NEW BRAUNFELS - The City of New Braunfels is demanding $1.3 million dollars from The Scooter Store, claiming the company is in breach of contract.
Bob Gray, vice president of the New Braunfels Industrial Development Corporation, says the company has not maintained an agreed upon number of jobs.
The city sent a certified letter to the company Friday, five days before federal and state agents raided the company's headquarters. The Scooter Store is the target of a Department of Justice investigation into possible Medicare fraud. An FBI spokesperson said all agents had left the corporate headquarters by Thursday afternoon. Employees were back to work Thursday.
Gray explained the city, through the New Braunfels Industrial Development Corporation, entered into a contract in May 2009 to pay The Scooter Store for jobs created. However, the city claims the company has not maintained the agreed upon 401 jobs and has, over time, cut at least 256 jobs. Now, the city wants to be paid back $1.3 million for the lost jobs, Gray said. Gray initially said the company had to pay back $1.8 million, but the city later said the figure was $1.3 million. That money is sales-tax supported economic development dollars.
"We have a very precise contract with clawback provisions provisions. We are following it to a 'T.' We have, so there is no delay or misinformation at all. We hope to get that money back," Gray said.
The Scooter Store had been in talks with the city about the letter prior to Wednesday's raid, but the raid could complicate matters, he said. The letter says it is "absolutely critical" the company resolve the breach of contract within 30 days.
"For us, there's concerns. Me, personally, it's for friends of my kids and their families and what it means to them. We hope to sort of move beyond that but at the same time protect, from the 4B side, protect the monies we've invested."
Gray said it was too premature to discuss possible litigation.
An attorney for The Scooter Store would not comment on the federal investigation or the letter, however, he did say the company is working with the city.
The Scooter Store was previously scheduled to make a presentation to the Industrial Development Corporation Thursday evening, however, it was cancelled following the raid.
