Pubdate: Wed, 07 Jan 2004
Source: Reuters (Wire)
Copyright: 2004 Reuters Limited
Author: Sue Zeidler

TWO AD EXECS CHARGED WITH OVERBILLING U.S. GOV'T

LOS ANGELES - One current and one former executive from the prestigious 
advertising agency of Ogilvy & Mather were charged Tuesday with overbilling 
the federal government for an anti-drug media campaign, federal prosecutors 
said.

Thomas Early, a senior partner and director of finance of Ogilvy & Mather 
in Manhattan, and Shona Seifert, a former senior partner and executive 
group director, were charged in an indictment in Manhattan federal court 
with participating in a scheme to defraud the government, according to a 
statement by David Kelley, U.S. Attorney for Southern District of New York.

Paul Clark, a spokesman for Ogilvy, said the ad agency was aware Early and 
Seifert were under investigation and had been cooperating with the probe 
since it began two years ago.

He said Early's position was currently under review, while Seifert had left 
the agency during the last two years.

Clark said Ogilvy, a unit of the world's No. 3 advertising company, 
British-based WPP Group Plc, first brought the discrepancies to the 
attention of the Justice Department in 2000, prompting the federal 
investigation.

The indictment charges the executives with developing an extensive scheme 
to fraudulently inflate labor costs stemming from a 1998 contract from the 
Office of the National Drug Control Policy (ONDCP) for the anti-drug media 
campaign.

Under the contract, Ogilvy could have received about $1.5 million a year 
for labor costs, according to Clark.

According to the indictment, in the summer of 1999, Early and Seifert 
learned the labor billings were far below what Ogilvy & Mather had 
anticipated. From May 1999 through April 2000, they directed certain 
employees to revise time sheets already completed to reflect falsely that 
they had worked more time on the ONDCP contract than originally recorded, 
it said.

They also directed Ogilvy employees to record on their time sheets a 
specified percentage of their time for the ONDCP contract whether or not 
the employees actually worked that amount, according to the indictment.

Early, 48, and Seifert, 43, are scheduled to be presented before U.S. 
District Judge Richard Berman on Wednesday and are both charged with one 
count of conspiracy and 10 counts of false claims.

If convicted, each faces up to five years in prison and a fine of $250,000 
or more based on the amount of gains involved.

Clark said Ogilvy stopped billing the government from the summer of 2000 
until its system was certified in 2001 by outside and government auditors 
applying stringent standards.

He said Ogilvy disclosed billing missteps to the Justice Department and 
other government agencies; took corrective action; reached a civil 
settlement with the government and instituted a rigorous accounting 
compliance program.

"Although it turned out that we were unprepared for the complex and unique 
federal record-keeping requirements of that type of contract, we are 
nonetheless proud that our work on that contract and on the ONDCP contract 
that we re-bid and re-won in 2002 has consistently exceeded the contract 
performance requirements," Ogilvy said in a statement.
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