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Orkin Under Siege 

Southeast's "termite belt" crawling with fraud lawsuits

Page 3 of 6

Garcia finally realized how bad the damage was when she had problem opening her garage door. "The wall holding the door was all eaten up by termites. And what happened then? Orkin treated me like I was a woman who didn't know what I was talking about. They brushed me off. Moisture, moisture, moisture is all they would talk about.

"But I know what happened. They promised to keep termites out of my house, and they didn't. They should pay for that."

Meet a loyal Orkin employee. Ron Harrison, a Ph.D. expert on bugs, runs a training center complete with a down-to-the-details demonstration house and various types of commercial buildings. The hands-on center in northwest Atlanta is credited with being the best in the industry, and Harrison says it shows Orkin's commitment to first-class service.

"The company philosophy is to do right by the customer," Harrison comments. "As a company, we don't make a lot of money" off of each client. "So, we have to keep our customers for the long term by doing the job right."

Meet a former Orkin employee the company would rather forget about, Jack Cox. Part of Orkin's termite guarantee to customers is that it will reinspect homes and businesses each year -- which is necessary to see if the pests have returned. Depending on the type of contract, Orkin might be required to retreat the property if termites have reappeared, or to repair damage. Cox, a former Orkin inspector in Tampa, was asked during a deposition in 2001 if he ever forged customers' signatures to reinspection 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 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 own 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."

Meet an Orkin lawyer, Doug Brown of the Orlando corporate law firm of Rumberger Kirk & Caldwell. His well-honed response to press inquiries: No comment. When Florida Attorney General Charlie Crist subpoenaed Orkin records in July, the company told shareholders in a Securities and Exchange Commission filing that it was "cooperating fully" with the probe. However, at the same time, Brown's law firm filed a lawsuit against the attorney general on behalf of "Doe Corporation" seeking to quash the subpoena and to have documents concealed from the public.

Still, even the hardball-playing Brown has been backed into a corner on occasion. He said in closing statements in Collier Black's Florida case last year: "[I] certainly concede that there are a lot of very embarrassing and terrible things that have happened ... that shouldn't have happened. ...You have negligence, you have mistakes, you have chronic failures to fix things, but it's not fair to hold Orkin responsible in the sense of an intentional misconduct."

Arbitrators, in awarding $750,000 in actual damages (plus $2.25 million in punitive damages and $1.25 million in attorney's fees) to Black, agreed with everything in Brown's statement -- except the lawyer's denial that Orkin had dirty hands. (Orkin appealed the verdict, and a federal judge on Aug. 25 struck down the punitive damages.)

Meet the anti-Orkin lawyer, Tampa's Pete Cardillo, the nation's only attorney whose entire practice is devoted to suing pest control companies: "Orkin knows of thousands of customers who have been screwed by the company. What's it doing? Is it telling them their homes are at risk? Absolutely not."

Orkin, like Janus, has two faces. Indeed, it's as if there were two very different companies, each sporting the Orkin red diamond.

One Orkin is a company founded by men who represented the very best of individualism and American capitalism. Hard work, shrewd strategic moves and an unflagging commitment to innovation have built Orkin into the second-largest pest control company among 18,259 competitors in the $5.65 billion a year industry. Only Memphis-based Terminix Inc. tops Orkin in size.

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