Leo Burnett USA pays out $15.5m to settle allegations over Army billing

by Staff, Brand Republic 07-Jan-09, 08:45

WASHINGTON - Leo Burnett has agreed to pay the US government $15.5m (£10.4m) to settle allegations that the advertising agency submitted false claims to the US Army while working on its account.

The Publicis Groupe owned advertising group held the US Army's advertising account from 2000 to 2005. During that time is accused of improperly billing the Army while developing its recruiting website and for advertising under the "Army of One" campaign, according to the Justice Department.

Leo Burnett denied wrong doing and said in a statement that the government's claims were without merit and that the settlement would "not affect Publicis Groupe's earnings since the payment amounts have been fully accrued in prior fiscal periods".

The agency will make a cash payment of $12.1m and credit the Army $3.4m in work performed, but not billed.

Brigadier General Rodney Johnson, commanding general of the US Army Criminal Investigation Command, said: "The American people trust us to ensure their tax dollars are spent appropriately and we will continue to aggressively seek out and investigate those who intend to defraud the Army and the American taxpayer."

The settlement resolves the lawsuit filed on behalf of the US government by former Leo Burnett employees, Greg Hamilton and Michele Casey, who received $2,790,000 as their share of the recovery in the case.

Under the False Claims Act, private citizens can bring a suit on behalf of the United States and share in any recovery obtained by the government.

The litigation and settlement of this case were conducted by the US Attorney's Office for the Northern District of Illinois and the Justice Department's Civil Division.

The case was investigated by the Defense Criminal Investigative Service of the Inspector General for the Department of Defense, the US Department of the Army Criminal Investigation Command -- Major Procurement Fraud Unit, and the Defense Contract Audit Agency.

The case dates back to the summer of 2002 when questions over billing irregularities first arose on the $150m US Army account.

The agency won the account, which since 2005 has been handled by McCann Erickson, in 2000 and came up with the US Army's new slogan "Army of one", replacing "Be all you can", which was used for 20 years.