By By Suzanne Monk/The Meridian Star
April 10, 2001
Kim Gianakos testified Monday, defending herself against a federal indictment alleging she conspired to defraud Comcast of $2.6 million.
The "man in the middle" of the alleged conspiracy is former Primestar regional manager David Colvin.
Prosecutors claim he directed the actions of four co-conspirators between January 1994 and August 1996: Gianakos, owner of a public relations firm that did business with Comcast; Kary Graham, manager of a Comcast satellite sales office in Waynesboro; C.D. "Bubba" Newell, a former vice president of Trustmark National Bank in Meridian; and contractor Darrell Wayne Raley.
The 21-count indictment includes charges ranging from mail/wire fraud to money-laundering to income tax evasion. The primary charge against Gianakos is that she "laundered" money for Colvin by submitting personal expenses charged to his American Express card to Comcast for reimbursement.
Before the storm
Defense attorney Frank Trapp's questions to Gianakos focused on two areas: 1) giving context to the events alleged in the indictment; 2) outlining what Gianakos did in response to concerns about billing practices requested by Colvin.
Gianakos Associates had a long-term relationship with Comcast and its affiliates. The relationship with David Colvin began in 1986 with a store called Video to Go. It became stronger in 1991 when he became regional manager of Primestar.
Gianakos said Colvin gave her instructions about how to bill marketing expenses generated on his American Express card. She complied with those instructions, paying the invoices and submitting reimbursement vouchers to Comcast. The billing amounts were distributed among five marketing categories.
The 33.34 percent mark-up for this service, Gianakos said, is standard in the marketing industry.
She testified that Colvin kept the original Amex invoices at his office, explaining he would "match up" expenses as needed.
Four circumstances, the defense says, combined to support Gianakos' belief that nothing was wrong: 1) Colvin was the regional manager of Primestar, fully empowered by Comcast to conduct business and issue instructions; 2) requests for changes indicated the invoices were being reviewed; 3) nobody from Comcast ever called to question the practice; and 4) Comcast paid the bills.
Changes in 1995
Gianakos said she consulted Trapp in August 1995, after her accountant expressed some concerns about the Primestar billings. The concerns, Gianakos testified, had to do with Comcast's ability to sort travel/entertainment expenses from other expenses.
The American Express billings had grown over time to rival standard Comcast billings.
On Trapp's advice, she made three changes. Reimbursement invoices referenced Colvin's American Express card number. The mark-up was reduced from 33.34 percent to 10 percent and listed as a separate handling fee on the invoices.
Gianakos also asked Colvin to secure a letter from Comcast management authorizing her to pay American Express invoices. She received a letter to that effect from chief financial officer Bill Kyles.
She admits to dragging her feet before confronting her agency's single largest client.
After the changes were in place, Gianakos said the matter was "verified, confirmed and put to rest."
Situation unravels
By early 1996, Colvin was shopping for a new marketing agency and negotiations were under way with Luckie &Company. Advertisements appeared locally that Gianakos Associates had nothing to do with.
Gianakos said Colvin told her those ads were placed by the national office and continued talking about future campaigns.
On June 14, she got a call from her office. A Primestar employee was there asking for Gianakos Associates letterhead invoice letterhead.
She testified that she called Colvin and met with him at his home.
In a meeting later that month, Wasser commented that Gianakos had a bad reputation at Comcast because she did not attach back-up documents to her invoices. Gianakos said that was confusing since Colvin had asked her to retain the back-up at her office.
New billing practices were put in place.
Comcast audit
When Comcast auditor Sharon Desmond arrived in August 1996, Gianakos testified, it became apparent that Colvin had been forging Gianakos invoices.
She testified she called Colvin.
Colvin replied, she said, "I can't believe you'd lose the account over this."
The authorization letter from Kyles turned out to be a forgery.
Comcast auditors were in her office. Trapp pointed out Gianakos was not told she was the target of a federal investigation, and that meetings with the U.S. Attorney's office had already occurred.
Gianakos said Comcast officials agreed to compensate her for copies and staff time involved in assisting the auditors. This did not happen, nor were final Gianakos invoices paid.
Gianakos maintains her innocence.
Follow the money
In a brief cross-examination, Assistant U.S. Attorney Harold Brittain re-stated previous prosecution arguments alleging a conspiracy to defraud Comcast emphasizing the amount of money Gianakos made.
In 1994, American Express billings to Comcast totaled $597,270. Gianakos Associates made $119,454 in agency mark-ups.
In 1995, Gianakos billed $1,076,945 $178,464 in mark-ups. In 1996, Gianakos billed $740,963 in American Express reimbursements $67,360 in mark-ups.
Today's court action
The trial moved on today to Graham. Defense attorney Charlie Wright has already presented three witnesses, including two character witnesses on Monday. Forensic accountant Jack Sykes was expected to lead off today's witnesses. Graham was also expected to testify in his own defense.
Suzanne Monk is managing editor of The Meridian Star. E-mail her at smonk@themeridianstar.com.