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The U.S. Makes Its Case Against Seifert And Early

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NEW YORK The first week of Shona Seifert and Thomas Early's trial saw drama, intrigue, tears and an extended dissection of office politics at Ogilvy & Mather as the government detailed its fraud and conspiracy case against the two former executives of the venerable New York shop.

Prosecutors painted Seifert, a former executive group director, and Early, a former finance director, as driven by "lies and greed" in their attempt to make up a $3 million revenue shortfall on an account they thought was worth $14 million. The defense claimed the duo were merely hopelessly unprepared to handle the federal government's complicated accounting chores on the Office of National Drug Control Policy account.

For both sides, it appears to be all about the timesheets—thousands of them that were allegedly altered or revised to inflate Ogilvy's labor bills on the $1 billion anti-drug business.

Here is what happened last week on the 26th floor of New York's U.S. District Court building in lower Manhattan:



TUESDAY, FEB. 1

In opening statements, assistant U.S. attorney Kim Berger claimed that Seifert and Early instructed employees, some of whom were not working on ONDCP, to bill all their time to the account. She singled out the media department, suggesting the "highest-paid" managers there were told to bill "an incredible number of hours" to the account, all at the behest of Seifert and Early. The defense responded that Seifert and Early had been swamped by mountainous demands for paperwork from a client that examined the accounting methods at Ogilvy's Washington, D.C., office but never its totally unqualified New York headquarters. Ironically, the prosecution's first witness, Johanna Shapira, managing director of Ogilvy's consumer group, bolstered the defense, telling the court that even though Seifert told her to bill all her spare hours to ONDCP, "I really was 100 percent on ONDCP." She added that she never regarded Seifert as a cheat, even after the timesheet probe began.



WEDNESDAY, FEB. 2

Any headway made by the defense eroded as lawyers for Seifert and Early allowed Shapira to reveal that Seifert had also told her, "If you were working any hours on Five Brothers or MotherNature.com [two other Ogilvy clients], you can just put those hours on ONDCP." Two more witnesses made similar claims. Former account executive Melissa Cunningham detailed how, in 1999, she often did no work for ONDCP because she was working for other clients. Her timesheets were sent back to her, she said, with certain hours circled and the handwritten notation "OND01" scrawled underneath—the client number for ONDCP. Cunningham said she then filled out a new timesheet and submitted that. The defense claimed that Cunningham had repeatedly lied to investigators prior to her testimony—a charge Cunningham, reduced to tears, confessed to. Later, Ogilvy North America co-president Bill Gray was forced to admit that he was clueless as to the accounting details of the contract he had promised ONDCP.



THURSDAY, FEB. 3

During more than seven hours of testimony, former Ogilvy media director Bob Zach repeatedly alleged that he, Seifert and former contract coordinator Al DiOrio hatched a plan to increase the percentage of time billed to ONDCP without increasing the actual hours worked on the account. Zach claimed the following: In September 1999, DiOrio provided him with a stack of hundreds of timesheets that had been submitted by media staffers since January. They were to be sent back to employees and resubmitted according to bogus time percentages assigned to each worker. Seifert, DiOrio and Zach even discussed who to let in on the plot and how they should approach rank-and-file workers. Zach was to tell group heads, whom he said Seifert described as "people we can trust," to ask their staffs to "re-evaluate" their timesheets. The instructions were never to be spelled out to the staff. That created problems when employees, particularly in the local broadcast buying department, continued to resubmit timesheets that did not bill the prescribed amount of time to the government client. Defense attorneys attemped to chip away at Zach's credibility, pointing out that he came clean only after making a deal with investigators for leniency. In addition, they argued that Zach was pressed for money and desperately needed a bonus to cover the cost of a lawsuit and a $150,000 Ferrari he bought in May.



FRIDAY, FEB. 4

The focus, which had been on Seifert for most of the week, shifted more toward Early, as four witnesses described the timesheet chaos within Ogilvy's media buying arm. A November 1999 e-mail from Early was produced in which he had addressed DiOrio: "Al, we really need to be at $14 million ... are all the media people on board?" They were indeed, according to former director of local broadcast Abby Auerbach, who said she personally changed dozens of her buyers' timesheets at the request of Ray Simko, a former senior partner. But eventually, Auerbach told the court, "I looked at those timesheets and I said to myself, 'This is wrong.' "

The prosecution's witness list this week is likely to include Peter Chrisanthopoulos, a former director of broadcast at Ogilvy, who, in a deal last year, pleaded guilty to conspiracy to defraud the U.S. The prosecution may wrap this week. The defense will then make its case for Seifert and Early's innocence.