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ONDCP Trial: Witnesses Say Plot Ran Deep

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NEW YORK Witnesses on Friday told a court that several senior media managers at WPP Group's Ogilvy & Mather helped carry out an alleged plot to overbill the federal government on its $1 billion Office of National Drug Control Policy ad account.

The testimony came on day four of the trial of former Ogilvy executives Shona Seifert and Thomas Early, who stand accused of masterminding the scheme to cover a $3 million revenue shortfall on the ONDCP account. Both have pled not guilty to 11 counts of conspiring to defraud the government.

Six former Ogilvy managers were named by witnesses as knowing some aspects of the plan: Larry Cole (former U.S. media director); Ray Simko (former N.Y. senior partner); Abby Auerbach (former senior partner and director of broadcast); Bob Zach (former strategic planning director); Peter Chrisanthopoulos (ex-national broadcast director); and Jon Swallen (ex-director of media research).

Those executives either met to discuss how staffers' timesheets could be faked, or told their employees to go along with a massive effort to revise thousands of previously submitted or missing timesheets riddled with bogus information, witnesses testified.

Dozens of their staff, witnesses said, including virtually every media buyer in the local broadcast department, ended up with their names on timesheets claiming work for the ONDCP they never actually performed.

Witnesses also described a meeting in November 1999 in Simko's office during which Simko decided to take charge of the alleged timesheet revision plan. The meeting was scheduled in an e-mail copied to North America co-president Bill Gray, Zach, Cole, Auerbach, Chrisanthopoulos, former director of finance Early and former contract manager Al DiOrio, according to a printout shown to the jury.

"Ray was very upset and agitated," Auerbach testified. "He had come from a meeting where people were yelling" about the projected $3 million ONDCP revenue shortfall. "He had to make sure these timesheets were getting done," Auerbach said. (Auerbach is now an evp at the TV Advertising Bureau, where she oversees creative and marketing. She testified pursuant to a non-prosecution agreement with the government.)

At the meeting, Simko resolved that his assistant, Bill Evans, would take over the timesheet project. "I was relieved quite frankly," Auerbach said.

Evans, who also testified pursuant to a non-prosecution deal, corroborated Auerbach's version of events. He said he checked every media department timesheet, returning them to any buyer who failed to log the number of ONDCP hours ordered on a staffing plan. (Employees were told to log those hours even if they had not actually worked on the business, Evans said.)

Once the bogus timesheet was "correct," Evans would sign Simko's name on the sheets and send them to the accounting department, he testified.

On cross-examination, lawyers for both defendants concentrated on whether Auerbach or Evans had received instructions from Early or Seifert (a former Ogilvy executive group director), and both said they had not.

The prosecution's theory of the case is that Early and Seifert masterminded the scheme after Gray became angry when revenue on the business came in far lower than projected. In evidence, prosecutors have introduced timesheets, staff lists, e-mails and handwritten notes naming virtually every agency senior media manager as having some level of involvement.

Zach, DiOrio and Chrisanthopoulos have all pled guilty to some involvement. DiOrio, who suffered from diabetes during the period in question, died a few months before the trial began.

Simko, Swallen, Gray and Cole have not been accused of any wrongdoing.

Witnesses, however, have indicated that some of them knew something strange was happening to Ogilvy's timesheets during the period.

Craig Schulz, a former manager in the research department, testified that when he filled out his timesheets accurately, they came back to him with instructions to bill to the ONDCP hours previously billed to other agency clients.

"I went to talk to my supervisor Jon Swallen," he said, to ask what was happening.

"He [Swallen] said, 'It's the way we're doing it and just go ahead and do it,'" said Schulz. "It seemed odd."

That was not the only split within the Ogilvy ranks during the period of the alleged ONDCP overbilling. At one point, Early asked that the agency's labor bills include "spot bonuses, moving and relocation expenses, sign-on bonuses, executive allowances and special bonuses," according to an e-mail from DiOrio.

DiOrio and a colleague, manager of accounting systems Helen Ripka, came to the tentative conclusion that those perks probably should not be submitted as "labor," Early ordered DiOrio to classify them in that way, Ripka testified.

DiOrio considered challenging the order, so Ripka advised DiOrio of an earlier occasion when she had questioned one of Early's orders on a different issue.

"Tom had said to me, 'It can't be done or you won't do it? ... What if your job depended on it?' ... I told him to fuck off and ran back to my office," she said.

That anecdote produced a brief burst of laughter from a jury clearly becoming tired of looking at ad agency paperwork.

Separately, Auerbach became disenchanted with the scheme because she was annoyed that none of the other executives involved would say explicitly that they wanted her to order buyers to alter their timesheets. Auerbach had made a point to "encourage" buyers to be "careful" and "examine" what they wrote when filling out the sheets, but had stopped short of actually demanding they be faked, she said.

On one occasion, Auerbach said, she asked other media managers if she was supposed to outright ask buyers to fake their timesheets. The reaction from one executive (she believed it was DiOrio) was, "For god's sake, don't tell them to change their timesheets!"

Later, Auerbach found herself sitting at home with a stack of her underlings' timesheets on her kitchen table. She had taken them home to change them herself. "This is wrong," she told the court, "I looked at those timesheets and I said to myself, 'This is wrong.'"

Testimony continues on Monday in U.S. District Court in New York.