Court Documents: Several Grey Employees Bilked Clients

NEW YORK — Grey clients, Procter & Gamble, Brown & Williamson Tobacco Corp., and Joseph E. Seagram & Sons are mentioned in federal complaint filed earlier this month by the U.S. Attorney’s Office in the Southern District against former head of print production Mitch Mosallem who is charged with bilking Grey’s clients for about half million dollars over several years.

Grey said it is continuing to cooperate with the government investigation.

Mosallem, in concert with other Grey employees who were not identified, “caused graphics suppliers to issue to Grey numerous false and fraudulent invoices,” according to the complaint. The alleged fraud began in 1991 with one production house and continued until 1998 when three others graphics companies became part of the scheme that continued through 2000, the complaint says.

The investigation began in January 2001. “The clients relied on Grey’s representations regarding the accuracy of the bills it presented for reimbursement,” court papers say.

Mosallem ran Grey’s print production department, and sources said he was asked to resign in December 2001 because of billing improprieties related to New York production house Color Wheel.

“We are aware of the criminal complaint sworn out against Mitch Mosallem,” a Grey representative said. “Obviously, at this stage of the matter we cannot comment further.” The representative confirmed Mosallem’s departure from the agency three months ago, declining further comment.

The complaint says Mosallem and other Grey employees authorized certain print houses to inflate costs on client projects for their personal benefit and “members of their families, including tickets to theater, sporting and cultural events, and graphics items such as wedding invitations, holiday cards, family and other personal pictures and brochures.”

“In a single year,” the complaint says, “one grahics supplier fraudulently billed Grey almost $100,000 in monies owed for tickets only, which amount Grey was reimbursed by its clients, without their knowledge.”

Attorneys at the Justice Department’s antitrust division were not immediately available for comment. Color Wheel executives could not be reached.