NEW YORK A former graphics salesman admitted in U.S. District Court Monday to helping rig bids and to dispensing nearly $1 million in payments to unnamed ad agencies in exchange for steering contracts to a company he worked with.
John Ghianni, a former independent sales executive for Quality House of Graphics, a Queens, NY-based graphics services company, pleaded guilty to two counts of fraud and anti-trust violations. The charges stem from an ongoing investigation of the print and advertising industries by the Justice Department's Antitrust Division and comes a week after the guilty plea of Mitch Mosallem, who headed the print production department at Grey Worldwide. Mosallem pleaded guilty to charges of anti-trust, fraud, bid rigging and tax evasion in U.S. District Court in Manhattan last Monday, the day his trial was set to begin. Ghianni's trial was likewise set to begin today.
As the sole owner and employee of J. Ghianni Graphics Inc., Ghianni served as an independent salesman for Quality Graphics until 2001. As part of his plea agreement, he admitted to submitting false bids for print work on behalf of Quality to Grey from 1994 to 2001. The work was for Brown & Willamson, the tobacco marketer and Grey's client.
For contract work that exceeds $25,000, B&W required Grey to receive at least three competitive bids. Ghianni, along with co-conspirators, submitted intentionally high bids as directed by an arrangement led by Mosallem and Haluk Ergulec, the former owner of The Color Wheel, a graphics supplier now under new management and known as 291 Digital. Under the Mosallem's scheme, he and Ergulec would inflate the price of the print work through the use of phony invoices and split the amount that was above the production costs.
In addition to Mosallem, the other co-conspirators who have already pleaded guilty to these and other charges include Gabriel Casas, a former Color Wheel salesman, James Rattoballi, a co-owner of New York-based graphics supplier Print Technical Group, and Lori Montgomery, formerly a minority co-owner and treasurer of Quality House of Graphics. In addition, John Steinmetz, a former Grey employee who worked under Mosallem, is also accused by the government of taking part in this scheme and is scheduled to be tried on October 14, 2003. The trial of Birj Deckmejian, a former Color Wheel salesman, on related charges, is expected to begin that day as well.
In the second count, Ghianni, 72, admitted giving $950,000 in kickbacks to unnamed agencies in return for steering contracts to Quality from 1996 to 2001. "I returned 50 percent of the commissions I received to ad agencies in return for their business," he said before Judge Thomas Griesa.
Attorneys for the Department of Justice's Anti-trust division, which is in charge of this case, would not comment on what ad agencies Ghianni mentioned, except to say that the investigation into billing practices of the print industry is ongoing.