Indicted Ogilvy Finance Executive Resigns

WASHINGTON, D.C. Thomas Early, finance director for Ogilvy & Mather in New York, resigned on Wednesday following charges that he and former Ogilvy executive Shona Seifert conspired to defraud the government while working on the White House Office of National Drug Control Policy’s anti-drug media campaign.

In a statement provided by Ogilvy, the shop said Early “decided to resign in order to devote his full energies to obtaining a full vindication in this matter.”

The U.S. District Court for the Southern District of New York, in an 11-count indictment, on Tuesday charged that Early and Seifert, now president of the New York office of TBWA\Chiat\Day, “participated in an extensive scheme to defraud the United States government by falsely and fraudulently inflating the labor costs” while working on the White House’s anti-drug media campaign.

To carry out the scheme, the court documents say Early and Seifert:
* “Directed certain Ogilvy employees to revise time sheets that employees had already completed to reflect falsely that the employee had devoted more time to the ONDCP contract than was originally recorded;
* Directed Ogilvy employees to record on their time sheets a specified percentage of their time for the ONDCP contract whether or not the employees actually devoted that percentage of their time on the ONDCP contract;
* Caused vouchers to be submitted to the government claiming reimbursement for labor costs that Ogilvy had not actually incurred in connection with the ONDCP contract;
* Caused falsified time sheets to be submitted to the government in support of their fraudulent claims for reimbursement of labor costs; and
* Made false statements to representatives of the [White House Office of National Drug Control Policy] in an attempt to mask the fabrication of its labor costs.

Tom Riley, an ONDCP representative, said the court documents do not allege any wrongdoing by the White House drug policy office. “These alleged abuses took place in a previous administration,” Riley said. “Since then, there have been many improvements to the campaign, including much more rigorous and transparent accounting procedures, which would prevent any abuse like this from taking place now.”

WPP Group’s Ogilvy previously settled civil charges on the billing issue, paying the government $1.8 million.

Ogilvy representatives did not return calls, but late Tuesday afternoon, the shop provided the following statement:

“Five years ago this week, Ogilvy & Mather New York began its first government contract with the Office of National Drug Control Policy (ONDCP). Although it turned out that we were unprepared for the complex and unique federal record-keeping requirements of that type of contract, we are nonetheless proud that our work on that contract and on the ONDCP contract that we re-bid and re-won in 2002 has consistently exceeded the contract performance requirements.

“Unfortunately, our performance of the time record-keeping requirements on the initial contract did not meet federal requirements or our own commitment to maintaining the highest ethical standards. Upon discovery of this fact, Ogilvy stopped billing the government in the summer of 2000 until our system was certified by outside and government auditors applying stringent standards in 2001; voluntarily disclosed billing missteps to the Justice Department and other relevant government agencies; took extensive corrective action; over-compensated the government in a civil settlement for any questionable labor billing; did not seek compensation for additional work we did; and instituted the most rigorous accounting compliance program in our industry.

“For more than three years, Ogilvy has cooperated with every government review and investigation of the billing missteps it voluntarily brought forward, including extensively cooperating with the U.S. Attorney’s Office in Manhattan for more than two years. We are aware that several individuals have been charged in connection with actions that are alleged to have been taken while they worked on the initial ONDCP contract at Ogilvy. If true, their behavior was inconsistent with the high standards the company promotes and maintains.”

In response to the indictment, Seifert provided the following statement: “Neither with respect to the indictment announced by the U.S. Attorney’s office, nor at any other time in my life, have I ever committed any criminal misdeed of any nature. While saddened and dismayed by these fallacious charges, I do welcome the opportunity to present evidence of my total innocence. I am innocent of any wrongdoing. I will contest these charges. I know I will be exonerated.”

This story updates an item poster yesterday to include Early’s resignation.