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	News / Events October 20, 2011 To Our Valued Customers: As you may be aware, our company has recently been in the news following a legislative audit of the Department of Alcohol and Beverage Control (DABC). Many of the media reports have suggested possible impropriety due to family connections between Flexpak and the DABC – those reports and allegations are based on speculation and are wrong. Flexpak has been a competitive provider of shipping, packing and janitorial supplies to the DABC for over 9 years. All of Flexpak’s dealings with the DABC have been a matter of public record since 2002. While the audit does suggest that some of the DABC’s employees weren’t always following the DABC’s internal protocols and procedures with respect to purchases from the DABC’s numerous vendors, Flexpak stands behind all of its dealings with the DABC and provided the DABC with the best products and services at competitive prices. Reports suggesting that Flexpak’s products were markedly more expensive than our competitors are again inaccurate and wrong. In reality, Flexpak underwent a sealed competitive bidding process for certain equipment sold to the DABC in accordance with the rules applicable to vendors of a state agency and Flexpak was awarded the contract because it was the lowest bidder. In fact, Flexpak’s products were over $55,000 less than other bidders and over $13,000 less than the next lowest bidder. Many of the products sold to the DABC and services provided were related to the shrink wrapping machines that were purchased pursuant to the competitive bidding process. Unfortunately, many believe that the legislative audit and accusations made against Flexpak are politically motivated and stem from certain politicians views about the State of Utah’s involvement in the sale of alcohol. We think that these decisions are best made by the elected officials and we are disappointed that our company and our dedicated employees have been dragged into the political process, but we want to assure our many valued customers that Flexpak stands behind all of its business dealings with the DABC. Flexpak treated the DABC like any of its 1,300 other customers, providing the best products and services for the lowest possible price. Any suggestion that products were ordered based on a family relationship between Dennis Kellen and Brian Kellen are wrong and reports suggesting that our products and services were marked up because of that family relationship are reckless and simply inaccurate. Flexpak provided the same high level of customer service and competitive pricing to the DABC that we provide each of our customers. If you have any questions or need any information regarding our dealings with the DABC or any of our products or services, I’m happy to answer questions and make information available to you or anyone else. Very Truly Yours, Brian Kellen, President/CEO Flexpak October 19, 2011 Renai Bodley News Director KSTU, Fox 13 5060 Ameila Earhart Drive Salt Lake City, Utah 84116 Re: Flexpak, Inc. Dear Ms. Bodley, I am writing to you today requesting that KSTU, Fox 13 print a retraction to Sandy Riesgraf’s story labeled “DABC audit accuses former director of bid rigging, falsifying documents” posted online shortly before 4:00 on Tuesday, October 18, 2011. In Ms. Riesgraf’s story she made the following statement: “In some cases the department was paying twice as much for products through Flexpak compared to what other vendors offered, according to audit details.” Her statement is simply inaccurate. Ms. Riesgraf posted her story before the audit was available to the public and conflated information from the audit that is damaging to our business. She apparently assumed that the amounts shown in Figure 1 of the audit applied to Flexpak’s products and services. In fact, the “Shelf Talker,” “Warning Signs,” “Store Supplies,” and “Receipt Paper” referenced in the audit are not products that the DABC purchased from Flexpak and Ms. Riesgraf’s statement to the contrary is wrong and damaging to our business. In fact, if Ms. Riesgraf had read the entire audit she would have noted that the audit provided details of the amounts charged for Flexpak’s products and services. For example, as shown in Figure 5 of the audit, the DABC ordered $87,595 in wrap and tape from Flexpak in fiscal year 2011 and the audit report claims that the DABC could potentially have saved $7,841 by ordering from other vendors. Assuming all of the details of the audit are accurate, which Flexpak disputes, the actual difference presented by the audit is 8.9%, nowhere near the 50% that Ms. Riesgraf claimed. We believe that the 8.9% difference is easily explained by the auditor not accounting for the constantly changing prices for petroleum based products, such as the shrink wrap sold to the DABC, or the varying qualities of the product. I trust that you will make the necessary retraction to Ms. Riesgraf’s story as her statement is inaccurate and obviously very damaging to our business. Sincerely, Brian Kellen, President/CEO Flexpak October 20, 2011 Dear Mr. Kellen, My name is Debby Rogers and I am the executive producer for Fox13 News during the evening hours. My news director, Renai Bodley shared your letter with me. We have reviewed our story from Tuesday night as well as the state audit. We will make a clarification in our newscast tonight. We have also deleted Tuesday’s story from Fox13Now.com. Sincerely, Debby Rogers Fox13 News Evening Content Manager Statement from Brian Kellen, CEO of Flexpak – Aug. 25, 2011 Flexpak has been a competitive provider of shipping, packaging and janitorial supplies to the Utah Department of Alcoholic Beverage Control for several years. In fact, Flexpak’s business relationship with the DABC is a matter of public record, with all transactions open to public scrutiny. Recent reports suggesting possible impropriety due to family connections between Flexpak and the DABC are based on speculation and are erroneous. Flexpak treated the DABC like any of its 1,300 other valued customers, providing the best products and services for the lowest price possible. To my knowledge, the DABC treated Flexpak like any of its vendors, with business decisions made based on price, service and quality. The business relationship was between Flexpak and the DABC, not between Brian and Dennis Kellen. Neither of us was directly involved in the day-to-day interaction between the organizations. It is not improper for Flexpak to do business with the DABC – regardless of who works there. It is our understanding that Flexpak’s relationship with the DABC was treated no differently than any other supplier or vendor, including other packaging and janitorial suppliers. All business between Flexpak and the DABC is documented with signed proof of delivery receipts. In fact, Flexpak transacted business according to the DABC’s preferred method of invoicing and accounting. The customer-vendor relationship between Flexpak and the DABC was not unusual in the business world, and we relied on the DABC to operate according to its own internal policies. Flexpak has conducted an internal review of all transactions with the DABC and found that all was handled properly – legally and ethically. We welcome and fully support the State of Utah’s audit of the DABC and are confident they will reach the same conclusion as it relates to the products and services provided by Flexpak. August 20, 2011 Dear Valued Customers: As you may be aware, several media outlets have recently run stories focusing on the products and services provided by Flexpak to Utah’s Department of Alcoholic Beverage Control (DABC). The DABC has been a customer of Flexpak for approximately nine years, and, due to the fact that the executive director of the DABC was most recently Dennis Kellen, the father of Flexpak CEO, Brian Kellen, several news articles have focused on amounts paid by the DABC to Flexpak. We want to assure you that there has been no impropriety on Flexpak’s part in dealings with the DABC and Flexpak stands behind all of the products and services it has provided to the DABC over the years. Flexpak provided the same high level of customer service and competitive pricing to the DABC that we provide each of our customers. Thank you for continued business and support. October 20, 2011 To Our Valued Customers: As you may be aware, our company has recently been in the news following a legislative audit of the Department of Alcohol and Beverage Control (DABC). Many of the media reports have suggested possible impropriety due to family connections between Flexpak and the DABC – those reports and allegations are based on speculation and are wrong. Flexpak has been a competitive provider of shipping, packing and janitorial supplies to the DABC for over 9 years. All of Flexpak’s dealings with the DABC have been a matter of public record since 2002. While the audit does suggest that some of the DABC’s employees weren’t always following the DABC’s internal protocols and procedures with respect to purchases from the DABC’s numerous vendors, Flexpak stands behind all of its dealings with the DABC and provided the DABC with the best products and services at competitive prices. Reports suggesting that Flexpak’s products were markedly more expensive than our competitors are again inaccurate and wrong. In reality, Flexpak underwent a sealed competitive bidding process for certain equipment sold to the DABC in accordance with the rules applicable to vendors of a state agency and Flexpak was awarded the contract because it was the lowest bidder. In fact, Flexpak’s products were over $55,000 less than other bidders and over $13,000 less than the next lowest bidder. Many of the products sold to the DABC and services provided were related to the shrink wrapping machines that were purchased pursuant to the competitive bidding process. Unfortunately, many believe that the legislative audit and accusations made against Flexpak are politically motivated and stem from certain politicians views about the State of Utah’s involvement in the sale of alcohol. We think that these decisions are best made by the elected officials and we are disappointed that our company and our dedicated employees have been dragged into the political process, but we want to assure our many valued customers that Flexpak stands behind all of its business dealings with the DABC. Flexpak treated the DABC like any of its 1,300 other customers, providing the best products and services for the lowest possible price. Any suggestion that products were ordered based on a family relationship between Dennis Kellen and Brian Kellen are wrong and reports suggesting that our products and services were marked up because of that family relationship are reckless and simply inaccurate. Flexpak provided the same high level of customer service and competitive pricing to the DABC that we provide each of our customers. If you have any questions or need any information regarding our dealings with the DABC or any of our products or services, I’m happy to answer questions and make information available to you or anyone else. Very Truly Yours, Brian Kellen, President/CEO Flexpak October 19, 2011 Renai Bodley News Director KSTU, Fox 13 5060 Ameila Earhart Drive Salt Lake City, Utah 84116 Re: Flexpak, Inc. Dear Ms. Bodley, I am writing to you today requesting that KSTU, Fox 13 print a retraction to Sandy Riesgraf’s story labeled “DABC audit accuses former director of bid rigging, falsifying documents” posted online shortly before 4:00 on Tuesday, October 18, 2011. In Ms. Riesgraf’s story she made the following statement: “In some cases the department was paying twice as much for products through Flexpak compared to what other vendors offered, according to audit details.” Her statement is simply inaccurate. Ms. Riesgraf posted her story before the audit was available to the public and conflated information from the audit that is damaging to our business. She apparently assumed that the amounts shown in Figure 1 of the audit applied to Flexpak’s products and services. In fact, the “Shelf Talker,” “Warning Signs,” “Store Supplies,” and “Receipt Paper” referenced in the audit are not products that the DABC purchased from Flexpak and Ms. Riesgraf’s statement to the contrary is wrong and damaging to our business. In fact, if Ms. Riesgraf had read the entire audit she would have noted that the audit provided details of the amounts charged for Flexpak’s products and services. For example, as shown in Figure 5 of the audit, the DABC ordered $87,595 in wrap and tape from Flexpak in fiscal year 2011 and the audit report claims that the DABC could potentially have saved $7,841 by ordering from other vendors. Assuming all of the details of the audit are accurate, which Flexpak disputes, the actual difference presented by the audit is 8.9%, nowhere near the 50% that Ms. Riesgraf claimed. We believe that the 8.9% difference is easily explained by the auditor not accounting for the constantly changing prices for petroleum based products, such as the shrink wrap sold to the DABC, or the varying qualities of the product. I trust that you will make the necessary retraction to Ms. Riesgraf’s story as her statement is inaccurate and obviously very damaging to our business. Sincerely, Brian Kellen, President/CEO Flexpak October 20, 2011 Dear Mr. Kellen, My name is Debby Rogers and I am the executive producer for Fox13 News during the evening hours. My news director, Renai Bodley shared your letter with me. We have reviewed our story from Tuesday night as well as the state audit. We will make a clarification in our newscast tonight. We have also deleted Tuesday’s story from Fox13Now.com. Sincerely, Debby Rogers Fox13 News Evening Content Manager Statement from Brian Kellen, CEO of Flexpak – Aug. 25, 2011 Flexpak has been a competitive provider of shipping, packaging and janitorial supplies to the Utah Department of Alcoholic Beverage Control for several years. In fact, Flexpak’s business relationship with the DABC is a matter of public record, with all transactions open to public scrutiny. Recent reports suggesting possible impropriety due to family connections between Flexpak and the DABC are based on speculation and are erroneous. Flexpak treated the DABC like any of its 1,300 other valued customers, providing the best products and services for the lowest price possible. To my knowledge, the DABC treated Flexpak like any of its vendors, with business decisions made based on price, service and quality. The business relationship was between Flexpak and the DABC, not between Brian and Dennis Kellen. Neither of us was directly involved in the day-to-day interaction between the organizations. It is not improper for Flexpak to do business with the DABC – regardless of who works there. It is our understanding that Flexpak’s relationship with the DABC was treated no differently than any other supplier or vendor, including other packaging and janitorial suppliers. All business between Flexpak and the DABC is documented with signed proof of delivery receipts. In fact, Flexpak transacted business according to the DABC’s preferred method of invoicing and accounting. The customer-vendor relationship between Flexpak and the DABC was not unusual in the business world, and we relied on the DABC to operate according to its own internal policies. Flexpak has conducted an internal review of all transactions with the DABC and found that all was handled properly – legally and ethically. We welcome and fully support the State of Utah’s audit of the DABC and are confident they will reach the same conclusion as it relates to the products and services provided by Flexpak. August 20, 2011 Dear Valued Customers: As you may be aware, several media outlets have recently run stories focusing on the products and services provided by Flexpak to Utah’s Department of Alcoholic Beverage Control (DABC). The DABC has been a customer of Flexpak for approximately nine years, and, due to the fact that the executive director of the DABC was most recently Dennis Kellen, the father of Flexpak CEO, Brian Kellen, several news articles have focused on amounts paid by the DABC to Flexpak. We want to assure you that there has been no impropriety on Flexpak’s part in dealings with the DABC and Flexpak stands behind all of the products and services it has provided to the DABC over the years. Flexpak provided the same high level of customer service and competitive pricing to the DABC that we provide each of our customers. Thank you for continued business and support.
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