Witness Names Seifert, Early

NEW YORK Ogilvy & Mather’s former national broadcast director, Peter Chrisanthop-
oulos, today told a court that he inflated his timesheets and those of his assistant at the direction of two other former Ogilvy executives, Shona Seifert and Thomas Early.

Early and Seifert have both pled not guilty to charges of masterminding a plot within Ogilvy to overbill the federal government on its $1 billion anti-drug account.

Chrisanthopoulos’ testimony came the same day an account executive at Ogilvy described how she attempted to pad the agency’s bills for IBM in order to rake back an unrelated overrun in expenses on that client.

The problems on the IBM business dovetailed with $3 million in timesheet inflation occurring on the Office of National Drug Control Policy account, prosecutors argued, via an attempt to transfer cost overruns for the computer giant into bills for the anti-drug effort.

The appearance of Chrisanthopoulos, 47, was the first recent public sighting of a man who, five years ago, was regarded as one of the country’s most powerful media buyers. He resigned from Ogilvy suddenly in March 2000 to become president and COO at Pappas Telecasting Azteca America TV Station Group, a move that left many scratching their heads at the time. Chrisanthopoulos resigned the Azteca position in January 2004, and, he testified today, has been unemployed for the last 14 months.

Chrisanthopoulos has already pleaded guilty to several counts of conspiracy to defraud the United States in; the indictment was sealed.

Speaking with a quiet, hesitant and sometimes embarrassed demeanor, Chrisanthopoulos explained how, in mid-September 1999, he was called into a meeting after business hours with Ogilvy’s New York financial director, Thomas Early. The meeting was also attended by Ray Simko, the former senior partner in charge of media in New York.

“It was a one-way discussion. Tom started talking. … ‘You guys messed up, you didn’t monitor your people … you’ve underreported your ONDCP time for the year,'” Chrisanthopoulos said, describing the words of Early.

Early pointed at the wall, and the office next door to his, which belonged to Bill Gray, Ogilvy’s New York co-president, Chrisanthopoulos said. “‘I’m getting heat from Bill Gray,'” Chrisanthopoulos quoted Early as saying. “‘You guys are also going to get heat,'” which included having their bonuses cut, Chrisanthopoulos said.

“He was angry and yelling,” Chrisanthopoulos said of Early. After five minutes, “Ray got up, angry, and opened the door, walked out, and I followed him. Ray said, ‘What a jerk! What an ass!’ He would have to tell [former U.S. media director] Larry Cole about this.”

Despite the animosity, Chrisanthopoulos said he never doubted what Early wanted from him: to falsely inflate his timesheets, and those of his staffers on ONDCP, “irrespective of the amount of work we actually did.”

A few days later, Chrisanthopoulos said, he bumped into Seifert, the former executive group director on ONDCP, in a hallway, and she told him he was going to get new “targets” for ONDCP—meaning percentages for hours written onto individual timesheets—and that it was “very important for me and everybody else to use them.”

Seifert’s message was clear, Chrisanthopoulos said, that he should adopt the bogus hourly percentages on timesheets “irrespective of the number of hours we actually worked.”

Early and Seifert later made a joint phone call to his office to say “we want you to use 80 percent as your target,” he testified. Chrisanthopoulos was actually spending only about 35 percent of his time on the account, he said.

All of Chrisanthopoulos’ timesheets were signed by Gray, and prosecutors showed some of them to the jury. Chrisanthopoulos, however, said he “never discussed” his hours or the timesheet changes with Gray.

Lawyers for Seifert and Early concentrated on the fact that Chrisanthopoulos had apparently changed his story during the period of the government’s investigation of Ogilvy, and attempted to paint him as a liar.

They also repeatedly reminded the jury that Chrisanthopoulos hopes to avoid jail time by cooperating with the government.

And in a drawn out exchange, Seifert’s lawyer, Greg Craig, grilled him about a phone call he had made to Nancy Smith, head of media at American Express, in his attempts to seek a job. Chrisanthopoulos had apparently told Smith that he expected not to go to jail, Craig insisted, when in fact his plea deal leaves the possibility of prison in the hands of the judge. Chrisanthopoulos minimized the call, saying it “was just to say hello.”

Although Chrisanthopoulos is one of the prosecution’s star witnesses in this case, he was upstaged today by 33-year-old Ogilvy account director Mabel Chin, who supervised $1 million of business on Tivoli.com, a brand of IBM, in 1999 and 2000.

It was her first tour of duty as an account director, she said, and as 1999 came to a close she realized to her horror that her staff had performed $300,000 more work on Tivoli than the client had budgeted for. She went to see Ken Gray, the former director of print production. Gray agreed to attempt to transfer some or all of the $300,000 in hours billed to IBM over to ONDCP.

That scheme was thwarted, however, by another young Ogilvy executive, client finance director Wai-Man Leung, who noted that only five employees had worked on both accounts and that even if you assumed all their hours were actually for ONDCP, it still only amounted to a $27,000 overlap. “Is it even worth doing the transfer for this small amount of money and quite possibly having to explain our actions to government auditors in the future?” he wrote in an e-mail to colleagues. That e-mail was displayed for the court today.

Ultimately, Chin came up with a different, three-pronged solution, proposed in an e-mail she sent in September 1999: Ogilvy would attempt to shift some of the overage onto ONDCP; some of it would be billed the following year as part of the client’s regular $550,000 labor bill; and some would be eaten by about $100,000 in new work that Ogilvy had sold the client.

“The overall budget has been padded to cover the overage,” she wrote to her colleagues. “It looks like new product.”

When presented with the e-mail, and asked to explain its meaning, Chin looked mortified, and her answers were punctuated by long silences.

Later, under questioning by defense lawyers, she was asked, “You presented these ideas and it was handled and everything went forward smoothly?”

“Yes,” she replied. Chin left the courtroom looking shaken.

If Chin’s testimony is true, it once again spotlights lax practices within ad agency print production departments. Allegations of bill switching on the print side during the same time period, on unrelated accounts, have previously surfaced at Grey Global Group in New York [Adweek Nov. 8] and Foote Cone & Belding in San Francisco [Adweek Nov. 1].