Leo Burnett settles Army billing case for $15.5 million

Leo Burnett Co., the Chicago-based advertising firm, agreed to a $15.5 million settlement of claims it overbilled the U.S. Army for work on the "Army of One" recruiting campaign.

Leo Burnett, a unit of the Paris-based Publicis Groupe SA, will pay $12.1 million to the U.S. and waive billing for $3.4 million of work already performed, the firm said today in a statement. The accord ends a four-year-old whistleblower lawsuit brought by two former Leo Burnett executives.

"The Justice Department is committed to vigorously pursuing all those who knowingly submit false claims with respect to military contracts," Assistant U.S. Attorney General Gregory Katsas said in a separate statement.

Leo Burnett admitted no liability. The U.S. accused the firm of improper billing for subcontractor work and inflating labor rates. Leo Burnett, which counts restaurant operator McDonald's Corp. and automaker General Motors Corp. among its clients, said any improper invoicing was "inadvertent."

"Leo Burnett itself brought the inadvertant error to the Army's attention 2002," the firm said. The Army "never acted" on an offer of reimbursement, Leo Burnett said.

The suit, filed in U.S. District Court in Chicago in June 2004, was unsealed yesterday. Plaintiffs Greg Hamilton, a former Leo Burnett vice president, and Michelle Casey, a one-time comptroller, will receive $2.79 million from the settlement.

The case is Hamilton v. Leo Burnett USA Inc., 04cv3897, U.S. District Court, Northern District of Illinois (Chicago).