William John Grizack, the rogue advertising executive whose elaborate scam involving fictitious contracts cost Durham-based McKinney and a second ad agencymore than $4 million, has been sentenced to a minimum of 57 months in prison.
In handing down his sentence Thursday, Forsyth County Superior Court Judge John O. Craig III marveled at the ingenuity of Grizack’s scheme.
“It was a con game that was highly complex and highly believable,” the judge said, adding: “There are certain politicians in our country who could probably take notes from this man and learn from him as to con artist skills. I’ve never seen anything quite like this.”
Grizack, 42, pleaded guilty in March to three felonies stemming from his invention of lucrative contracts that were supposedly from Coca-Cola and spirits giant Brown-Forman in 2012 and 2013. Under his plea bargain, he also agreed to pay $235,000 in restitution, including $100,000 to McKinney.
“This is a case about lies and deception by the defendant to fuel an upper-class lifestyle,” said prosecutor Scott Harkey, who’s with the financial crimes unit of the N.C. Conference of District Attorneys. Harkey, who noted that Grizack went on to scam another ad agency after departing North Carolina, urged the judge to send him to prison “for a very long time.”
The falsified contracts were so big that the agency Grizack worked for – Pave Advertising Design in Winston-Salem, now known as The Variable – made him a partner and then turned to the Triangle’s largest ad agency, McKinney, for help. McKinney also hired him at a $250,000 annual salary – making him an employee of both agencies – and also paid Pave $1.5 million as part of the deal.
Grizack made his scheme believable by acting out fake phone calls and sending e-mails to and from fictitious addresses, according to court documents and statements by Harkey. The scam lasted nearly eight months before the agencies discovered it was all smoke and mirrors.
Before they uncovered the truth, however, the two agencies hired 40 employees between them to handle the additional workload, according to statements made in court. Neither the prosecutor nor the two agencies have been willing to provide a breakdown of how many employees each agency hired.
Craig said that the fate of those employees factored heavily into the sentence he meted out to Grizack, which calls for between 57 and 81 months in prison.
“The sad part is that, a number of additional employees were hired and then, once the situation was uncovered, they lost their jobs,” the judge said.
A bad bet
McKinney, which declined to comment Thursday, previously said that although it did lay off about 30 employees in May 2013, it was the result of the loss of one of its larger clients and had nothing to do with “the Grizack matter.”
Today McKinney has about 155 employees and its clients include Samsung, ESPN, Sherwin-Williams, CarMax, Crocs and, ironically, Coca-Cola. Since 2014, well after Grizack departed, McKinney has been the agency of record for World of Coca-Cola, an Atlanta museum owned by the beverage giant.
McKinney’s losses, outlined in court documents, totaled $2.6 million. That included nearly $1 million in salary and benefits paid between November 2011 and April 2012, $110,000 in other expenses “to accommodate for the supposedly newly contracted business” and the $1.5 million payment to Pave. However, Pave subsequently repaid the $1.5 million to McKinney.
Grizack, wearing a tan sports jacket and standing erect, apologized to the two agencies in court Thursday.
“My actions and the consequences of my actions, I’m deeply sorry and have great regret for,” he said as his voice cracked. “I caused pain and suffering to the very people I was trying to please.”
Grizack’s defense attorney, Bernard Desrosiers of Winston-Salem, told the judge that although his client was driven by greed, pride was also a factor.
Grizack, he said, had created “revolutionary” software that enabled him to land some “legitimate clients” for Pave. But he was thwarted in his efforts to land the two clients he coveted most: Coca-Cola and Brown-Forman.
“He thought that he could pull this thing off,” Desrosiers said. He added that McKinney CEO Brad Brinegar has said “that it was his opinion that my client placed a bet. It was a bad bet, it went south. And he doubled down on it.”
Gullibility and greed
Keith Vest, president of what was formerly Pave and is now The Variable, pushed the judge to maximize Grizack’s sentence.
“His actions caused employees to lose their jobs and caused unimaginable turmoil at work,” he said. “And he almost destroyed a company whose only fault was an instinct to trust.”
Vest issued a statement afterward saying that The Variable, which today has 32 employees, is now thriving – including tripling its staff and quadrupling its revenue since 2013.
No one from McKinney spoke at the hearing.
Craig, the judge, said that although he placed the blame “squarely on the defendant, I have to say there is just a small amount of gullibility and greed involved on the part of the victims.”
“It’s a reinforcement of the old saying that, if something sounds too good to be true, it probably is too good to be true and should not be believed,” he said.
Under the terms of his plea bargain, Grizack could have been sentenced to up to 123 months in prison. Craig said that he took into consideration the fact, outlined in sealed documents submitted by the defense, that Grizack suffers from “a rare genetic disorder that could be fatal and most likely will greatly shorten his life span.”
Craig said he had no doubts about the legitimacy of the diagnosis because the physician who came up with it was someone he knew from his days at Davidson College.