Prosecutors cry conspiracy

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The ad industry's head-in-the-clouds creative nature has long been used to explain away its idiosyncrasies. But it took an attorney who achieved notoriety defending Bill Clinton from impeachment to turn it into a legal defense.

As the trial of former Ogilvy & Mather executives Shona Seifert and Thomas Early got under way, their big-dollar attorneys staked at least part of their legal strategy on the idea that the sheer size and complexity of the White House's anti-drug advertising account befuddled the Ogilvy staffers working on the business. The timesheets required a rigor that just couldn't be expected from a right-brain-driven ad agency.

"Evidence will show that Ogilvy was not organized to handle timesheets. Creative people do not want to be troubled with timesheets," argued the defense attorney Gregory Craig in his booming voice.

During three days of trial last week, federal prosecutors used the testimony of former Ogilvy staffers, most of whom cut deals with the government to avoid prosecution, to reconstruct an effort in the latter half of 1999 to misreport the number of hours worked on the ONDCP business. The effort involved revising staffing plans, fabricating timesheets and even hiring additional employees to bill hours they would never work, all so the agency could make up a $3 million shortfall.

rogues' gallery

The first days of trial constructed a white-collar rogues' gallery from the legendary ad agency, a circle of smartly dressed, well-educated conspirators describing crimes committed with the most banal of instruments: timesheets. The jury seemed at times bored by the document avalanche and other times enthralled by the tales of ad execs behaving badly. Jurors even broke into laughter when one of the witnesses read an e-mail exchange in which Mr. Early-who has seemed impassive and dry during the trial-had suggested giving the ONDCP timesheets for Christmas.

Despite defense attempts to tie Ms. Seifert and Mr. Early to the paper trail, thus far the strongest case has been made not against any one mastermind but against the way the agency conducted its business. And, more broadly, against an industry-wide culture of timesheet-keeping that begs for sloppiness at best and criminal malice at worst.

When Mr. Early and Ms. Seifert's attorneys begin to make their case, perhaps as early as Feb. 10, they will likely use that sloppiness as a partial explanation for the shortfall and Ogilvy's reaction to it. They've already striven, in many cases persuasively, to distance their clients from the actions of lower-level employees who admitted to falsifying timesheets and directing others beneath them to do the same.

But they will also have to combat the portrait witnesses painted of a frantic and even desperate conspiracy that kicked into motion when Ogilvy managers discovered around mid-1999 that the agency's brand-new, high-profile, big-budget account had a problem: namely, a projected $3 million revenue shortfall by year's end.

When he took the stand, Robert Zach, former media director on the ONDCP account and arguably the government's most important witness, locked gazes with the lawyers and delivered a deliberate, painstaking rendition of how Ogilvy executives reacted to the revenue shortcoming. In a daylong testimony on Feb. 3, he recounted carefully and evenly how agency managers first tried to narrow the gap by launching a search for timesheets that hadn't been filed. When that didn't do the trick, he testified, he was instructed by Ms. Seifert to create staffing plans that would have media-department employees bill more hours against the ONDCP account even though those hours were devoted to other clients.

"Shona said to me that we have to go back to the senior-most people-people we can trust-and have them go back to the timesheets," Mr. Zach testified. "However, we cannot say that to them. We have to go tell them to re-evaluate the timesheets."

Toward year's end, he said, Mr. Early approved a plan to hire media-department staffers who would add more ONDCP hours without actually working them. Under cross-examination, Mr. Zach conceded he didn't know whether that plan was executed.

The defense team's strategy has been to try to discredit the witnesses. With Mr. Zach and Melissa Cunningham, another witness who said Ms. Seifert directed her to falsify timesheets, the defendants' lawyers hammered away at the fact that they changed the stories over the multi-year investigation for the purpose of getting a deal from the prosecutors. Ms. Cunningham, once an Ogilvy account executive, broke down in tears. "We're talking about changing your story, Ms. Cunningham, in addition to changing your timesheets," Mr. Craig said.

over the coals

Mr. Zach, too, who once made $180,000 a year for Ogilvy, was dragged over the coals. Attorney Emmet Flood called attention not only to his changing story with prosecutors but also a lie he told when applying for a Realtor's license after resigning at Ogilvy. Even his purchase of a $150,000 Ferrari import-which he sold before driving-was brought up. Mr. Flood used it as potential evidence of a personal financial strain that could have led Mr. Zach to push the timesheet scheme.

To Ogilvy & Mather, New York, the $3 million shortfall it was suffering was a drop in a revenue bucket of about $200 million in the third-quarter of that year. But it still sparked a strong reaction from executives. When Bill Gray, head of the New York office, found out about the ONDCP shortfall, he reacted in anger, cursing during a phone conversation with the defendants, he testified last week. Asked why, he said, "You've got one there and then you've got one somewhere else and then you've got a problem. It's a volatile business."

Mr. Gray seemed unsure of himself on the stand, despite his seniority at the agency and the fact he hasn't been accused of wrongdoing. On Feb. 2, he was grilled over his knowledge of the ONDCP contract and whether the agency met federal accounting standards. He was largely speechless as Mr. Craig asked him rather detailed questions about the contract, with the document blown up on the projector.

"You don't have a clue, do you?" Mr. Craig finally asked.

"Yeah, you could say that," Mr. Gray answered.

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