Photo: Linkedin / James Buckley / Screengrab
UPDATE: The FBI alleged Aegis president Todd Hansen lined his own pockets in the accounting fraud he just pleaded guilty to:HANSEN allegedly misused tens of thousands of dollars of Company funds to pay for expenses and fees that directly benefited him, his family, and friends, and that were unrelated to the Company’s legitimate business. Those expenses included apartment rental fees, country club dues, and aeroplane tickets for HANSEN and certain members of his family.
EARLIER: Todd Hansen and James Buckley, the former president and finance director, respectively, of Posterscope, one of the largest providers of billboards in the U.S., both pleaded guilty to a $19.7 million accounting fraud, according to the Associated Press.
Hansen and Buckley could face up to 40 years in prison for their attempt to inflate revenues at the outdoor ad unit of Aegis.
The pleas bring to an end a two-year-old mystery at Aegis: Why did Hansen and Buckley resign amid a management shuffle in January 2010? That reorg was followed shortly by Aegis’ embarrassing disclosure that it was restating its numbers from 2004 through 2008 because it had “improperly reported over-stated revenues and profits between 2004 and 2008 by an aggregate £10.5m.”
Photo: Darwin Bondgraham
The episode shows, again, that corruption and conflicts of interest remain within the advertising business, despite repeated denials by agency brass that it does not.
The indictment against Hansen and Buckley is short on details. It says that from 2004 through 2009, the pair conducted wire fraud by sending each other emails about “recording false revenues” that would “artificially improve the appearance of [Posterscope’s] financial performance and, thereby, to obtain higher compensation and bonuses for themselves.”
At the time, Aegis made this disclosure to investors:In December 2009, an internal review process initiated by the new regional management team, supported by a comprehensive investigation into the business unit’s accounting practices, concluded that former senior managers at Posterscope USA had improperly reported over-stated revenues and profits between 2004 and 2008 by an aggregate £10.5m. This has been reversed in full through underlying revenue in 2009 with no restatement of prior periods. There was no direct cash impact.
The scandal is the third that has attached itself to the Aegis name in recent years. In 2009, the company—again via Posterscope—was accused by Media Week in the U.K. of keeping discount rebates from space vendors that should have been passed back to the clients, whose money earned them:
One senior outdoor industry source claims these additional rebates, or volume deals, are currently running at 10-12% on top of the official 15% and 5% agency commissions. He says: “This means that, in effect, Posterscope and Kinetic are not only paid for their planning and buying services by the client, but also by the outdoor media owners.”
The FBI said that the U.S. Posterscope scam featured exactly that type of fraud:
HANSEN and BUCKLEY allegedly directed the Controller to record higher monthly revenues from either false client billings or from rebates on certain goods and services that the Company was purportedly receiving from some of its vendors.
The feds said the inflated revenues led to Hansen and Buckley receiving salaries and stock of $1.1 million and $650,000, respectively. (Hansen’s lawyer previously said the whole thing was a misunderstanding: “this whole mess arises out of the bookkeeping practices of other people several years ago. We are working to straighten the entire situation out.”)
Then in 2010 Aegis in Europe paid €30 million to settle allegations that its former president, Aleksander Ruzicka, ripped off Danone Groupe (DN.PA) by siphoning off Danone’s TV media credits for himself. He was replaced by CEO Jerry Buhlmann in a reshuffle.
Similarly, when Hansen and Buckley were ousted new management was brought in at Posterscope: Connie Garrido, president of Chrysalis, assumed the role of CEO of Posterscope U.S.; and Ray Rotolo, managing director of Chrysalis, was named evp of Posterscope U.S.
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