COLOR WHEEL SELLS ASSETS

Employee-Owned 291 Digital Takes Over Presses, Premises

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A clarification has been made in this story. See below for details.

NEW YORK (AdAge.com) -- Six months after a federal judge sentenced its founder and former chief executive to a three-year jail term, Manhattan graphic services company

The Color Wheel name has been dropped for a new one, 291 Digital.
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Color Wheel has sold its assets.

Scaffolding in front of the company's 227 E. 45th St. plant is covered with signage bearing the new logo and name of the acquiring corporation: 291 Digital. Marketing materials describe the firm as "New York's only employee-owned full service graphic imaging company."

Majority owners
Arnold Zimmerman, chairman of 291 Digital, said he and his partner, Frank Suozzi, in early 2002 created a new company and bought all of Color Wheel's assets from former CEO Haluk Ergulec. Mr. Zimmerman said he and Mr. Suozzi own the majority of the new company's stock, and current plans call for the remaining shares to be distributed among 291 Digital's employees. "Haluk is gone," Mr. Zimmerman said. "We bought him out."

Guilty plea
Mr. Ergulec pleaded guilty in late 2002 to one count of conspiracy to obstruct the IRS and three counts of conspiracy to commit mail fraud as part of a plea agreement with the government. In addition to spending time in jail, the court ordered Mr. Ergulec, on behalf of Color Wheel, to pay restitution to those companies victimized by illegal activities committed by Mr. Ergulec or his employees from approximately 1990 through 2001.

The total compensation ordered was $1.5 million.

Quality House of Graphics
At least one other graphics services firm has changed dramatically as a result of the Department of Justice's long-running investigation into practices in the advertising, printing and graphics services industry.

Quality House of Graphics, based in Long Island City, closed in November 2002, said John Asslanian, its former CEO. One month earlier, Lori Montgomery, the company's treasurer and a minority owner, pleaded guilty to one count of rigging bids and allocating contracts from late 1994 until 2001 for retouching and separation services contracted out to third-party vendors by Grey Global Group's Grey Worldwide, New York, on behalf of certain clients.

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CLARIFICATION: This story has been changed. The former headline may have implied that the existing corporation, Color Wheel, had changed its name to 291 Digital. In fact, the assets of the Color Wheel printing company were acquired by 291 Digital, a completely new company set up by people not connected to the previous operations of Color Wheel.

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