When the FBI had picked up its final suspect, the Simon staffers-not implicated in a six-year scam to steal $13 million in McDonald's game prizes-were summarily escorted out of the Oak Brook, Ill., offices. The game was over: McDonald's, which had been working quietly with the FBI, immediately fired Simon, pulling a $500 million-a-year account and putting Simon's future in jeopardy.
"The FBI kept a lid on this until McDonald's got [its new] game together," said one fast-food executive, referring to the company's conciliatory "Instant Giveaway Game" that begins Aug. 30 and was being planned behind the scenes of the investigation. "It's amazing to me that they had that kind of clout."
Such is the power of the world's largest fast-feeder. It appeared that the FBI controlled the sting breaking the crime ring that stole winning game cards for McDonald's "Who Wants to be a Millionaire" and Monopoly games. The FBI said the swindle was masterminded by an employee of McDonald's long-time promo shop, Simon Worldwide's Simon Marketing in Los Angeles.
But it was the Golden Arches that held the final answer as to when the takedown would happen. The crescendo to "Operation Final Answer" wasn't decided until earlier in the month, according to Chris Graham, the supervisory special agent for the FBI in charge of the Jacksonville, Fla., division. "That was as late as we could put it back to accommodate McDonald's interests," he said.
Attorneys already have filed one consumer class-action lawsuit-the first of several expected-which came as no surprise to McDonald's Chairman-CEO Jack Greenberg. When Mr. Greenberg cooperated with the FBI in proceeding with the July Monopoly promotion to complete the sting, he did so knowing millions of customers would be cheated. "By ending the game, we would have stopped dead an ongoing investigation at the highest levels and would have let ruthless crooks go scot-free," said McDonald's spokesman Walt Riker.
"I had to do what was right. If you're sitting in my chair, I think you'd do the same thing," Mr. Greenberg said in a published report. "I would do it again. What we found out allowed the FBI to complete its investigation."
That rationale doesn't cut the mustard for Aron D. Robinson, the lawyer representing the first class-action plaintiffs to file suit against McDonald's and Simon over the fraud. "Is it a justification to harm your customers to help an investigation?" he asked. "McDonald's isn't being hurt by this, they're profiting doubly," he said.
McDonald's insular nature ultimately may have led to the relative ease in which Simon security employee Jerry Jacobsen, who the FBI alleges was the ringleader, was purportedly able to pull off the scam for so long.
The company has a reputation for aligning with companies, most privately held, that have complementary interests and are willing to serve the fast-feeder on a nearly exclusive basis. For example, Havi Group is a global limited partnership of companies, including Perseco, McDonald's main distributor of paper and packaging, and promo shop The Marketing Store. Grocery magnate Ron Burkle, 30% owner of Simon Worldwide and its chairman, also owns 70% of Golden State Foods, one of McDonald's largest suppliers via his investment company Yucaipa Cos. Several McDonald's agencies, including Bcom3 Group's Leo Burnett Co. and Omnicom Group's DDB Worldwide, considered making an offer for Simon but took a pass, confirmed spokespeople for both agencies. Cyrk, a promotional marketing company, bought Simon in 1997; Cyrk changed its name this year to Simon Worldwide.
Bruce Hollander, senior VP at Don Jagoda Associates, Melville, N.Y., which handles sales promotions from development to security oversight for some 40 companies, said working with such closely related companies is a recipe for disaster. "I think you need somebody with a broad background who isn't just going to know about your industry," he said. "It's almost like inbreeding if you deal with one person and one industry."
That appears already to be changing. McDonald's wouldn't discuss how it plans to reassign existing Simon projects, but three executives close to the fast-feeder said the company is courting Promo Edge, Neenah, Wis., a promotion and packaging unit of privately held Menasha Corp. A spokeswoman for Promo Edge, however, said the company "is not working with McDonald's." The chain won't discuss who is handling the new promotion, but it's believed it's being implemented by Schwarz Worldwide, Morton Grove, Ill., along with Havi's Marketing Store, Westmont, and law firm Winston & Strawn.
Promo Edge designed and produced the recent "Tomb Raider" instant win game for Tricon Global Restaurants' Taco Bell Corp. and is working on a Britney Spears concert tie-in for PepsiCo.
DDB, Chicago, is believed to have prepared McDonald's recovery campaign, which started with an Aug. 22 print ad apology; a TV spot is in the works. Publicis Groupe's Frankel is handling in-store displays on that effort, according to production executives knowledgeable about the effort. Both agencies declined to comment. The 2,535-word description of the rules for the new instant game posted on McDonald's Web site (mcdonalds.com) does little to explain exactly how winners will be randomly awarded. Every store has an opportunity as part of a "randomization process" where official agents for McDonald's will appear at 55 stores a la the Publisher's Clearinghouse Prize Patrol to award unsuspecting patrons. Each day of the promotion beginning Aug. 30 and ending Sept. 3, incognito McDonald's representatives will appear in the "randomly selected" stores and notify individual customers in the store or drive-thru that meet specific criteria.
Each day there will be a single $1 million prize and 10 $100,000 prizes awarded. Winners will have to respond to on-the-spot preliminary verification questions and then wait a few days for their eligibility to be verified by an outside panel. They won't go away empty-handed. Rather, the winners will receive a certificate that "affirms they are a potential winner," said spokeswoman Bridget Coffing.
The company is fronting the money from corporate coffers. "In the meantime, we'll look at recovery options including insurance indemnification and recovery," said McDonald's Mr. Riker.
Contributing: Cara Beardi, Kate Fitzgerald