“I love people. I love the press. I have nothing to hide,” says New York’s mercurial supermarket magnate John Catsimatidis, sitting at the head of a long table in a conference room at Red Apple Group Headquarters, flanked by Larry Sachs, his senior executive, and Emily Pankow, assistant general counsel.
The billionaire Chairman/CEO of the Gristedes supermarket chain, radio talk show host, and sometime mayoral hopeful, has drawn criticism for his decision to stop accepting WIC vouchers (a supplemental nutrition program for low-income mothers, infants, and children) at his 29 grocery stores.
“We’ve been taking WIC in our stores forever,” Catsimatidis says. “All of a sudden, the supermarket business is going bankrupt. Gristedes is short of money. They come to the boss for money. I start looking into things. All of a sudden the WIC program came up. At the same time the bank called up [and said], ‘Don’t take any more damn WIC checks.’ They were bouncing like no tomorrow.
“I don’t care about money,” insists Catsimatidis. “But when you have thousands of checks going out on a Friday, you need to know they’re good.”
Catsimatidis says Gristedes worked for months with the New York State Department of Health (DOH) to solve the problem.
Sachs attributes all of the bounced checks to the change in WIC policy; the checks used to have a dollar amount printed on them and now they’re blank. The checks do still have a specific value associated with them; however, neither the vendor nor the WIC participant knows what that value is. Instead of a number value, the checks list the items that the participant is entitled to purchase. The DOH’s assumption is that similar types of stores charge the same amount of money for certain items, and their check will cover it.
The DOH calls these similar types of stores “peer groups.” According to the agency, vendor peer groups were established in June 2016 to help set maximum reimbursement levels for each WIC food item. Vendors are grouped by geography, size of the store, and business model: factors that predict the cost of doing business. The DOH says that if WIC checks are rejected, it is either because the vendor’s shelf prices are significantly higher than their peers, or because of errors by the vendor in processing WIC transactions.
Sachs, however, counters that the DOH’s concept of peer groups is far too broad.
“We are tracked against a group of urban chain stores with X amount of registers in the store. This includes the cheapest rent district in Brooklyn or Buffalo and the most expensive rent district in Manhattan,” complains Sachs. “It has to do with density only, not the cost of doing business. We asked them repeatedly to add something to correlate with cost of rent or cost of doing business in the district, and they said ‘No.’ We tried to make this work.”
“This peer grouping doesn’t get you close to what we have to charge to pay the bills. Ninety-five percent of our stores are in Manhattan,” says Catsimatidis.
RI’s WIC Participants
The folks at Red Apple Group say there are five WIC customers on the Island, and Sachs insists the company wants to serve those customers. “We know WIC customers buy other things when they shop in our store. We don’t want them to go elsewhere. We are hoping the [DOH] comes around. We would really like to be able to [participate in the program].”
“We could try to make an exception to the rule and talk to the [DOH].” says Catsimatidis. “We have no problem doing that. We try to be reasonable. But when your bank says, ‘Get another bank if you can’t straighten this out,’ I’d rather just get rid of WIC.
“We are willing to serve those five customers. We just need the [DOH] to simplify [the program].”
When bounced WIC checks started rolling in, Sachs says he did his homework to try and find out what the State’s pricing was, so he could then instruct Gristedes cashiers to deduct a certain percentage of each item when accepting a WIC check.
Producing a long document of WIC reimbursements dated the last week in July, Sachs explains how he calculated the amounts he got reimbursed against what Gristedes charged for each item. He found that while it varied by merchandise, the State typically paid 75 cents on the dollar. That method involved a lot of forensic accounting on Sachs’ part, but wasn’t foolproof. There were still a lot of bounced checks.
Sachs says, “I did the analysis, but we can’t take a percentage off without knowing price lists.”
Catsimatidis adds, “That’s a lot of administrative work we have to do. It reached the eff-you level.”
It wasn’t always like this, says Sachs. WIC checks used to have dollar amounts and Gristedes would void the excess off the top at the register. “We never got reimbursed our shelf price; that’s not the point,” says Sachs. Once the State started issuing blank checks, Gristedes cashiers were instructed to charge the shelf price. Sachs says, “The State doesn’t give me the mechanism to discount prices. I don’t know what the reimbursement rate is, and they won’t tell me.”
According to Catsimatidis, neither the Roosevelt Island Operating Corporation (RIOC) nor Hudson Related have reached out to them to discuss the Roosevelt Island store’s WIC policy or its lease. “We would talk to them,” insists Catsimatidis. “Let’s call them right now.”
Catsimatidis says he does have partners, including Congresswoman Carolyn Maloney and Public Advocate Leticia James, in his quest to find a workable solution.
“The taxpayer is spending so much to give someone $20 worth of goods,” Sachs says. “We’re better off teaching [the WIC participants] about nutrition and adding $20 to their food stamps.”
Regarding the Island store, Catsimatidis says, “I am here willing to cooperate. We have remodeled that store at least five times.”
As for the disappearance of the organic section, Sachs says, “People find it frustrating to have [an organic] store within a store. The merchandise is the same.”
When asked if he will run for mayor again, Pankow looks at her boss and says, “That’s the million dollar question.”
Catsimatidis banters back, “If it cost a million, I’d do it. Last time, I spent 11, 12 [million dollars].
“A lot of people have been pushing me to do it. My general comment to everybody has been, ‘Let’s get the presidential election over with and then we’ll look at it.’”
Regarding the election in November, Catsimatidis declines to pick a winner, “I’m friends with Donald Trump for 30 years. I’m friends with the Clintons for 30 years. If either of them gets elected, it would be a much better choice than what we have now. I’m very disappointed in President Obama and his foreign policy. The Middle East is a mess. And on domestic policy, I feel there is a lot to be desired. I have nothing personally against President Obama. If you look at the walls you’ll see pictures of me and him from early on when he first started thinking about running, but I believe he disappointed some people.”
Photos do line the hallways of the Red Apple Group offices, all of the big man himself with various dignitaries and politicians, ranging from Chris Christie (“Do you think he’ll give me his old suits?” Catsimatidis jokes, alluding to Christie’s weight loss) to a 2002 photo of him and Fidel Castro taken in Havana (Catsimatidis says this is his favorite photo). He stops at a photo taken of him and President Bill Clinton, which he says was taken on the second floor of the White House. “Nobody gets to go to the second floor of the White House,” Catsimatidis says.
“The people supporting Donald Trump are the ones that are opening their window and yelling out just like the movies, ‘We’re mad as hell and we’re not going to take it anymore.’ But Donald Trump has his own problems. Bill Clinton was one of the best presidents we ever had. I was with him the other night at his birthday party. I gave him a big hug and he gave me a big hug and I told him, ‘I’m going to throw you an 80th birthday party.’”