A one-time Gillette executive is at the centre of the latest cash-for-contracts scandal to hit the US marketing services industry.
Gino Deluca, quondam director of the consumer goods group’s permanent merchandising systems unit, is accused of demanding kickbacks from marketing services agencies in return for business. Arrested Friday, he was charged with fifteen counts of wire and mail fraud plus one count of money laundering.
In an indictment served by a federal grand jury in Boston, Deluca is accused of fraudulently assigning $21 million (€19.5m; £13.4m) of advertising, marketing, printing and distribution services for Gillette. The agencies said to have undertaken the work include Montreal trio Interesting Displays & Ideas (which allegedly received $15m of the business in question), Top Marketing and Dascal & Associates, plus MGM Graphics in San Diego.
Deluca, who pleaded not guilty, worked for Gillette from 1980. According to the indictment, he was in charge of a budget worth $30m to $40m a year and could rubber-stamp contracts of up to $120,000 without review.
Gillette fired Deluca in August and called in the Department of Justice, which has been conducting a major inquiry into billings fraud in the advertising and print services industry. Said the firm: “We discovered grounds to terminate [Deluca], which we did, and at the same time thought that because of the severity of what was discovered that further legal action was required.”
Deluca allegedly received kickbacks worth almost $600,000 from the agencies involved. These included a car, a condo, vacations, appliances and $225,000 in a Swiss bank account. According to the indictment, when MGM complained about the payments, he threatened to move the business elsewhere.
• Meanwhile, there was a fresh development in the bid-rigging scandal unearthed by the Justice Department involving former executives at Grey Worldwide, graphics shop The Color Wheel and several other agencies [WAMN: 09-Apr-03].
John Ghianni, once an independent sales executive for New York’s Quality House of Graphics, pleaded guilty to two counts of fraud. He admitted submitting false bids connected with work for Grey client Brown & Williamson between 1994 and 2001. Ghianni also confessed to paying $950,000 in kickbacks to undisclosed agencies between 1996 and 2001 in return for contracts.
The investigation continues.
Data sourced from: multiple sources; additional content by WARC staff