BACKGROUND: THE WHITE HOUSE DRUG OFFICE ADVERTISING CASE
The Stories From 2001 to the Present
Read the 14-page indictment .pdf
The criminal charges involve the WPP Group advertising agency's work for the Office of National Drug Control Policy (ONDCP), which is in the executive office of the president of the U.S. The government hired Ogilvy & Mather in 1998 to run a nationwide anti-drug advertising campaign.
Seifert and Early
In opening statements outlining their case in U.S. District Court in Manhattan, prosecutors said Thomas Early and Shona Seifert attempted to make up for an anticipated revenue shortfall by having Ogilvy staffers pad the timesheets intended to reflect the hours worked on the account.
Ms. Seifert, a former senior partner and executive group director at Ogilvy, and Mr. Early, its former chief financial officer, pleaded not guilty to an 11-count indictment that accuses them of conspiracy in making false claims against the federal government.
"Scores of employees were asked to revise hundreds of timesheets," assistant U.S. attorney Kim Berger told the courthouse in lower Manhattan. She acknowledged that the defendants didn't come right out and tell employees to falsify timesheets. Instead, "they chose their words very carefully. Employees were told to bill to target percentages no matter how much they were actually working on [the ONDCP] account."
The defense team, meanwhile, characterized the problems with timesheets as a botched effort by novices to comply with dense federal regulations governing contracts.
Laurence Urgenson, representing Mr. Early, said the defendant's role as financial director was simply "to report and monitor the results and operations of the company." When he realized that an accounting system was supposed to be in place upon landing the government contract, Mr. Early hired Al DiOrio, who had government contract experience, Mr. Urgenson maintained.
Mr. DiOrio died shortly after he left Ogilvy in 2000.
Gregory Craig, representing Ms. Seifert, called the laws governing federal contracts "complicated" and "voluminous." The ONDCP contract, he said, was the first government contract the New York office of Ogilvy had won, and the first that Ms. Seifert had worked on.
Dead man blamed
Mr. Craig, too, turned his attention to Mr. DiOrio. "It was his job to make sure Ogilvy did not break the rules," Mr. Craig said. At the least, the "evidence will show that Ogilvy was not organized to handle timesheets," he continued. "Creative people do not want to be troubled with timesheets."
As its first witness, the government called Ogilvy employee Johanna Shapira, who works as a managing director of the discovery group, which is part of planning and research. In 1999, however, she was working on the ONDCP account with Ms. Seifert.
Ms. Shapira testified that following a routine status meeting, Ms. Seifert approached her about billing hours worked on other accounts to the ONDCP. Ms. Shapira said she reported that encounter to Ogilvy's lawyers in 2001 or 2002 after an internal investigation on timekeeping began.
'Close to $700 million'
Since 1997, Ms. Berger said, the "federal government has spent over $1 billion to get [its anti-drug message] out to American families." Over a five-year period, she maintained, Ogilvy & Mather's contract had an estimated value "close to $700 million." The two people responsible for the account, Ms. Berger said, were Mr. Early and Ms. Seifert.
The quality of Ogilvy's work was not at issue, Ms. Berger conceded. "I expect you will hear the ONDCP was extremely impressed by the quality of work" Ogilvy did, she told the jury. However, after billing projections from the contract were "about $3 million" off, the defendants embarked on their scheme to make up the shortfall by having employees pad their timesheets, she said.
Ms. Berger told jurors they would hear testimony from Bob Zach and Peter Chrisanthopoulos, who worked in Ogilvy's media department. Each man pleaded guilty in the conspiracy and is "hoping for a reduced sentence" by testifying at the trial of Mr. Early and Ms. Seifert, Ms. Berger said.
Seated at the defense table, the two defendants and one-time colleagues barely looked at one another. While Mr. Early appeared glum to at least one observer, Ms. Seifert, now president of Omnicom Group's TBWA/Chiat/Day, New York, was lively and engaged and often looked at prospective jurors.
Judge Richard Berman said the trial will last approximately two weeks. He said he hopes the jury will begin deliberating by Valentine's Day.