LONDON: Next Fifteen Communications Group CEO Tim Dyson said it could take “many months” for the holding company to resolve its internal fraud case.
“I feel like we had a relative of Bernie Madoff working for us without us knowing,” Dyson told PRWeek in an email Thursday. “We expect the case will take many months to work its way through the legal systems due in part to its complexity.”
Next Fifteen said Wednesday that it had discovered “a complex fraud involving a senior member of the finance team in its Bite North America subsidiary,” which it believed to be “an isolated incident and a case of personal embezzlement as opposed to accounting irregularities.”
The company said it is postponing publication of its annual results for the previous fiscal year pending a full investigation, which it expected to be complete in the next four weeks.
Dyson called the case “a very serious crime” and said the company had notified the FBI and San Francisco Police Department. Next Fifteen is also working with external auditor BDO and has hired risk consulting firm Kroll to carry out a full forensic investigation.
Bite Communications CEO Clive Armitage will leave the agency at the end of this year to start a digital marketing firm under Next Fifteen. Dyson said Armitage's departure is not connected to the fraud case.
“[Armitage's] move had nothing to do with all this. It was an unfortunate coincidence from a timing point of view,” Dyson said. “He and I had been discussing what he'd do next for about 12 months, and it was only in the last few weeks that we settled on a business idea that we all found exciting and compelling.”
The new firm will be in the “digital insight space,” Dyson added.
“We firmly believe that as marketing shifts more online, the ability to deliver actionable insights that enable customers to optimize their digital marketing campaigns is of increasing importance and value,” he said.
Bite North America President Andy Cunningham will succeed Armitage as CEO.
Next Fifteen said the suspected fraud will have no impact on the underlying trading of the group's shares and it will not impact its abilities to carry out activities or make the investments it had planned for the coming year. It added that it expected to report revenue, adjusted profits, and earnings for the year ending July 2012 that are in line with market expectations.
Next Fifteen posted 4% organic revenue growth in the six-month period that ended January 31. Revenues for the period totaled $73.1 million, compared to $65.8 million in the prior year period, an 11% improvement. The company owns PR firms Bite Communications, M Booth, Text 100, and The OutCast Agency.