OUSTED EXEC RABOSKY SUES LEAP PARTNERSHIP: FRAUD CHARGES SWIRL AROUND WEST COAST UNIT

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Steve Rabosky, who was terminated from his job as managing director of Leap Partnership's Santa Monica, Calif., office, has sued the agency for more than $500,000 on charges of breach of contract, fraud and libel.

In the lawsuit, filed late last year in California Superior Court in Orange County, Mr. Rabosky said he was slated to become co-manager of TBWA Chiat/Day's office in southern California when he decided to take the $500,000-a-year job heading Leap's West Coast headquarters last January, with Carisa Bianchi, a former TBWA Chiat/Day account director.

INVESTING IN START-UP OFFICE

Leap officials, according to the suit, "represented and promised to Rabosky that Leap understood that a new office such as it proposed to open in Los Angeles would be a start-up operation that might not be profitable for a period of up to three years and Leap would commit the necessary resources to sustain potential losses for that period of time while the Los Angeles office was ramping up its operations and developing and securing clients."

Mr. Rabosky's attorney did not return phone calls for this story; Mr. Rabosky could not be reached by press time. Leap President Tom Sharbaugh said the agency would have no comment since the suit is pending.

The Leap office participated in several pitches and, in July 1997, won the $7 million Los Angeles Department of Water & Power account. A management change at the department, however, resulted in termination of that contract.

FINANCIAL PRESSURE

At the same time, Leap came under financial pressure due to its declining stock price and acquisitions, and "embarked on a plan and scheme pursuant to which they conspired and attempted to force Rabosky and Bianchi to resign their employment" to escape severance payments, the suit claims.

Documents contend that without notifying Mr. Rabosky or Ms. Bianchi, Leap then installed Chicago-based Mr. Sharbaugh as head of the office and put pressure on the pair to come up with a plan to have the office break even by January 1998.

Subsequently, on Sept. 25, Leap issued a news release that said it was forced to restructure the Santa Monica operation due to "unacceptable revenue performance."

The release also said the agency was "disappointed in the lack of development of new business."

The press release, the lawsuit said, caused Mr. Rabosky "loss of his reputation, shame, mortification and hurt feelings."

Papers cited in the court documents state Mr. Rabosky was terminated effective Oct. 28.

Leap said in documents filed with the Securities & Exchange Commission the Rabosky lawsuit is without merit.

BIANCHI TO S.F.

Ms. Bianchi previously reached a separation agreement with Leap and last week returned to TBWA Chiat/Day as managing director of the former San Francisco office of Ketchum Advertising, replacing Dianne Snedaker, who has left (see related item on Page 35).

In its shareholders report for the quarter ended Oct. 31, Leap said the September restructuring cost the agency $1.2 million in severance and other charges.

Contributing: Bradley Johnson

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