisements, the Orkin man looks like a clean-cut guy of impeccable credentials. In real life, there's a pretty good chance that he's a creepy-crawly himself.
Orkin's shady history is particularly alarming when you consider that the company specializes in spraying various forms of poison in homes and businesses. Let's consider a few "highlights" from the Orkin files:
* According to a 2007 CBS News report, Orkin was facing four class-action lawsuits across the Southeast for failure to protect homes against termite damage. A Florida woman called her house "the termite buffet," even though she had a contract with Orkin for six years. "I think you hire Orkin to protect your home and all of a sudden one day you realize you have to protect yourself from Orkin," she said.
* A series of articles in 2004 portrayed "Orkin Under Siege" from lawsuits launched by dissatisfied customers. From reporter John F. Sugg:
The outfit is being nibbled at by lawyers and disgruntled customers who are as ferocious in their attack as termites are when they sniff unprotected wood. Juries and arbitration panels have slapped multimillion-dollar judgments on Orkin. Looming over the horizon are scores of other cases, at least four of which are seeking "class action" status that could pit hundreds of thousands of customers against Orkin -- and could, potentially, write the final chapter for a fabled American business icon.
* Wayne Cowart, a former Orkin employee from Valdosta, Georgia, provides a devastating account of his time at the company. From John F. Sugg's report:
Meet another Orkin man -- or, more accurately, ex-Orkin man -- Wayne Cowart of Valdosta. The 30-year veteran of the pest control industry worked for Orkin for six years, including two as a top executive in charge of handling consumer claims. He's now a consultant who spends most of his time giving testimony against Orkin and other termite companies.
"If the Gambino [Mafia] family was doing what the Rollins family has done, there'd be a Senate investigation," says Cowart, referring to accusations against the company of fraud and forgery.
His spin on what went awry at Orkin is that the "company has stopped being a service-oriented company and is now a revenue-oriented company. The losers are the customers."
* The attorney general of Florida took such charges seriously, launching a racketeering investigation into Orkin in 2004. Orkin eventually settled the case in 2010. From a news report about the settlement:
In 2004, Florida's Attorney General opened an investigation of Orkin under criminal and civil racketeering and corrupt practices statutes. The investigation focused upon termite contracts Orkin issued in the state which it administered under a nationwide system. After nearly four years of investigation, Orkin concluded it should quietly settle the claims, neither Orkin nor the Attorney General's office issued a press release.
Orkin agreed to pay money to Florida to defray costs of the investigation and to provide free inspections and repair of termite damage where permitting procedures were not followed in the past and change its business practices to ensure future inspections and repairs are done correctly.
According to Sandy Copes, a spokeswoman for the Attorney General, despite Orkin's denial of guilt, the settlement clearly indicates changes were needed and ensures correction of "poor practices by Orkin about which we have extensive evidence."
The investigation was originally prompted by Collier Black's lawsuit (involving severe termite damage to his Duvall County, Florida home incurred while under Orkin's Lifetime termite protection contract) which resulted in a $4.6-million payment from Orkin.
Is Orkin's bottom line suffering under the onslaught of lawsuits. It doesn't sound like it. According to a report in the Atlanta Business Chronicle, CEO R. Randall Rollins and President Gary Rollins each remain safely ensconced in the billionaire category. Rollins Inc. and its insurers are doing their part to keep the legal community happy. On the vast majority of Orkin lawsuits that we've seen, the enormous Chicago-based law firm of Sidley Austin provides defense services for the company.
Sidley Austin is one of the world's oldest law firms, and it once employed a young black female attorney named Michelle Robinson. She now is better known as Michelle Obama, our first lady. Who says the Obama family does not have ties to our nation's corporate power structure?
What kind of outfit is Sidley Austin defending? A Florida man named Jack Cox gives us an idea, per John F. Suggs:
Cox, a former Orkin inspector in Tampa, was asked during a deposition in 2001 if he had ever forged customers' signatures to re-inspection tickets, meaning the homes hadn't been scoped for termites and were vulnerable -- or, perhaps, were about ready to collapse from termite damage.
Cox pondered the number of forgeries he had committed, and concluded that "if you do a hundred a month, that's 1,200 a year. So it might be over 1,000. ... In fact, we've had parties, kind of like a party, sat down, and all of us sat down in a room and did them." Often, according to court documents, pizzas were served as Orkin employees industriously forged their trusting clients' signatures to stacks of documents, giving a special and well-known meaning to the term "pizza party" within the company.
In another deposition last month, Cox testified that customers were kept in the dark about damage to their property. "If we found damage," he said, "we were to report it back to the office. Normally, we didn't tell the customer."
Why would Orkin sandbag its customers? Cox explained: "It would have been an expense [to repair the termite damage]. It would have been a cost to the office to fix it. We're trying to make money at the office, you know."
Yes, Orkin employees would throw pizza parties in order to have a good time while forging client signatures. That's what passes for "business ethics" at the company.
In spite of all the lawsuits, published reports indicate Orkin and Rollins Inc. still have a healthy bottom line. Are they providing effective service to their customers? Our research indicates the answer is no.