Former Color Wheel Owner Sentenced

NEW YORK Haluk Ergulec, the former owner of The Color Wheel, was sentenced yesterday in U.S. District Court to 37 months in prison for conspiring to rig bids and reserve contracts for other companies doing business with Grey Worldwide. The charges, which Ergulec and the company pleaded guilty to last November, were in connection to work for clients such as Brown & Williamson, among others, from late 1991 until 2001.

Lawyers for Ergulec’s alleged co-conspirators—Mitch Mosallem, a former evp and director of graphic services at Grey; Birj Deckmejian, a former salesman for The Color Wheel; and John Ghianni, a former salesman for Quality House of Graphics in Long Island City, N.Y.—are continuing to maintain their not-guilty pleas. Their trial is expected to start April 14.

Ergulec is not expected to testify. His attorneys could not be reached for comment.

In May 2002, a federal grand jury indicted the defendants with conspiring to defraud certain Grey clients in a phony billing scheme from 1991 until July 2000, which was uncovered by an investigation conducted by the Department of Justice’s anti-trust division. For example, according to prosecutors, in 1999, The Color Wheel issued a false invoice to Grey that inflated the bill upwards of $12,000 for ads for Cover Girl nail polish and mascara. Other companies were also named in The Color Wheel’s schemes, such as Brouillard Communications and Impact Communications, both small New York ad agencies, and TDI Winston Network, a New York media agency that’s a subsidiary of Viacom.

In February, Ergulec completed the sale of The Color Wheel and its building to new ownership. Arne Zimmerman, chairman, and Frank Suozzi, CEO, have rechristened the print house 291 Digital and have instituted a number of reforms, such as a billing system that allows clients to track costs throughout the entire production process.
As part of his guilty plea, Ergulec agreed to pay $1.5 million in restitution to the victims, with the bulk, $1.1 million, going to Grey and the rest divided among Brouillard, Impact and TDI Winston.

Ergulec’s attorney requested that he be allowed to serve his sentence at Federal Prison Camp. U.S. District Court Chief Judge Thomas P. Griesa, the presiding judge in this case, said he will recommend it to the Federal Bureau of Prisons, which makes the final decision. Ergulec’s sentence begins on June 17 and with good behavior, he could be released within 32 months.