Covering up on P&G's Cover Girl

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Federal investigators allege Mitchell Mosallem, former exec VP-director of graphic services at Grey Global Group's Grey Worldwide, worked with Color Wheel owner Haluk Ergulec, a Color Wheel salesperson and other "co-conspirators" to defraud several Grey clients by having Color Wheel issue false invoices for services rendered. Specifically, say prosecutors, the quantities and prices of certain line items on invoices were inflated. One of the alleged victims: Procter & Gamble Co.

An example of work for which the New York print-production house allegedly issued a false and fraudulent invoice is a 1999 magazine advertisement created by Grey for P&G's Cover Girl Smoothers featuring models Brandy Norwood, Niki Taylor, Yamila Diaz, Lonneke Engel and Faith Hill. Federal authorities allege the line items for various retouching services were inflated by a total of $5,000.

Color Wheel management allegedly used the excess funds to recoup the cost of tickets to the theater, sports and cultural events as well as goods and services provided for the personal benefit of Mr. Mosallem, another unnamed Grey employee described as a "co-conspirator" and other senior employees and executives at Grey along with their family members.

Authorities claim some of the money was also used to recoup charges for work Color Wheel performed on earlier jobs, frequently for different Grey clients, for which it had not been fully paid.

Messrs. Mosallem and Ergulec and others indicted have pleaded not guilty to bid-rigging charges. Grey is cooperating with the investigation. P&G had no comment.

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