A Calculated Scheme or Just Naive Accounting?

NEW YORK The trial of two former Ogilvy & Mather executives accused of inflating bills on the White House’s $1 billion anti-drug account opened Tuesday, with the prosecution arguing that the pair deliberately schemed to rip off the government, while the defense painted them as naive players at an agency that had “no experience whatsoever” dealing with a complicated federal account.

“This is a case about lies and greed,” said Assistant U.S. Attorney Kim Berger, in her opening statement at Federal District Court in New York. “The government is going to prove this case through documents [which show the agency] facing a $3 million shortfall; the defendants decided to lie and scheme to cover the shortfall.”

The defense responded that, in fact, Shona Seifert and Thomas Early were hopelessly out of their depth, overwhelmed by a massive account on which they had no experience, working for a client which was “demanding, nitpicking, suspicious, adversarial [and] a real nightmare.”

The two executives on trial, former senior partner and executive group director Seifert (who is currently the president of Omnicom Group’s TBWA\Chiat\Day in New York), and Early, former senior partner and director of finance, have both pled not guilty.

Executives on the account were described as “desperate” for help after Ogilvy spent millions to service the business, and almost immediately fell five months behind in its bills.

Whether the jury of seven men and five women believes the defendants are crooks or clowns, both sides seemed determined to portray life working for Ogilvy on the Office for National Drug Control Policy account as a mixture of chaos, naivety, ambition and incompetence.

And that is just the beginning of the bad news for the agency: Prosecutors promised to parade a string of Ogilvy executives before the jury, all of whom, they said, have done deals with the feds to avoid fines and prison time. They also produced a list of 136 people or businesses that would likely be named during the trial (dozens of them Ogilvy employees) and described how “the president of Ogilvy,” when informed about the $3 million shortfall, told the defendants “to fix the problem.”

No executive at that level of the agency has been accused of any wrongdoing and the “president” was not named specifically.

The agency had at least three people with the title of “co-president” in 1999: Rick Boyko, co-president in New York and chief creative officer of North American operations, Bill Gray, co-president, and Carla Hendra, president of OgilvyOne. The North American CEO was Tro Piliguian. Only Gray and Piliguian’s names were on the list supplied to the jury today.

The trial initially seemed to go badly for the defendants, with prosecutors describing how some employees who “never worked on ONDCP billed all their time to ONDCP,” according to Berger. She singled out the “media department” as being worst, with the “highest-paid” managers there being told to bill “an incredible number of hours” to the ONDCP, all at the behest of Seifert and Early.

But the tables were turned just a few minutes later when the testimony of the prosecution’s first witness backfired on the stand. Johanna Shapira, managing director of Ogilvy’s consumer research group, was asked by Assistant U.S. Attorney Lauren Goldberg about a meeting in which Seifert allegedly encouraged her to bill all her spare hours to ONDCP. But Shapira said, “I really was 100 percent on ONDCP and I didn’t really report to Shona, so Shona wasn’t in a capacity to tell me what to do. I continued to record the time worked against other accounts.”

Under cross-examination by Seifert’s lawyer, Greg Craig, Shapira admitted that even after Ogilvy’s internal probe of its timesheet policies had started, she did not regard Seifert as a crook or a criminal.

Moreover, Shapira read a kudos-laden letter she had handwritten to Seifert when the latter left to go to work for TBWA. It described Seifert as an “astute and clear thinker,” “an inspired and inspiring leader” and “a pleasure to sit next to on any number of flights to Boston … or Milan.”

Shapira was also unaware that prosecutors had named her as a co-conspirator, until Craig informed her of that on the stand. “That’s the first I’ve heard of this,” she said. Shapira later left the courtroom looking shaken.

The first day of the hearings ended on that note. Asked how he thought it was all going, Early replied, “Fine, thank you”—his first public words since the investigation started more than three years ago.

Seifert declined comment, but looked both nervous and pleased. By the end of the day she had smiled at every juror in the box.