SUICIDE AND GUILTY PLEA REVEALED IN AD PRINT SCANDAL

Court Papers Detail Cash Kickback Scheme

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NEW YORK (AdAge.com) -- The intrigue surrounding an ongoing federal investigation into an advertising scandal is deepening.

The former chief financial officer of Color Wheel, one of the print-production companies involved in the investigation, killed himself earlier this year, Advertising Age has learned. Another executive with ties to the production company has entered a guilty plea on various charges, including tax evasion.

Former CFO
Donald LaPorte, Color Wheel's former CFO, died on Jan. 23 in Flushing, N.Y. The death was ruled a suicide, according to the New York City medical examiners office.

Meanwhile, Ivan Glick, an independent seller of commercial printing services, pleaded guilty March 28 to charges of tax evasion, mail fraud and antitrust conspiracy. Court papers said Mr. Glick primarily represented one New York company, referred to in the papers as "Printing Company-1," which provided an office for Mr. Glick. Mr. Glick"s attorney confirmed to Advertising Age last week that Mr. Glick represented Color Wheel.

Guilty plea follows surrender
Mr. Glick's guilty plea followed

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the March 21 surrender of Mitchell Mosallem, former executive vice president and director of graphic services at Grey Global Group's Grey Worldwide, to federal authorities. Mr. Mosallem is charged with conspiracy to commit mail fraud.

A complaint for Mr. Mosallem's arrest alleges he conspired with executives of an unnamed graphics supplier to defraud Grey clients by padding invoices. The government may have been led to Grey after a December 2000 search of Color Wheel offices during which some 30 agents of the Internal Revenue Service and Federal Bureau of Investigation seized documents, computers and file cabinets, according to witnesses.

Mr. LaPorte left Color Wheel in October 2000. Color Wheel Senior Vice President Mark Wenger confirmed Mr. LaPorte left then but would not comment on his reason for departing. Several industry executives said they believe Mr. LaPorte was cooperating with the government investigation. Douglas Tween, a Justice Department attorney, would not comment on what role, if any, Mr. LaPorte had in the ongoing investigation.

Court papers filed on March 28 in U.S. District Court, Southern District of New York, state Mr. Glick and two unnamed co-conspirators arranged for "Printing Company-1" and other suppliers to "participate in a scheme" to defraud certain agencies, including New York-based Impact Communications as well as WPP Group's Brouillard Communications and Deltakos Advertising, then part of J. Walter Thompson, New York.

Cash kickbacks detailed
In some instances, according to the court papers, Mr. Glick would agree to pay cash kickbacks to agency print production co-conspirators in exchange for contracts. In other cases, Mr. Glick obtained "inflated written price quotations and bids from multiple sources," including "Printing Company-1," according to court documents.

The papers said the kickbacks were generated as follows: Each supplier that was awarded a contract based on an inflated price received an invoice from a shell company (that existed solely to provide cash and false invoices for a fee) in the amount of the difference between the true cost of the job and the price at which the job was awarded. The supplier then issued a check to the shell company, which returned roughly 93% of the check's face value, in cash, to Mr. Glick. Mr. Glick paid some of the cash as a kickback to an agency co-conspirator, according to court documents, and kept some as an off-the-books commission.

Co-conspirator
The co-conspirator is not named in court papers. The papers said that Mr. Glick's "co-conspirator-1" filed a personal income-tax return that "omitted to include as income any cash received from Glick."

One former Brouillard employee was involved in a similar scheme. Brouillard confirmed it employed Lawrence Scaglione as print production manager for a period ending in 2001. In 1997, Mr. Scaglione pleaded guilty to charges of tax evasion from 1989 through 1992 on money received through a kickback scheme he participated in while employed at J. Walter Thompson, New York. He was sentenced to three years' probation. The criminal docket for his case shows prosecutors sought to bring a proceeding to determine whether Mr. Scaglione violated his parole. That matter is still pending.

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