291 Digital Clarifies Ownership and Assets

NEW YORK The owners and founders of 291 Digital, Arne Zimmerman and Frank Suozzi, purchased the assets belonging to The Color Wheel in March 2003. Those assets include the building, facilities and equipment. At that time, 291 Digital hired 180 employees of The Color Wheel, including its president Mark Wenger. 291 Digital and Color Wheel exist as separate corporate entities. There is no affiliation or relationship between the two companies [Adweek Online, Nov. 7].

A corrected version of the original story follows:
A jury has found former Grey Worldwide executive John Steinmetz not guilty of charges related to bid-rigging, over-billing, kickbacks, fraud and tax evasion on print work for unwitting Grey clients such as Brown & Williamson.

The jury did, however, convict co-defendant Birj Deckmejian, a graphics supply salesman, of various anti-trust and fraud violations.

The verdicts were returned late on Friday in U.S. District Court here.

In May 2002, four individuals plus New York print production house The Color Wheel were indicted by a federal grand jury for crimes being investigated by the U.S. Department of Justice’s Anti-trust division.

Steinmetz and Deckmejian were the only defendants to go to trial. The rest, Haluk Ergulec, The Color Wheel’s owner; Mitch Mosallem, a former director of graphic services at Grey; and John Ghianni, a former salesman at defunct print supplier Quality House of Graphics, all pleaded guilty.

Steinmetz was a vice president and associate director of graphic services for Grey and had worked at the agency for roughly 40 years. As the associate director of graphic services, Steinmetz reported directly to Mosallem, who pleaded guilty a week before his scheduled trial was to begin last April to several violations, including rigging bids and defrauding Grey and its clients. He is expected to be sentenced next week.

Deckmejian, who ran a print brokerage business called Birj & Feathers, often represented The Color Wheel.

Beginning in 1991, the government claims that Mosallem agreed with Ergulec, Deckmejian and Steinmetz and others, including former Color Wheel salesman Gabriel Casas, who was later charged and pleaded guilty, to defraud Grey clients, most notably B&W, by issuing phony invoices for contracts on print jobs.

According to the government’s case, Mosallem was alleged to have instructed Steinmetz to track the expenses Color Wheel was to recoup by keeping a “monies owed list” and to identify jobs to which those amounts could be added by fraudulently increasing the quantities and prices of certain line-items in those jobs. During the trial, a number of former Grey employees testified to Steinmetz’s good character and noted occasions when Steinmetz angrily confronted Mosallem over shady dealings.

In the case of Deckmejian, the government contended that he over-billed Bates on a print job for B&W by some $8,000. On the stand, Deckmejian said he could not recall what that particular amount was for, but said he gave tours to Bates employees and sought reimbursement for providing coffee and doughnuts, claiming that he had authorization from Linda Erekuff, the head of production at Bates during that time.

“I have no comment and no knowledge of that,” Erekuff said when asked last week about her alleged contact with Deckmejian.