Feds Investigate Alleged Client Fraud at Grey Worldwide

26 March 2002

A federal investigation into the US print production industry resulted last week in the arrest of Mitchell E Mosallem, a former executive vp and director for graphic services at Grey Global’s Grey Worldwide office in New York.

According to documents lodged by the US Attorney's Office in the Southern District [of New York], Mosallem, who resigned his post in December, connived over a nine year period with unidentified colleagues at Grey and staffers at four or more external suppliers of graphic services to defraud Grey clients by authorizing “false and fraudulent invoices relating to its contracts”.

The warrant refers to estimates made for just one period – February 1998 to July 2000 – during the nine years under investigation. During this single time window, false invoices amounted to $500,000 (€571,177; £351,320).

A Grey spokesperson confirmed that a federal probe is under way: “We have received an inquiry from the government about an investigation it is conducting relating to certain printing vendors and we have been cooperating completely to the extent we have been asked.” Among the Grey clients named in the court documentation are Procter & Gamble, Brown & Williamson Tobacco and Joseph E Seagram & Sons.

Mossalem’s lawyer, Paul P Bergman, says his client will contest the charges against him, and that further comment would be forthcoming once “the government decides to identify the so-far unidentified witnesses that they speak of in the complaint”.

One graphics company, New York-based Color Wheel, although not identified in the warrant, was last week named both by AdAge and AdWeek. In a statement issued by its lawyers, Color Wheel “categorically denies any impropriety or illegality whatsoever”.

Says Grey: “We are aware of the criminal complaint sworn out against Mitch Mosallem. Obviously, at this stage of the matter we cannot comment further.” Meantime, the agency has hired Deloitte & Touche to “conduct a comprehensive and independent assessment of our print production department.”

Data sourced from: New York Times and AdWeek; additional content by WARC staff