Mitch Mosallem, the former head of print production at Grey, is due in court April 22 for a preliminary hearing of evidence or, possibly, an indictment against him.
Mosallem, who could be indicted before that date, is charged with conspi racy to commit mail fraud. The charge stems from an investigation that began in January 2001 by the U.S. Department of Justice's antitrust division. The complaint also refers to unidentified Grey employees and four unnamed print production firms.
The maximum penalty depends on the specific charges brought against Mosallem in the ongoing investigation.
Aware that an arrest warrant had been issued, Mosallem turned himself in at the federal courthouse in lower Manhattan on March 21, sources said. He was released the same day on $1.5 million bail.
Paul B. Bergman, a Manhattan attorney in private practice, is representing Mosallem. He said Mosallem "intends to fight these charges. Once the government reveals who these 'unidentified witnesses' are, I will likely have specific comments to make."
The complaint, filed March 15 in U.S. District Court, Southern District, alleges that Mosallem "authorized certain graphics suppliers to add to the monies owed charges for goods and services that the graphics suppliers had provided for the personal benefit of Mosallem or the personal benefit of other senior Grey employees or 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."
Grey clients mentioned in the complaint as possible victims are Procter & Gamble, Brown & Williamson Tobacco Corp. and Joseph E. Seagram & Sons. "The clients relied on Grey's representations regarding the accuracy of the bills it presented for reimbursement," court papers say.
A Grey representative said the agency is cooperating with the investigation and confirmed that Mosallem left Grey in December. She declined further comment.
Sources said Grey fired Mosallem that month after bills from print production house The Color Wheel, a vendor used by Grey, came under scrutiny. Calls to Mosallem were not returned.
If Mosallem is indicted, he will be arraigned and a judge will be assigned to the case and determine a trial date.
If he is not indicted, the government could dismiss the charges on April 22 or ask for a 30-day extension of the complaint to continue the probe.
An IRS representative would not confirm whether it was investigating The Color Wheel, except to say that "a search warrant was executed by the FBI, the Department of Justice's antitrust division and the IRS on the premises of The Color Wheel in December 2000."
In a March 25 letter to its clients, Color Wheel said it "categorically denies any impropriety or illegality whatso ever" and that how Grey bills its own clients "is entirely within the control and direction of Grey." The com pany added that its business success is based on "the most advanced and sophisticated technology, and the most competitive pricing."