Fifth Print Executive Pleads Guilty in Color Wheel Case

NEW YORK — The co-owner of a New York City graphic services company today pleaded guilty to rigging bids submitted to Grey Advertising in Manhattan, the Department of Justice announced.

In U.S. District Court in Manhattan, Lori Montgomery, a minority co-owner and treasurer of Quality House of Graphics, a Queens, NY-based graphic services company, pleaded guilty to one count of rigging bids and allocating contracts, from late 1994 until 2001, for the supply of retouching and separation services contracted through Grey for its client, Brown & Williamson Tobacco Corp.

A representative of Quality House of Graphics said in a statement, “Lori Montgomery, who’s no longer working with the company, has taken full responsibility for her actions. We’re gratified to have been assured by the government that Quality House of Graphics is not a focus of this investigation and will not be charged. As a result of an internal investigation, we’re confident that the company operates at the highest levels of ethical conduct.”

Montgomery worked at Quality House of Graphics with former print-services salesman John Ghianni, who pleaded not guilty to related charges in May. Ghianni remains a defendant in the case, which is expected to go to trial next spring.

The charges stem from a Department of Justice anti-trust division investigation into several printing companies, including The Color Wheel and some of its former officers, as well as the former head of Grey’s print services Mitch Mosallem. The DOJ charged the defendants with using phony invoices to inflate the cost of print jobs for Grey clients, including Brown & Williamson Tobacco Co.

According to the charges, Montgomery’s alleged co-conspirators rigged bids so that Color Wheel would be the low bidder among the co-conspirators on contracts to supply retouching services, and that another unnamed graphic services company would be the low bidder on contracts to supply separation services on behalf of B&W brands.

The bid-rigging charge, a violation of the Sherman Act, carries a maximum penalty of three years imprisonment and a $350,000 fine.

Montgomery is the fifth individual connected to the case who has pleaded guilty within the last two weeks. Those who have pleaded guilty to related bid-rigging and conspiracy charges so far are Joseph Panaccione, vice president and manager of graphics services at Grey Advertising; Gabriel Casas, a former Color Wheel salesman; Howard Marlin, owner and chief executive of Caysun Graphics, New York, a brokerage of printing and other graphics services; and Bertram Cohen, owner of Darbert Offset Corp., a New York-based printing company.

Also recently named as co-conspirators in this case are John Steinmetz, a vice president and associate director of graphic services at Grey and James Rattoballi, part owner of an unnamed graphic services company and a broker for other printing suppliers. Prosecutors have identified a third co-conspirator, who was a former Quality House of Graphics salesperson, but have declined to make the name public.