LVMH Moët Hennesy–Louis Vuitton, the Paris-based luxury marketer with an expansive brand portfolio that includes Christian Dior and Sephora, was subpoenaed by a federal grand jury in the probe of U.S. media buying practices, according to people familiar with the matter. The far-reaching inquiry has moved into broader territory and across sectors of the industry, these people say.
Ad Age reported in March that an unnamed company had been subpoenaed for years of financial records and communications with its agency. The people familiar with the investigation now say that company was LVMH, though no one has yet been accused of any illegal activity.
LVMH last year shifted its $400 million-plus North American media account from Havas to Dentsu Aegis Group, though there’s no indication either the marketer or the agencies are involved in wrongdoing, and no one has been charged with anything. Havas previously handled the account for more than a decade.
Two people familiar with the matter say an unidentified former Havas executive has also been subpoenaed in the federal probe.
LVMH declined to comment, while Havas and the New York office of the FBI didn’t respond to requests for comment by deadline.
Two people familiar with the investigation say media companies have also been subpoenaed in the far-reaching probe, including at least one outdoor media player, though it’s unclear whether these subpoenas have anything to do with LVMH business.
“This investigation looks like it’s reaching a boiling point,” says one of the people, who knows of more than a half dozen additional people who’ve voluntarily talked to the FBI from a wide swath of the industry, including media, agency, ad tech and marketer executives.
In November, the Association of National Advertisers outlined a likely focus of the federal probe as wire and mail fraud and related conspiracy stemming from assurances agencies made to clients that they weren’t getting rebates or were passing them along when they did.
But these people say the probe has expanded well beyond those parameters to include revenue recognition matters that are of concern to the U.S. Securities and Exchange Commission; U.S. Treasury Department tax issues over transfers of payments for domestic transactions to overseas subsidiaries of agencies; and, in one case, alleged money laundering involving payments from an ad tech company to an individual. These matters are unrelated to LVMH media business.
Now that a grand jury has been impaneled, federal investigators are under pressure to deliver indictments or resolve matters within the typical six-month window. But the U.S. attorney’s office could seek a court-ordered extension for a grand jury in such a complex matter. SEC and Treasury probes operate independently of the FBI and need not rely on a grand jury.[from http://bit.ly/2VwvxLm]