FBI subpoenas LVMH in US media-buying probe

The US Federal Bureau of Investigation has issued a subpoena to French luxury group LVMH as part of its probe into media buying transparency in the US, Campaign has learned.

There is no suggestion of wrongdoing by LVMH, which owns brands including Louis Vuitton, Moët & Chandon, Veuve Clicquot, Hennessy and Christian Dior.

When the FBI, the law enforcement arm of the US Department of Justice, wants to make a legal demand for information, it typically goes to court to request a subpoena.

The request must be approved by a grand jury, a group of several dozen members of the public, which meets privately to weigh the evidence.

It is thought that the FBI may be seeking information about LVMH’s estimated $400m-a-year US media buying account.

A spokesman for the FBI gave no comment, citing its long-standing policy that it does not confirm or deny the existence of any investigation. LVMH said it had no comment.

LVMH appointed Dentsu Aegis Network as its media buying agency network in the US last year. Havas previously held the account.

There has been no allegation of wrongdoing against either of the agency groups.

Campaign first revealed in June 2018 that the FBI was beginning an investigation into media trading and transparency and was gathering information.

The LVMH subpoena suggests the FBI’s probe has advanced and Campaign understands that there have been other developments:

• The FBI has approached and interviewed former or current executives from multiple agencies as part of its broader investigation.
• Part of the focus of the FBI’s inquiries has been the out-of-home advertising sector.
• There is also speculation that the FBI has issued a subpoena to demand information from an unidentified media owner.

The FBI reiterated that it was unable to confirm or deny information in relation to any investigation.

Asking advertisers for help 

The FBI has asked advertisers for help. The Association of National Advertisers, the trade body for US advertisers, sent a white paper to its members in November 2018, explaining that the FBI was asking for co-operation.

"The FBI does not have the resources to investigate dozens or hundreds of potential financial fraud victims, each of which may present different facts and evidence," the ANA’s white paper said.

"As such, the FBI is asking that advertisers first conduct their own investigations. If indicia of fraud is uncovered, the FBI would then like to hear from the advertiser as to what it has found."

The white paper added: "One should not, however, speculate on what companies or individuals may be persons of interest or targets in the investigation as thus far, no one has been charged with any criminal behaviour.

"The FBI’s resources are stretched and it therefore asks for assistance from the potential victim advertiser community."

The media transparency debate first exploded in 2016 when the ANA used private investigators from K2 Intelligence to carry out a report that found "non-transparent" practices were "pervasive" across the US media agency sector.

The report suggested some agency groups were receiving secret rebates from media owners and marking up the cost of ads at a profit or receiving rebates – without telling their clients.

The ANA and K2 Intelligence did not identify any agency group and all names were redacted and treated anonymously.

The report only examined media agency practices in the US. 

Industry observers say media trading has become complex and can sometimes involve payments in multiple countries or offshore.

All of the big agency groups denied they had done anything wrong when the ANA report was published.

The FBI is the lead US government agency that investigates corporate fraud and it has significant powers to look into white-collar crime, including "illicit transactions to evade regulatory oversight" and "kickbacks".