Ex-Ogilvy execs face court battle in scandal over bogus time sheets
An Ogilvy & Mather staffer who works on the White House Office of National Drug Control Policy account said last week he was once handed a revised and fully completed time sheet to sign and told it needed to be resubmitted because of "mistakes" made in the processing of the original.
"I don't know if the hours were changed, since this was done a few months after," the source said. "I didn't notice anything strange. It didn't say I worked 100 hours a week on it, so I signed it. ... No one said anything about a shortfall and having to make up for it."
The time sheets for work done shortly after Ogilvy won the $150 million anti-drug media account in January 1999 are a central issue in a federal indictment lodged last week against two former executives of the WPP Group shop.
Thomas Early, 48, and Shona Seifert, 43, are accused of falsifying time sheets by adding hours in an alleged scheme to defraud the federal government. Court documents allege that Early, Seifert, two unidentified "co-conspirators" and others "caused Ogilvy to fraudulently inflate the number of hours that Ogilvy employees had devoted to the ONDCP contract" to make up for a $3 million shortage in labor costs. The indictment alleges that they "directed certain Ogilvy employees to revise time sheets that employees had already completed to reflect falsely that the employee had devoted more time to the ONDCP contract than was originally recorded."
Early, who resigned as Ogilvy senior partner and director of finance last week, a day after the indictments, and Seifert, former Ogilvy senior partner and executive group director and current president of Omnicom Group's TBWA\Chiat\Day in New York, were led into U.S. District Court in handcuffs last week. They are each charged with one count of conspiracy and 10 counts of making false claims.
If convicted, they could face a maximum of five years in prison and a $250,000 fine. Both pleaded not guilty.
Sources said the "co-conspirators" were Al DiOrio, who managed the ONDCP contract in Ogilvy's finance department, and Bob Zach, former strategic planning director for media at Ogilvy, who retired last September.
DiOrio left Ogilvy in 2000 for health reasons and later died. Zach, reached at his home in Greenwich, Conn., last week, declined to comment. He was not charged because he is cooperating with investigators, sources said.
The charges by the U.S. attorney in New York are another black eye on a campaign that has been racked by scandal and an industry that has had its share of image problems. "As an advertising person, you want this thing to go away real quick," said an exec at a WPP shop.
Seifert was the top person on ONDCP at Ogilvy. She reported to Bill Gray and Rick Boyko, co-presidents of Ogilvy New York. Boyko left the agency last June. Shelly Lazarus is currently worldwide chairman and CEO.
Sources described Seifert as smart, dedicated and "good at making the client feel comfortable." Her good relationship with top ONDCP executives was "not the sign of a company who will screw you," said one source.
Ogilvy's attorney, Ira Raphaelson of the Washington law firm O'Melveny & Myers, said the shop did nothing wrong. "I know one thing: The company didn't want anyone to fill out time sheets incorrectly," he said last week. "This company did everything right from the minute it discovered the errors, and that is the true measure of the company's good character."
Ogilvy settled a previous civil complaint by paying $1.8 million in 2002 following a General Accounting Office report that found 28 Ogilvy employees had revised time sheets, billing 3,127 more hours to ONDCP. Ogilvy subsequently created a billing system to comply with government standards.
Sources said the U.S. attorney's office had pressured Seifert to plead guilty but she refused. Ogilvy is required to pay a "reasonable" amount of Early and Seifert's legal fees, an agency rep confirmed.
Ogilvy issued a statement Tuesday acknowledging the charges against Early and Seifert. A later, revised version omitted the original's final sentence, which read, "If true, their behavior was inconsistent with the high standards the company promotes and maintains."
News of the indictment stunned staffers at TBWA\C\D. At an agencywide meeting Wednesday, sources said, president of the Americas Tom Carroll expressed support for Seifert, who stepped forward, apologized for the distraction and vowed to fight the charges.
Some sources wondered how Seifert could manage her position while preparing to defend herself in court. Asked to describe the vibe inside the agency, one source said, "The best adjective I have is confused. They don't know what's going to happen next." -- with Andrew McMains