ONDCP Trial: Prosecutors Build Evidence

NEW YORK A parade of current and former Ogilvy & Mather executives on Tuesday told a court that they either altered their timesheets or told others to do so as part of an alleged scheme to defraud the government on its $1 billion anti-drug account.

Among those execs were: Jon Swallen, former Ogilvy director of media research, who is now a vp, director of research at TNS Media Intelligence; Lisa Strassberg, a former supervisor who reported to Swallen and is now at Mindshare; Laura Weinkam, a former account supervisor who is now a group account director at Arnell Group; Janet Berg, who remains an Ogilvy senior partner, management supervisor; and Mary Ellen Maloney, the former assistant to former president of national broadcast Peter Chrisanthopoulos. (Maloney is now an assistant to the CEO at RTC Relationship Marketing.)

All five testified after signing non-prosecution agreements with the government.

Swallen’s testimony best described the scope of the alleged scheme. He spoke in detail about how former Ogilvy strategic planning director Bob Zach came to his office in September 1999 and engaged him in a strange, slightly surreal conversation in which Zach refused to say directly what he wanted Swallen to do, but nonetheless managed to convey that the latter needed to start faking his timesheets immediately.

Zach also provided Swallen with stacks of blank timesheets and his previously filed timesheets, and told him, “To reflect—I believe that was the word he used—on what I had recorded,” Swallen said.

“I pushed back at him [to] explain what he was asking,” Swallen said. “He came back to me and said, ‘You’re not the only person being singled out here.'”

“No matter how hard I pushed … I was only going to get certain replies” from Zach, Swallen said. It was as if Zach had entered his office determined to stick to his “mental bullet points,” and the more Zach was questioned on his true intentions, “the more uneasy and ill-at-ease he became,” Swallen said.

Eventually, Swallen got the message and went back through his old timesheets, reassigning any hours he had put down as general research to the Office of National Drug Control Policy. All his timesheets were signed by Larry Cole, the former U.S. media director, he said.

Later, Swallen was approached by Lisa Strassberg, both testified, because Strassberg felt she was being pressured to falsely inflate her billable hours to the ONDCP. Swallen said he “played back to her many of the talking points Bob had told me.” Strassberg did alter her timesheets, she testified, but later stopped doing it because “I just didn’t feel comfortable doing it any more.”

The defense countered the testimony of both witnesses by wringing out a familiar theme, that neither Swallen nor Strassberg had received orders to do this from either of the two Ogilvy executives indicted for allegedly masterminding the plot: former executive group director Shona Seifert and former finance director Tom Early. Seifert and Early have pled not guilty.

It was the testimony of Berg and Weinkam which was most damaging to the defense, however. They both testified that Seifert had instructed them to revise or alter their timesheets.

In 1999, Berg was taking medication for depression after suffering repeated miscarriages, she testified, and was working a four-day week, one of those days at home. When work piled up, however, Seifert encouraged her in a phone conversation to bill her overtime to the ONDCP. Berg said she was a “little surprised” at Seifert’s instruction, because she was running a focus group for Five Brothers pasta sauce at the time.

Weinkam received a bunch of blank timesheets in the interoffice mail with a Post-It Note attached reading “Fill these out,” she said. “I knew it wasn’t the right thing to do. I felt bad about it but I did it.” Her timesheets were all signed by Seifert.

On Wednesday or Thursday, the court is expecting to experience a Martha Stewart-type moment when Seifert’s former assistant, Sally Axelrod, testifies as a prosecution witness. (It was the testimony Stewart’s assistant that aided in the domestic diva’s conviction and prison sentence, within the same courthouse complex.)

Little of the testimony today linked Early to the case. In fact none of the witnesses even mentioned his name, a fact that defense lawyers reminded the jury of repeatedly.

Much of the day was spent with lawyers interrogating Wesley Mandler, an accountant that the ONDCP brought in to check Ogilvy’s billing. The questions brought out in almost comic detail the incompetence of Ogilvy’s billing system on the business.

Despite having the account from January 1999, the agency did not manage to submit its first bill until September 1999, Mandler testified. When it did, the voucher—consisting of more than 10,000 sheets of paper—was riddled with errors, crossed out text, whiteout, “re-billing” efforts and correction tape. It took his team “two man months (or 360 total hours) to decipher the contents,” Mandler wrote in an e-mail. Ogilvy’s math didn’t even add up, Mandler testified, and the bills were full of “unexplained extra compensation … [such as] bonuses, automobile allowances and health benefits,” Mandler wrote to the ONDCP in an advisory memo shown to the jury today.

One of the most glaring errors, according to Mandler, was that Seifert and New York co-president Bill Gray had agreed in the contract to work pro bono on the account, but had in fact billed for their salaries.

Seifert’s lawyer, Emmet Flood, argued that the salary bill might have been legitimate if Seifert worked more than 2000 hours on the account. But Mandler said only “I do not know” if Seifert was paid or not.