Ad Executives Accused of Bilking the Government

Not even the government’s war on drugs is immune from the scandals gripping corporate America. The Associated Press reported yesterday that the government is charging two ad industry executives with conspiracy for supposedly overcharging the government for an anti-drug campaign.

The Ogilvy & Mather advertising agency was hired in 1998 by the Office of the National Drug Control Policy, part of the Executive Office of the President, to oversee a print and broadcast campaign on the dangers of drugs, designed to discourage drug use among young people. The campaign concluded last week.

Thomas Early, 48, director of finance at Ogilvy's New York office, and Shona Seifert, who once directed Ogilvy's $684 million contract with the government, were accused Tuesday in a federal indictment with directing employees to exaggerate their work on the project when they filled out time sheets, the Associated Press reported. Seifert left the agency two years ago and is now president of TBWA/Chiat/Day, New York. She said Tuesday: "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."

Early resigned from Ogilvy to "devote his full energies to obtaining a full vindication in this matter," the company said, and AP reported. Early and Seifert both pleaded innocent yesterday in Manhattan federal court and were each freed on $500,000 bonds, after both posted $25,000 in collateral. They are due back in court for a pre-trial hearing on Feb. 13. If convicted, they both could face up to five years in prison for each of the 11 counts contained in the indictment as well as millions of dollars in fines, the AP reported.

Ogilvy, which was not charged, said it was unprepared for complex and unique federal recordkeeping rules but changed its procedures when it realized it was not meeting federal requirements.

The agency said the government was not billed after the summer of 2000 when its internal recordkeeping system was modified, leading to the discovery of billing mistakes. The government was compensated for the mistakes in a civil suit.

In a statement, the agency said its new system was certified by both outside auditors and government auditors and the agency "instituted the most rigorous accounting compliance program in our industry."


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