Court Reserves Ruling on Mosallem’s Lawsuit

NEW YORK A judge said Tuesday he would reserve his decision until a later date in a lawsuit brought by the former chief print buyer at Grey Global Group.

The ex-Grey executive, Mitch Mosallem, convicted in 2003 of taking kickbacks from print sales executives in return for the agency’s printing contracts, claims he was framed by the agency, according to the suit.

Oral arguments had been scheduled Tuesday at New York State Supreme Court [Adweek Online, May 22]. Mosallem, however, did not appear. Judge Ira Gammerman said he only received a piece of paperwork from Mosallem earlier in the day, so he sent Grey’s lawyers home without holding a formal hearing.

Mosallem’s suit alleges the agency withheld documents from federal investigators’ subpoenas when he was being investigated; that Grey prejudiced his joint defense agreement with the shop by giving investigators information he told Grey’s lawyers in confidence; and that Grey falsely overstated Mosallem’s role in the scandal.

Grey’s lawyers have argued that Mosallem’s suit should be thrown out. Grey contends that by pleading guilty, Mosallem was the architect of his own fate and (as a matter of law) he may not profit from his conviction. Also, they note that Mosallem failed to serve Grey’s parent company, London-based WPP Group, with the suit. (Mosallem sent the suit by mail, not by an official legal service, as required.)

Mosallem is seeking $4 million to settle the lawsuit. He has used the case to make new allegations that Grey’s London office also had an under-the-table scheme with its printer, Wace [Brandweek, May 22].

In a December letter to WPP chief executive Martin Sorrell, Mosallem wrote that he had “close to twenty boxes of records” detailing wrongdoing between Grey London and Wace, as well as other dubious acts by senior Grey managers.

Mosallem also told Sorrell: “You can rest assured that I will not desist until an equitable distribution of justice has been made in this affair, either through the courts or through the press or both.”

Mosallem has yet to provide any proof of his claims.

The Grey printing scandal took place between 1991 and 2001. During that period, Mosallem and two colleagues at Grey were accused of conspiring with sales executives at Color Wheel, a New York printer, in a kickback scheme in which Grey staffers were showered with cash, gifts, tickets to sporting events, vacations and, on two occasions, prostitutes, by Color Wheel executives. Color Wheel then recouped the charges by inflating print bills for Grey’s clients. Procter & Gamble and Brown & Williamson were the most heavily defrauded clients in the scheme.

A total of $3.5 million was added to bills for P&G and B&W, which spent $20 million and $13 million in print reimbursables, respectively.

The investigation led to the indictment of 22 people in the New York print advertising business. All but one was convicted.

Mosallem pled guilty to fraud and antitrust violations and is currently serving a 70-month sentence in Brooklyn’s Metropolitan Detention Center.

This story updates and replaces an item posted on May 22 with news of the judge’s decision.